CENUSA: EU anti-corruption sanctions: a useful tool for eastward enlargement

CENUSA: EU anti-corruption sanctions: a useful tool for eastward enlargement
The sanctions regime is a tool that can be used by European states to battle oligarchic influence in politics and to fight corruption. The new packages are more about enforcement than punishment. / bne IntelliNews
By Denis Cenusa in Germany May 30, 2023

European sanctions go through a process of continuous maturation and updating, adapting to current geopolitical sensitivities. In the context of the Russian military aggression against Ukraine, European actors are accelerating efforts to adopt the eleventh sanctions package.

The great objective of the European Union is to intensify the pressure on Russia by adjusting the restrictions adopted in the first ten waves of sanctions. This could include penalising entities that facilitate sanction evasion. Therefore around 90 international companies, including from China, etc., could be punished by secondary sanctions for engaging in the (re)export of dual-use goods.

Russia is resorting to “parallel imports” with the help of companies from third countries not aligned with Western sanctions, including restoring its military industry capabilities. At the same time, the evasion of restrictions on the transport of Russian oil will be sanctioned. Thus ships that disconnect movement tracking systems on delivery routes will be sanctioned by the EU. Finally, Brussels wants to combat smuggling activities for goods whose final destination is the European market. This also prevents accidents at sea which, with Russia's use of ageing vessels, can cause oil spills and environmental catastrophes, especially in the Baltic Sea area.

As Hungary and Greece have given their support for the eleventh sanctions package conditionally on the removal from Ukraine's sanctions list of certain companies in the banking and transport sectors respectively, the EU is preparing for the formalisation of anti-corruption sanctions.

The new sanctions regime, still in the process of being finalised, targets corruption outside Europe's borders and could improve the management of geopolitical emergencies in geographic proximity. Thus a new level of influence appears on the horizon within the EU's common foreign and security policy in relation to both its partners and its geopolitical rivals.

Anti-corruption sanctions may become essential to prevent negative corruption developments within neighbouring countries. At the same time, this sanctions regime could complicate initiatives to harness the effects of corruption, from the region that the EU tends to Europeanise, by adversary regional powers such as Russia.

The advantage of the anti-corruption sanctions that Brussels is about to launch lies in their horizontal nature, which will make it possible to penalise corruption at a global level, regardless of the country and region. With the introduction of anti-corruption sanctions, the EU overcomes the disadvantage of the previous regime focused strictly on the violation of human rights: the “European Magnitsky Law”.

Once they come into force, the fight against external corruption through individual sanctions (travel bans and asset freezes) could become strategic for better management of the EU enlargement process. Likewise, financial transactions towards those who were sanctioned will be prohibited.

In addition, the same tool can serve to prevent regional security risks related to the exploitation of criminal groups in the region by Russian security services to destabilise neighbouring states.

In the field of European regional integration, anti-corruption sanctions could have beneficial effects in furthering the EU's enlargement agenda by immobilising local agents of corruption. The very diplomacy of anti-corruption sanctions can serve as the EU's warning system against oligarchic criminal attempts to boycott democratic reforms in candidate countries.

At the same time, the pro-EU forces of the states included in the European enlargement package (ten states from the Western Balkans, Eastern Europe and Turkey) can use sanctions as a tool for external intervention against massive corruption phenomena. In other words, the ambitions of this sanctions regime signal a greater degree of interventionism by the EU, mainly in relation to its neighbours.

Anti-corruption sanctions will draw new “red lines” in relations with geopolitical rivals. Thus the EU will be able to thwart and devalue the informal links between corrupt actors in its eastern proximity and Russia. In the current geopolitical context, Moscow relies on the actions of oligarch networks or co-ordinates corrupt regional players in an attempt to decouple the region from Ukraine and the EU. Therefore anti-corruption sanctions could become a geopolitical means to protect the geostrategic interests of the EU. For this sanctions policy to work, it will require objective reporting from its diplomatic missions, embedded anti-corruption agencies in neighbouring countries, credible investigative journalism networks and pro-reform political forces uninterested in politicising the country's anti-corruption sanctions.


New sanctions on the eve of the Summit of the European Political Community

Russia's actions directed against Ukraine have repercussions for the security of neighbouring states. Considerably affected by regional socio-economic crises and their exploitation by Russian-connected local political forces, Moldova requested the extension of Western sanctions to target the corrupt destabilisers. Following the US sanction of Moldovan figures Ilan Șor and Vladimir Plahotniuc in October 2022, the Moldovan governors asked for Romania's help to put on the EU agenda measures to sanction oligarchs and facilitators suspected of having ties to Moscow at the European level. As in the case of the US, European policymakers justify the sanctions by the fact that Russia is harnessing corrupt forces to destabilise public order and the rule of law in Moldova against the pro-European government.

In March-April 2023, ideas for sanctions dedicated to the situation in Moldova were distributed at the level of European institutions. The final decision of the Council of the EU is expected before the summit of the European Political Community, to be held in Moldova on June 1.

For now, the sanctions list includes five Moldovan politicians or those related to them: Ilan Șor, Marian Tauber, Vladimir Plahotniuc, Gheorghe Cavcaliuc and Igor Ciaika (RadioMoldova, May 2023). However, once the sanctions regime is put in place, other individuals and entities risk being included if the Chisinau government proves that they are contributing to instability.

The criteria that will guide the EU in the application of sanctions include participation in actions that hinder political processes, including elections, but also accusations about the attempt to overthrow the constitutional order with or without the application of violence. In addition, oligarchs who exercise influence over state institutions or participate in illegal financial transfers will also be sanctioned. Although Romania played an important role in promoting this sanctions regime, Brussels mentions that the measures are being introduced as a result of the request of the Moldovan government.

Moldova is not the only country in relation to which the EU adopts sanctions aimed at punishing individuals and entities responsible for undermining democracy and the rule of law. Thus, the EU introduced individual sanctions for destabilising the situation in Lebanon. They are in force since July 2021 and have been renewed for one year until July 31, 2023.

Compared to Lebanon, where the EU refers to concerns about the state of democratic and judicial institutions, the sanctions on Moldova carry a heavy geopolitical and security charge. Therefore the sanctions will mainly target political actors suspected of having ties to Russia and of carrying out measures, in the form of orchestrated protests, considered dangerous for public order and national security in the regional geopolitical context.


In lieu of conclusions…


Sanctions tailored to Moldova could later be used in other corners of the European Political Community, from Georgia (Eastern Partnership) to Serbia (Western Balkans) and even Turkey. Under current conditions, replicating the Moldovan model of European sanctions requires pro-EU political forces in the government and a pro-Russian opposition with a criminal-oligarchic profile. If the sanctions regime remains in place later, it could be exploited even in situations where pro-EU forces are in opposition and those associated with Moscow are in government.

The extent of geopolitics in the EU decision-making process regarding the implementation of horizontal anti-corruption sanctions or a country-specific sanctions regime will fluctuate depending on European strategic interests, particularly when the enlargement process is being targeted. Brussels’ effort to become a global power and the sharpening of confrontations with geopolitical rivals will increase the weight of these sanctions in the EU's foreign policy actions.

Denis Cenusa is an Associate Expert at Think-Tank EESC in Lithuania and Moldova, and a PhD candidate at Justus-Liebig-Universität in Germany. He tweets @DionisCenusa.