00:00Mr O'Sullivan, the last time that you spoke to Euronews, you highlighted that you wanted to crack down on Chinese
00:06companies helping Russia circumvent certain EU sanctions,
00:10as well as those Chinese companies producing dual-use technologies that Russia can use on the battlefield. How is this
00:18faring?
00:18Well, I think we have taken several actions. We have listed a number of Chinese companies.
00:25We recently listed some, in a previous package, some Chinese banks who then agreed to discontinue funding Russian activities.
00:34So we have been active in taking action against Chinese companies.
00:40But I won't hide from you that China remains a very big problem for the circumvention of our sanctions.
00:47How big?
00:47Well, it's one of the biggest sources of circumvention, both in terms of what we call backfilling.
00:55This means simply selling Chinese versions of goods which we previously sold as Europeans.
01:01So, you know, things like household goods and so forth, which is, of course, perfectly legitimate.
01:05But also, unfortunately, as a platform for the re-export from China of Western-branded goods and EU-branded goods.
01:14So this is still a problem. We raise it regularly at the highest level with the Chinese authorities.
01:19But you know their answer, which is to say that they don't feel they're doing anything wrong.
01:24So we still have to take unilateral action against Chinese companies and financial institutions.
01:30But they've also retaliated following the 20th package of sanctions.
01:33China responded by banning at least seven European defence companies from receiving certain dual-use products.
01:40Should we expect more reprisals from Beijing?
01:43Yeah, I think the Chinese play hardball, as the Americans say.
01:47And I think we have to face up to that, that if we want to take action, they will also
01:51take equal action.
01:57But I think it is very important, nonetheless, that we continue to be able to send a strong message
02:01that we are vigilant about efforts to circumvent our sanctions
02:04and that where we see the evidence, we will take action.
02:07But how does this work as the EU wants to forge closer trade ties with China?
02:13Well, I mean, this is true of many countries.
02:16I always say that my job is to try and make sure that sanctions don't get in the way of
02:21the positive stuff we want to do with countries.
02:24It's clear that the agenda with China is very complex, from trade to security to tech to access to raw
02:33materials, all of these questions.
02:35And we have to look at the sanctions issue through that prism.
02:38And there always has to be a balance between, you know, I would say our offensive interests and our defensive
02:45interests.
02:45And I think it's complicated, but I think we manage it pretty well.
02:49Certainly complicated.
02:50On the 20th package of sanctions, there was also the proposal from the Commission for the full ban on maritime
02:56services for Russian tankers as part of the country's shadow fleet.
03:01The understanding was that there should be approval first at the G7.
03:05Now, those leaders will meet later this month in Evian.
03:08Do you expect a breakthrough?
03:09I think events in the Gulf have clearly changed the calculus about anything to do with energy.
03:17For the moment, what all Western economies are struggling with is access to energy at reasonable prices.
03:24The price has gone up and there is scarcity of supply also in the area, for example, of refined products,
03:32so diesel, jet fuel and so forth.
03:34So I think at this point, there is no appetite to take additional measures which might aggravate that situation.
03:41But I think the fundamental point, Angie, is that, you know, our sanctions on the energy side are having a
03:47huge impact on Russia.
03:48Russia's revenue has gone down.
03:51The public finances are in great difficulty.
03:54They're in deficit.
03:54So I think notwithstanding the fact that we may not move forward in the short term on the maritime services
04:00ban, everything that we have done, whether it's the oil price cap, whether it's the actions against the shadow fleet,
04:05all of this has contributed to seriously undermining Russia's revenue from hydrocarbon exports.
04:13And this was one of our key objectives.
04:15And it is working.
04:16But can you argue that what is going on in the Middle East regarding this war is blunting the effect
04:22of the EU sanctions against Russia?
04:24As you rightly pointed out, there are certain countries perhaps that want to take a more laxed stance when it
04:30comes to acquiring Russian energy.
04:32Is this not having an impact on the efficacy of EU sanctions against Russia?
04:36In the short term, no, to be honest.
04:38I mean, of course, it all depends on how long this situation continues.
04:43But I think that the benefits of the short term increase in prices are not enough for Russia to offset
04:52the massive structural damage that has been done to the Russian civilian economy.
04:57There's also, let's not forget, what the Ukrainians politely call kinetic sanctions, namely their attacks on Russian ports and Russian
05:06refineries.
05:07And the estimates are that Russia's ability to export hydrocarbons has been reduced by 25 to 30 percent as a
05:15result of these actions.
05:16So Russia's ability to profit from the higher prices in this situation is seriously impaired.
05:21But the U.S. has also waived and wavered its own sanctions against Russia exactly because of the conflict in
05:29the Middle East driving up the price of crude oil.
05:33What do you make of the United States perhaps relaxing its own sanctions against Moscow?
05:38Well, I think the United States has maintained a very strong set of sanctions against Russia.
05:44Russia also in last October introduced sanctions against two major oil companies, Rosneft and Luke Oil.
05:51The temporary measures which have been taken largely relate to allowing some third countries, particularly India, to continue to export,
06:01to import some product which is on the sea.
06:04So, I mean, yes, we might prefer that this hadn't been done.
06:08But having said that, if you look at it in the bigger picture, it will not have a huge impact
06:13on the sort of the bottom line, which is Russia's difficulty to export and above all, a difficulty to export
06:21at attractive prices.
06:23So I think, you know, this will this will have a small effect.
06:28But the macro impact on the Russian economy is what people need to keep their eyes on.
06:32And that is very clearly undermining Russia's ability to continue financing this war.
06:37What do you expect to happen with the oil price cap, which many understand to be revised upwards?
06:43How will this have an impact on Russia?
06:45Well, I obviously, you know, with the price of oil now, you know, north of $100 on occasions, this is
06:52a dramatically different situation than that which we faced, say, just after Christmas,
06:57where people were talking really about price of oil going down to maybe $30 a barrel.
07:03So we are in a new world just at the moment.
07:06I think we need to take a second look at the oil price cap.
07:09It's due for a revision in June under the previous understandings.
07:13And I think the one thing everyone has agreed on is that this should not we should not increase the
07:19price cap to a point where it becomes unjury generous towards Russia.
07:23So I think the objective is to keep it in or around the boundaries of, you know, where it is
07:29now to what was previously the maximum of 60.
07:31The precise mechanism for doing this will be discussed with the G7.
07:35But I don't think anyone wants to see the price cap adjusted in a way that reflects the temporary spike
07:41in oil prices.
07:43The 20th package of sanctions against Russia by the EU also included a currency component targeting Russian stable coins, crypto
07:52assets, as well as what is being touted as the Russian, the digital ruble.
07:57Why did the EU take this route?
07:59Well, because we are discovering that with our financial sanctions, which have been very effective in decoupling the Russian banking
08:06system from the West, that there is increasing use of digital or crypto currencies to try and evade this.
08:15So we in the 19th package, we already introduced a major measures on digital and crypto, particularly in Kyrgyzstan, which
08:25we discovered was being used as a hub for evasion of our financial sanctions.
08:31And that's why in the 20th, we've reinforced that.
08:33And we will continue to work in that area.
08:36This is a new area of work.
08:38Like all sanctions work, it's a constant updating and repairing of the sanctions as you see new trends emerging.
08:46And very clearly, the greater use of crypto and digital is now a feature of Russian circumvention.
08:52How is the EU cracking down on these different forms of currencies because the United States is employing its own
08:58methods targeting Iranian crypto, which some experts have dubbed as quite invasive?
09:04How is the EU doing this?
09:05Well, we're doing it the same way.
09:06I mean, we in the 19th package, we we we sanctioned a major Russian crypto network, the A7A5, which is
09:14not just it's a currency, but it's also a network.
09:18And we are continuing to identify those crypto activities which are facilitating circumvention.
09:26And so we basically cut off their ability to interact with European banks, because at some point,
09:33no matter what you do in the digital space or the crypto space, you have to interact with the fiat
09:38currency.
09:39You have to change it into some into into a currency where you can actually buy something in the real
09:43world.
09:43And that's where we it's that intersection that we target.
09:47OK. And my colleagues here at Euronews have also been reporting that there is a certain willingness among EU member
09:53states now that Hungary has dropped its veto to sanction the Russian patriarch, Kirill.
09:59This is the head of Russia's Orthodox Church.
10:02Why is he important to target?
10:05Well, I don't want to get into, you know, what might be in a future package.
10:08What I will say is that the change of government in Hungary has clearly led to a change of policy.
10:14And we will now see how that interacts.
10:18In the past, Hungary has vetoed with its its its vote a number of proposals for the sanctioning of entities
10:25or individuals.
10:26We will test how much that has changed.
10:29And so names which have appeared previously, such as that which you have mentioned, might well figure again.
10:35But I'm really not in a position at this point to to go into details.
10:39So you can't answer whether you're hopeful or not that the patriarch will be targeted?
10:43I certainly can't talk about individuals at this point.
10:46We will wait and see what's in the package.
10:48And can you give us a taste of what will be included in the 21st package of sanctions?
10:51Well, I mean, I think it will be very much, I would say, more of the same.
10:57It's going to deal with the energy issue.
10:59It's going to certainly include more listings of vessels.
11:03We're going to take more action against refineries and ports, probably.
11:08We are going to take some more trade sanctions.
11:10We will continue in the financial area.
11:12I mean, I suppose the point, Angie, that the really bottom line here is that what we have in place
11:18is a massive range of sanctions against Russia,
11:20which are having a huge impact.
11:22So every successive package is about tightening the screw.
11:25It's about closing the loopholes, putting additional pressure where we see there's been a temptation to sort of move into
11:33another area to try and avoid the existing sanctions.
11:36And that's what we'll be doing over the next, you know, for as long as sanctions exist.
11:40So no, none of these packages will contain, I would say, you know, big silver bullets where we say, ah,
11:46now we found the way to make sanctions even more effective.
11:49It's just constant care and diligence, improving and refining.
11:54And that's what will be in the next package.
11:56And just going back to the 20th package of sanctions, for the first time, the EU triggered the anti-circumvention
12:01tool against Kyrgyzstan.
12:04What country could be next?
12:06What's in your line of sight?
12:07Well, by definition, we don't we don't announce this, you know, because we want to keep the element of surprise.
12:15And I don't know if we will use this technique again.
12:20The point of it is.
12:21Why not?
12:21Why wouldn't you use it again?
12:22Well, I'm saying we have to see whether it is justified.
12:25I mean, whether it is the most efficient way of achieving the objective, which is to stop these products getting
12:30to Russia.
12:30In the case of Kyrgyzstan, we noticed a remarkable increase in imports of two particular products into Kyrgyzstan, radio devices
12:43and CNC machines,
12:45and an equivalent, remarkable increase in the export of the same products to Russia.
12:50So for us, this was a very clear case of pure circumvention of our sanctions.
12:56We were not convinced by the measures which the Kyrgyz authorities said they would take, that this would stop it.
13:02So we basically banned the export to Kyrgyzstan of these products.
13:07And you were recently in Kyrgyzstan.
13:09What did you hear from authorities regarding how they were supposed to be?
13:11They reassured us that they would take the measures and to which my answer was, well, we will look at
13:17the trade figures and we will look at the numbers
13:19because we have not sanctioned, we have not used the anti-circumvention tool for a lot of the battlefield products
13:27which can be traded.
13:29If we see that there is a substantial fall in any export of battlefield products from Kyrgyzstan to Russia,
13:36and we feel confident that the measures taken by the Kyrgyz authorities to prevent this in the future are solid,
13:43then we may indeed decide to lift the use of the anti-circumvention tool.
13:50So this is the first time we've triggered it because we had a very clear example.
13:54If we see other examples, we will not hesitate to use it.
13:58But our preferred modus operandi is to get the countries themselves to take systemic steps to prevent any re-export
14:06of sanctioned products from their territory to Russia.
14:09Absolutely. Thank you so much for taking the time to talk to us, Mr. O'Sullivan.
14:13My pleasure. Thank you very much.
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