Western sanctions are having a “significant impact” on the Russian economy, the EU’s sanctions envoy has said, ahead of the fourth anniversary of Moscow’s full-scale invasion of Ukraine.
David O’Sullivan, a veteran Irish official, said sanctions were “not a silver bullet” and would always face circumvention, but insisted that after four years he was confident they were having an effect.
“I am fairly bullish. I think that the sanctions have really had a significant impact on the Russian economy,” he told the Guardian in a rare interview.
“We may be, in the course of 2026, coming to a point where the whole thing becomes unsustainable, because so much of the Russian economy has been distorted so much by the building up of the war economy at the expense of the civil economy. I think defying the laws of economic gravity can only go on for so long.”
O’Sullivan was speaking after weeks of intense Russian attacks on Ukraine’s energy infrastructure as the country endures a bitterly cold winter, with temperatures in Kyiv plunging to -20C this week.
Ukrainian counterparts, he said, had told him that Russia had been able to launch twice as many drones and missiles last month compared with January 2025.
But Vladimir Putin’s war machine has not come without a cost to the wider economy, which is thought to be under its greatest strain since the early days of the war. Oil revenues are plummeting, inflation is running at about 6% and interest rates at 16%.
O’Sullivan, who has more than four decades’ experience in the EU institutions, was appointed EU special envoy for sanctions in December 2022 with a remit to counter their evasion and circumvention.
The EU has imposed an unprecedented 19 rounds of sanctions on Russia since the full-scale invasion of Ukraine in 2022, targeting more than 2,700 individuals and entities, and halting trade across vast economic areas including energy, aviation, IT, luxury and consumer goods, diamonds and gold.
The sanctions envoy said he was “very slow to accuse countries” of not complying with the EU’s wishes, pointing out that “no [non-EU] country in the world is under any obligation to respect our sanctions”.
The EU has been on a mission to persuade other countries not to allow the resale of European goods to Russia, especially components that can be used or repurposed for military use.
O’Sullivan said the bloc had had some success in “prevent[ing] the direct re-export of critical products for weapons” through central Asia, the Caucusus, Turkey, Serbia, the UAE and “to a smaller extent” via Malaysia. Most circumvention was down to “economic operators, seeing economic opportunity and making money” rather than orchestrated by governments, he said.
But China, with its “no-limits” friendship with Moscow, was an exception. “China is clearly sort of backfilling and providing support” to Russia, although not in the form of direct military equipment supplies, he said.
Several EU leaders had raised this concern with Beijing, he said. “The answer is always the same: ‘Nothing to see here. We don’t know what you’re talking about. We don’t see any problem.’”
O’Sullivan said the EU had successfully taken action to counter the Russian shadow fleet – ageing tankers under obscure ownership transporting Russian oil to export markets in China and India. As of December, nearly 600 vessels were under EU sanctions.
“We’ve been very successful in getting flag states to remove their flags from sanctioned vessels. I think we have tightened the screws on that particular form of circumvention, very considerably. I think the Russians are struggling to keep the oil flowing,” he said.
Russia’s federal budget revenues from oil and gas, the lifeblood of the economy, halved in January to the lowest level since July 2020, according to the finance ministry in Moscow.
But the EU has been criticised by the US for not going far enough.
At the weekend, the US treasury secretary, Scott Bessent, accused the EU of “financing the war against themselves” after it signed a trade deal with India without including more sanctions on buying Russian oil. Since the full-scale invasion, India has been either the world’s first or second largest purchaser of Russian crude, heavily discounted due to the impact of western sanctions.
A few days later, the US claimed that India would stop buying Russian oil in exchange for a reduction in US tariffs on its goods.
O’Sullivan defended the EU-India trade deal, pointing to developments that preceded its signing, namely EU sanctions imposed on a large Indian refinery, an EU ban on imports of refined products made from Russian crude, including those from India, and the decision of the owner of 14 Indian ports, the Adani Group, to block access to sanctioned tankers.
India, O’Sullivan said, was “a hugely important country, and I think we gain much more by engaging with it, even if we don’t always agree with every Indian foreign policy position”.
His team is especially focused on 300 products on the “common high-priority list”, critical products that do not count as dual-use items requiring export licences to be sold. Such products, including memory cards, optical readers and circuit boards made by European companies, have been found in Russian drones, missiles and helicopters.
O’Sullivan said there was much greater awareness among EU member states of the potential for western technology to be sold to foreign distributors, who then supplied the goods to Russia. “I don’t think we’ve completely eliminated the problem, but I think we have reduced it,” he said.
“If you go to Kyiv, to the Forensic Science Institute, you can see, after they are deconstructed, where the components come from, and unfortunately they come mainly from western countries, whether the US, the EU, Switzerland or the UK. It’s embarrassing for us all.”
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