<\/p>\n
Western sanctions are having a \u201csignificant impact\u201d on the Russian economy, the EU\u2019s sanctions envoy has said, ahead of the fourth anniversary of Moscow\u2019s full-scale invasion of Ukraine<\/a>.<\/p>\n David O\u2019Sullivan, a veteran Irish official, said sanctions were \u201cnot a silver bullet\u201d and would always face circumvention, but insisted that after four years he was confident they were having an effect.<\/p>\n \u201cI am fairly bullish. I think that the sanctions have really had a significant impact on the Russian economy,\u201d he told the Guardian in a rare interview.<\/p>\n \u201cWe 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.\u201d<\/p>\n O\u2019Sullivan was speaking after weeks of intense Russian attacks<\/a> on Ukraine\u2019s energy infrastructure as the country endures a bitterly cold winter, with temperatures in Kyiv plunging to -20C this week.<\/p>\n 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.<\/p>\n But Vladimir Putin\u2019s 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%.<\/p>\n O\u2019Sullivan, who has more than four decades\u2019 experience in the EU institutions, was appointed EU special envoy for sanctions<\/a> in December 2022 with a remit to counter their evasion and circumvention.<\/p>\n 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.<\/p>\n The sanctions envoy said he was \u201cvery slow to accuse countries\u201d of not complying with the EU\u2019s wishes, pointing out that \u201cno [non-EU] country in the world is under any obligation to respect our sanctions\u201d.<\/p>\n 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.<\/p>\n O\u2019Sullivan said the bloc had had some success in \u201cprevent[ing] the direct re-export of critical products for weapons\u201d through central Asia, the Caucusus, Turkey, Serbia, the UAE and \u201cto a smaller extent\u201d via Malaysia. Most circumvention was down to \u201ceconomic operators, seeing economic opportunity and making money\u201d rather than orchestrated by governments, he said.<\/p>\n But China, with its \u201cno-limits\u201d friendship with Moscow<\/a>, was an exception. \u201cChina is clearly sort of backfilling and providing support\u201d to Russia, although not in the form of direct military equipment supplies, he said.<\/p>\n Several EU leaders had raised this concern with Beijing, he said. \u201cThe answer is always the same: \u2018Nothing to see here. We don\u2019t know what you\u2019re talking about. We don\u2019t see any problem.\u2019\u201d<\/p>\n O\u2019Sullivan said the EU had successfully taken action to counter the Russian shadow fleet<\/a> \u2013 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.<\/p>\n \u201cWe\u2019ve 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,\u201d he said.<\/p>\n Russia\u2019s federal budget revenues from oil and gas, the lifeblood of the economy, halved in January<\/a> to the lowest level since July 2020, according to the finance ministry in Moscow.<\/p>\n But the EU has been criticised by the US for not going far enough.<\/p>\n At the weekend, the US treasury secretary, Scott Bessent, accused the EU of \u201cfinancing the war against themselves\u201d 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\u2019s first or second largest purchaser of Russian crude<\/a>, heavily discounted due to the impact of western sanctions.<\/p>\n A few days later, the US claimed that India would stop buying Russian oil<\/a> in exchange for a reduction in US tariffs on its goods.<\/p>\n O\u2019Sullivan defended the EU-India trade deal, pointing to developments that preceded its signing, namely EU sanctions imposed on a large Indian refinery<\/a>, an EU ban on imports of refined products made from Russian crude, <\/strong>including those from India, and the decision of the owner of 14 Indian ports, the Adani Group, to block access to sanctioned tankers.<\/p>\n India, O\u2019Sullivan said, was \u201ca hugely important country, and I think we gain much more by engaging with it, even if we don\u2019t always agree<\/a> with every Indian foreign policy position\u201d.<\/p>\n