Mint Explainer: Why does the EU keep sanctioning Russia?

Mint

22-07-2025

On Friday the European Union imposed its 18th package of sanctions against Russia for its February 2022 invasion of Ukraine. This round of sanctions may affect India more than previous ones.
But do sanctions even work? What's the thinking behind them, and how have they affected Russia?
What are the latest EU sanctions against Russia?
The latest EU and UK sanctions against Russia are their most stringent yet. The aim is to show Western solidarity against Russia for its invasion of Ukraine on 24 February, 2022.
Key measures in the latest package fall under eight categories: energy, finances, trade, anti-circumvention, military capabilities and supply chains, protecting EU member-states from arbitration, Russian accountability, and against Russian ally Belarus.
Within these categories, the list of measures is fairly exhaustive. Key measures include:
Isn't Russia already under Western sanctions? What's the point of a new package?
Indeed it is – since 2022 in fact, when the Group of Seven (G7) countries — Canada, France, Germany, Italy, Japan, the UK and US — announce the first punitive package after Russia invaded Ukraine. Australia joined in, too. The highlights were a price cap of $60 per barrel of Russian oil, and excluding Russia from systems of international bank transfers such as SWIFT.
The goal of the new package to tighten the original sanctions, as indeed they have been incrementally. This is because Russia has been able to counter the G7 sanctions by selling oil cheaply to China and India — massive, growing economies that thirsty for oil.
Surely these are easy to plug?
You would think. In fact, no one's blameless in this game of geopolitics. Together, China and India represent a massive market for G7 and EU goods. A shrinking world helps no one.
Secondly, the G7 and EU also opportunistically skirted the sanctions by buying refined petroleum products from India. According to the Global Trade Research Initiative, an Indian think-tank, India exported $19.2 billion worth of petroleum products to the EU in FY24, but this slid to $15 billion in 2024-25.
Another sanctions-buster was the shadow fleet of around 1,000-1,400 tankers that Russia used to move its oil around, camouflaging its ownership and registration details. The latest sanctions seek to address both these gaps — re-export of refined petroleum products and shadow fleets.
How do these gaps arise? Aren't sanctions meant to be water-tight?
You wish. Data from the S&P Global Commodities at Sea and Maritime Intelligence Risk Suite shows more than 39% of Russia's 3.36 million barrels per day of seaborne crude in June was loaded by tankers 'flagged, owned or operated" by companies based in the G7, the EU, Australia, Switzerland or Norway, or insured by 'Western protection and indemnity clubs".
This was the highest monthly reading since November 2023 and well above 19% in May, though not too far from 36.9% in April. Greek shippers were particularly brazen. Some analysts said fears of breaching sanctions were easing because Western governments mainly targeted shadow fleet operators rather than mainstream shipping companies. Note that the ban on third-country exports of refined products made from Russian oil has five powerful exceptions: Canada, Norway, Switzerland, the UK, and the US.
So war is good for business?
That's a sad and old truism of economics. To buttress that point, there are other gaps, too. The American think-tank Atlantic Council said most Russian banks maintain access to SWIFT, which allows them to conduct international transactions and settle cross-border payments. The think tank calculated that Russia imported over $900 million worth of battlefield and dual-use technology per month in the first half of 2023.
How do the sanctions affect India?
The current package will hit India harder than the previous rounds, analysts said. First, it has strictures against EU imports of petroleum products made from Russian oil and refined by third countries such as India.
'India's $5 billion exports of petroleum products to the EU are at risk. Although India continues to engage in legitimate trade with Russia, the political optics of such transactions is shifting in Western capitals. As energy ties deepen, India will have to walk a fine line between economic pragmatism and geopolitical pressure," said GTRI founder Ajay Srivastava.
Second, the EU has targeted Indian firm Nayara Energy Ltd, whose ownership is split between Russian energy giant Rosneft and SPV Kesani Enterprises Co Ltd, an investment consortium.
According to Reuters, Russian energy giant Rosneft has a 49.13% stake in Nayara Energy's 400,000-barrels-per-day refinery at Vadinar, Gujarat. It owns nearly 7,000 fuel outlets across India and is developing an integrated petrochemicals plant next to its refinery, as Mint reported earlier.
The sanctions are set to complicate Rosneft's plans to sell its stake in Nayara. According to Bloomberg, Rosneft held talks with Reliance Industries Ltd for a possible stake sale. The Russian giant has been unable to repatriate earnings from Nayara because of previous sanctions.
What about India' oil imports?
India depends on imports for around 85% of its oil requirement. Since the first round of sanctions, its purchases of Russian crude have jumped from 1% of its total oil imports to 35%.
The even-lower price of $47 for Russian crude will help Indian industry. In case Russian supplies are hit, Indian Oil Corp will "go back to the same template [of supplies] as was used pre-Ukraine crisis when Russian supplies to India were below 2%," chairman A.S. Sahney said.
Oil minister Hardeep Singh Puri aso said he wasn't worried. "India has diversified the sources of supply and we have gone, I think, from about 27 countries that we used to buy from to about 40 countries now," he said.
India's oil imports from Russia rose marginally in the first half of the year, with private refiners Reliance Industries Ltd and Nayara Energy accounting for about half of the overall purchases from Moscow.
What has India said about all this?
As India is the world's fastest-growing major economy, energy security is a big part of its economic and foreign policy objectives. The latest round of EU sanctions hasn't pleased New Delhi at all.
"India does not subscribe to any unilateral sanction measures. We are a responsible actor and remain fully committed to our legal obligations," external affairs ministry spokesperson Randhir Jaiswal said. "The government of India considers the provision of energy security a responsibility of paramount importance to meet the basic needs of its citizens. We would stress that there should be no double standards, especially when it comes to energy trade."
Are the sanctions against Russia working?
This isn't easy to estimate. According to the Centre for Research on Energy and Clean Air (CREA), an independent think-tank with Finnish founders, Russia's total global fossil fuel earnings in the third year of the invasion reached €242 billion and have totalled €847 billion since the start of the invasion. China, India and Turkey are the biggest buyers of Russian oil.
So Russian workarounds are certainly working; hence the tighter sanctions. But in May, Russia's monthly fossil fuel export revenues dropped 3% month-on-month to €565 million per day — the lowest since the invasion — according to CREA.
The EU has been the largest buyer of Russian liquefied natural gas (LNG) since the first sanctions until May 2025. It imports sanctioned goods through Georgia, Belarus and Kazakhstan, according to researchers at King's College London. Then there's always China, which supplies high-tech products.
According to the IMF, Russia's GDP per capita has declined to $14,260 from nearly $16,000 in 2013. At the same time, there are contradictory reports about how stores in Russia are full of luxury goods smuggled in from neighbouring countries.
Clearly, the EU and other western powers are in it for the long haul. US President Donald Trump's policy flip-flops over Ukraine (he now supports the besieged nation) means Russia has been able to bomb the country at will. This time around, too, the US opposed an EU push for an even lower price cap of $45 on Russian oil.
So, what's the bottom line?
Remember, the 2022 sanctions built on measures first introduced in 2014 in response to Russia's annexation of Crimea and other neighbouring areas. So, as long as there is no peace between Russia and Ukraine, the sanctions regime will continue, affecting Indian and other countries in the process. Trump has now given Russia 50 days to agree to a peace deal. What if it doesn't? What's the plan? We don't know.