France and the Netherlands are backing European Union sanctions against any financial institution that supports the Russian military, Reuters reported on May 14.
The EU has already adopted 13 sanction packages in response to Russia's full-scale invasion of Ukraine, aiming to undermine Moscow's economic output and the ability to sustain the war.
EU leaders are expected to introduce a 14th round of sanctions in June.
According to a proposal read by Reuters, a new penalty, put forth by France and the Netherlands, would prohibit anyone in the EU from doing business with any financial institution that helps the Russian military purchase dual-use goods and technologies.
The restriction would apply to any financial institution worldwide, not just in Europe.
"The Netherlands and France propose to introduce a legal basis ... providing for a transaction ban with financial institutions in Russia or other third countries when the Council has determined these entities to be involved in transactions that significantly support Russia’s military by facilitating exports towards Russia of essential goods for the war effort, such as dual-use goods and technologies," the proposal reads.
If the EU adopts the proposal, the ban could be an effective tool against sanctions evasion. It could prevent financial institutions in the Middle East and Turkey from entering deals to provide Russia with sanctioned dual-use items, as they would risk losing access to European markets.
The ban could even pressure China to scale back its deals on dual-use goods with Russia.
Items classified as "dual-use" are considered to have both civilian and military applications, and have been used to skirt sanctions on weapons sales to Russia. Dual-use goods sold to Moscow include semi-conductors, which are vital for manufacturing communication systems and electronic warfare equipment.
The EU's current sanctions regime already bans the sale of certain dual-use technologies to Russia.
EU leaders are expected to discuss the Franco-Dutch proposal on May 15.
Robin Brooks
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