Abstract

This paper explores the evasion of Western sanctions by Russia after its 2022 invasion of Ukraine. The central questions to the topic are how effectively Western sanctions have hindered Russia’s war effort, what evasion tactics have emerged, and why it is significant to Western efforts to resolve the conflict.  The paper evaluates two main sanction categories: financial restrictions and energy measures. It finds that, despite initial economic disruption through bank isolation, asset freezes, and reduced energy revenues, Russia has adapted. Evasion tactics include rerouting trade through third-party countries, employing a “shadow fleet” of oil tankers, and creating alternative financial channels. Case studies of China, India, Türkiye, and the United Arab Emirates show how these partners have sustained Russia’s resilience. These gaps weaken Western leverage in shaping eventual peace negotiations. To restore credibility, the paper recommends expanding secondary sanctions, closing loopholes in energy trade, reinforcing coordination between Western allies, and adopting a more flexible sanctions framework. Strengthening enforcement is essential if sanctions are to remain a viable tool for influencing Russia’s behavior and supporting conflict resolution.

I - Introduction

Economic sanctions have long been accepted tools of coercive statecraft by powerful nations and coalitions, with their use seeing an increase in the post-Cold War era (Yotov et al., 2021). They are defined by the Council on Foreign Relations (CFR) as the “withdrawal of customary trade and financial relations” with the goal of changing the behavior of an actor without having to resort to direct military confrontation (Masters, 2024). Historically, they have been used against a broad range of actors — from Iraq in the 1990s, to Iran and the North Korea (DPRK) in the 2000s and 2010s — as a means of deterring nuclear proliferation, punishing territorial aggression, or preventing the state support of terrorist groups, among other causes, with mixed degrees of success (Metych, 2023).

Russia has posed a crucial test of this tool. As a major world economy, with a pre-war gross domestic product of roughly $2 trillion and significant global trade integration, Russia was an unprecedented target of sanctions (O'Neill, 2025; Statista Research Department, 2025). Western sanctions against Moscow initially began in 2014 after Russia’s annexation of Crimea, and were relatively narrow, focusing on preventing the Russian energy and banking sectors from receiving long term financing from the West (Harrell, 2025). Thus, they only had a minor impact on the broader Russian economy, and were not enough to change the Putin’s policy towards Crimea (Chatzky, 2019).

However, on February 24th, 2022, Russia launched a full-scale invasion of Ukraine after months of buildup (Center for Preventative Action, 2025). This action immediately attracted international condemnation; 141 out of 193 United Nations (UN) member states quickly backed a resolution affirming Ukraine’s “sovereignty, independence, and territorial integrity” (UN News, 2022). Moreover, multiple sources held that the invasion fundamentally violated international law including Cambridge University, the Council on Foreign Relations (CFR), and UN Secretary-General Antonio Guterres, with Guterres adding that it was a “violation…of the Charter of the United Nations” (Haque, 2025; UNSDG, 2022; Bellinger III, 2022). The brutality of the invasion itself was only exacerbated by specific cases in which Russian forces committed war crimes, including the torture of prisoners of war (POWs) and the killing of civilians, as reported by Amnesty International (Amnesty International USA, 2025; Amnesty International USA, 2024).

In response to Russia’s invasion, The U.S., European Union (EU), United Kingdom (UK), and other allied nations implemented an unprecedented and coordinated sanctions campaign, attempting to isolate Russia from the global financial system and hurting its ability to wage war (CFR Editors, 2025). These measures have included cutting major banks off from global networks, freezing hundreds of billions of dollars in central bank reserves, and taking steps to prevent Russia from making a profit on its energy exports (Shubbar et al., 2024).

However, a major way in which Russia weathered the sanctions is the systematic evasion of restrictions. For example, when Europe and the U.S. restricted Russia’s oil exports, Russia rerouted oil shipments to new buyers in China, India, and other third-party nations. A “shadow fleet” of oil tankers, often exploiting or breaking regulations, began transporting Russian crude oil outside the standard international insurance and tracking systems (Childs, 2025). Moreover, many foreign banks in Third World countries were more lenient about handling Russian transactions than their American and European counterparts, allowing sanctioned Russian institutions to move capital while avoiding Western jurisdictions. (“Russia outsmarts Western sanctions,” 2024).

These factors have prevented Western sanctions from decisively hindering Russia’s war effort. These sanctions have undeniably forced Russia to pay a price, which is clear in higher trade costs, liquidity shortages, and long-term isolation from Western capital (CFR Editors, 2025). Yet they have not caused a collapse of the Russian economy, and according to analysis from the Journal of Advanced Military Studies (JAMS), sanctions “have not resulted in a change of behavior vis-à-vis ending Russian aggression in Ukraine” (Lawniczak 2023).

A recent study from the Center on Strategic and International Studies (CSIS) also concluded that under current conditions Russia “will be able to continue its war in Ukraine, at least at the current level of intensity, over the next three years”, and that Moscow is unlikely to make major concessions at the negotiating table based purely on sanctions pressure under the current situation (Snegovaya et al., 2025). Indeed, Russia’s President Vladimir Putin introduced a set of “maximalist” demands for peace negotiations in June 2024, involving extensive land gains for Russia, a ban on Ukraine’s North Atlantic Treaty Organization (NATO) membership, and rejecting the presence of European peacekeepers within Ukraine after a peace deal is reached (Zadorozhnyy 2025). Putin continued to uphold these demands at a more recent summit hosted in Alaska, which, according to the BBC, “failed to yield any tangible progress towards peace in Ukraine” (Gozzi 2024). Russia has been able to unilaterally continue its military actions in Ukraine, while maintaining a relatively strong negotiating position with the West.

This outcome directly undermines one of the West’s core assumptions, that unprecedented sanctions would translate into decisive leverage to end the war (Luck, 2025).

Western leaders themselves have acknowledged the challenge. For example, in mid-2025 the European Commission’s president Ursula von der Leyen warned that the EU was prepared to impose further sanctions on Russia’s energy and financial sectors “to draw the country to the negotiating table” (CFR Editors, 2025). Moreover, in reference to U.S. President Trump’s recent efforts to secure a peace deal, analysis from the CFR highlighted a “need to impose greater costs on Russia” (Kupchan, 2025).

Overall, while Western sanctions have been a historically significant effort for geopolitical leverage, the evidence points to a need for stronger enforcement and coordination. This paper seeks to analyze that challenge through three lenses. First, it evaluates how sanctions on Russia’s financial and energy sectors have functioned in practice, identifying key loopholes that have allowed evasion. Second, it examines the role of third-party states—particularly China, India, Türkiye, and the UAE—in sustaining Russia’s economic resilience. Finally, drawing on coercive bargaining theory, the paper explores how sanctions operate as tools of diplomatic leverage and outlines policy recommendations for the U.S. and EU to enhance their enforcement and negotiation frameworks. Through this analysis, the paper aims to bridge empirical evidence and a theoretical understanding to assess how sanctions can serve as an effective instrument of coercive statecraft amid the Russo-Ukrainian War.

II - Overview of the Western Sanctions on Russia

Financial and Banking Sanctions

The first priority of the West while sanctioning Russia was to sever their ties with global finance. Within days of the invasion, the U.S., the EU, the UK, and their allies prohibited dealings with a wide range of Russian financial institutions and banned the trade of  Russian sovereign bonds, with restrictions on new loans or investments in Russian banks. By 2022, analysis from Bruegel estimated that the sanctions covered 80 percent of Russian banking sector assets (Demertzis et al., 2022). This reduced Russia’s ability to transact in dollars or euros, hindering the ability to borrow from Western investors.

Another key measure was the exclusion of certain Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), a Belgian-based cooperative that operates the secure messaging network through which the vast majority of financial institutions worldwide send standardized payment instructions (Reuters Staff 2022b; Bergin, 2022). Exclusion meant cutting banks off from most global finance, as it was significantly harder for Russian banks to interact with international ones. 

The 2022 ban initially hit seven Russian institutions, including structurally significant banks like VTB, Bank Otkritie, Novikombank, while retaining exceptions for those handling EU energy payments, notably Sberbank and Gazprombank (“SWIFT and the Ukraine Conflict,” 2022). Gazprombank itself would be sanctioned in 2024 after Europe decreased its energy consumption of Russian natural gas (U.S. Department of the Treasury, 2024). Russia’s exclusion from SWIFT left it at a functional disadvantage in global finance (Balzer, 2022).

On February 28, 2022, the U.S. Treasury, in coordination with European allies, froze the foreign currency reserves of the Central Bank of Russia (CBR) (U.S. Department of the Treasury, 2022). This measure immobilized an estimated $300 billion held in Western institutions, out of Russia’s $630 billion total reserves (Holland et al., 2022). Such a measure had never before been applied to a G20 economy’s central bank, marking a historic escalation in financial statecraft (Shagina 2022). U.S. Treasury Secretary Janet Yellen emphasized the move’s significance: “The unprecedented action we are taking today will significantly limit Russia’s ability to use assets to finance its destabilizing activities” (U.S. Department of the Treasury 2022).

It is important to recognize the legal and historical implications of the CBR asset freeze. As noted by scholars Lucia Quaglia and Amy Verdun in the West European Politics journal, it shattered the long-standing assumption that central bank reserves were politically untouchable (Quaglia & Verdun, 2023). Moreover, there have been calls within the West to confiscate the funds outright to finance the reconstruction of Ukraine — estimated to cost upwards of $500 billion according to a recent report from the World Bank — likely violating international geopolitical norms and setting a dangerous precedent for the weaponization of finance. (Ludwikowski et al., 2023; Fourth Rapid Damage and Needs Assessment, 2024). However, certain funds in institutions like Belgium’s Euroclear are interest-generating but non-renumerated. This means the interest is not owed to Russia, and is therefore more accessible to allocation for reconstruction of Ukraine (Veron, 2024). The leverage from these funds could be systematically used in sanctions policy to increase Western bargaining power (Conner & Wessel, 2025).

Finally, in addition to institutional bans, Western countries placed targeted sanctions on specific Russian individuals. The EU reported mid-2024 that its restrictive measures “continue to apply to over 2100 individuals and entities” linked to the Russian war effort (Council of the EU 2024). Similar lists are kept by the U.S. and other allies that include top government officials, oligarchs, and tycoons, such as Norilsk Nickel owner and close Putin ally Vladimir Potanin (Politi & Season, 2022). Listed individuals had their European and American assets frozen and were banned from travelling to the sanctioning nations.

These financial sanctions collectively caused a significant impact to Russia’s banking system. Many foreign investors divested their holdings, and Russian banks lost access to important revenue streams and financial services (Demertzis et al., 2022). Dozens of smaller Russian banks also faced insolvency or had to be rescued using state funds due to liquidity shortages from sanctions (Stockholm Institute of Transition Economics, 2025). The ruble’s value also initially plummeted amidst a bank run (Reuters Staff 2022a). 

However, the Central Bank of Russia ultimately intervened to stabilize the sector, deploying capital controls and introducing emergency liquidity. By mid-2022, Russia had ring-fenced and recapitalized its banking system to prevent immediate collapse (Gorodnichenko et al., 2024). Still, Western measures had seemingly achieved a core objective: Russia’s banking sector was largely isolated from the West, roughly $300 billion in Russian bank foreign assets were immobilized, and Russian banks’ ability to borrow or transact in the dollar and euro was severely curtailed.

Energy Sector Sanctions

Energy has played an important role in the Russian economy and throughout the 2010s represented more than half of the federal budget, making it a prime target for sanctioning. However, sanctions in this domain have been difficult, especially given Europe's dependence on Russian fuel (Fenton & Kolyandr, 2024; Yermakov, 2024). While the U.S. and EU aimed to pressure Russia by limiting one of its main income sources, they also wanted to avoid causing significant instability in global markets or jeopardizing their own energy security.

The U.S. initially led efforts with a ban on Russian oil imports. On March 8, 2022, it issued an executive order banning imports of Russian crude oil, refined fuels, and liquefied natural gas (LNG) (The White House Briefing Room, 2022). Given that Russian supplies amounted to only around 8 percent of American oil imports at the time, the ban was mostly symbolic, but set an important precedent (Hersher & Murphy, 2022). The UK soon followed by committing to phase out all Russian oil imports by the end of 2022 (James & Maclellan, 2022). 

The more important step regarding oil sanctions was Europe, as prior to the war, the EU imported about one-third of its oil and a significant portion of its LNG from Russia (Gross & Stelzenmüller, 2024). After an intense internal debate within the union, with strong opposition from member states such as Hungary, the EU agreed on an oil embargo in May 2022 as part of its sixth sanctions package. This embargo, implemented in December 2022, banned sea-based imports of Russian crude oil into Europe, with limited exceptions for pipelines supplying certain landlocked countries (European Commission, 2022). In February 2023, the EU expanded this to a complete ban on Russian refined petroleum products (Reuters, 2023). Together, these measures aimed to curb Europe’s approximately $100 billion annual pre-war payments for Russian petroleum. By EU estimates, around 90% of pre-war Russian oil imports to Europe were covered by the embargo, with only minor exemptions for a few member states (European Council, 2025).

 Notably, the G7 — a geopolitical bloc consisting of the U.S., Canada, Germany, Italy, France, Japan, the UK, and the broader EU — also implemented a “price cap” on Russian oil exports in December 2022, allowing Western shippers and insurers to continue handling Russian oil only if it was sold below $60 per barrel. The price cap was designed to prevent a global shortage of oil while reducing the revenue the Russian government earned from its export (Cahill, 2023). Countries like China and India could still potentially purchase Russian oil, but the cap, which is theoretically enforced by the West's dominance in the shipping insurance sector, was intended to force Russia to sell it at a large discount. However, while Russia was indeed selling its primary crude, Urals oil, at around $55-60 by mid-2023, global oil prices often fluctuated. When combined with Russian sanctions evasion measures, it occasionally pushed prices above the cap (Payne, 2023). These factors will be explored further in Section III.

Meanwhile, sanctioning Russian natural gas was far more difficult due to Europe’s reliance on the energy source (CFR Editors, 2024). Indeed, Western sanctions initially exempted gas transactions to avoid a European energy shortage. Due to the absence of immediate gas sanctions, Russia itself took the initiative to use gas as geopolitical leverage. In the summer of 2022, Gazprom sharply reduced and then halted flows through the Nord Stream 1 pipeline to Germany under the dubious explanation of “maintenance”, causing an increase in European benchmark gas prices by approximately 30 percent (Chestney, 2022). The following year, unexplained explosions destroyed the Nord Stream pipelines entirely (Lee, 2023). Finally, Russia also cut off gas to several EU countries that refused a demand to pay in rubles, such as Poland and Bulgaria (Hernandez et al., 2022). Therefore, while gas was not formally sanctioned by Europe early on, the war effectively led to a de facto decoupling over time, in which the Russo-European oil trade decreased without formal legal intervention.

Moreover, Europe did move to gradually phase out Russian gas imports by finding alternative suppliers, setting gas storage mandates to stabilize supply, and developing policy for developing renewable energy at a faster rate (Thompson, 2025; Covatariu, 2025). By mid-2023, the EU reported that Russian pipeline gas comprised less than 10 percent of its supply, down from over 40 percent in 2021 (European Commission, 2025a). Moreover, the EU recently announced a comprehensive plan to completely end Russian gas imports by 2027, marking a likely end to natural gas as a tool of sanctions policy (European Commission, 2025b).

These energy sanctions illustrate both the ambition and the limitations of Western policy. While they sought to strike at the heart of Russia’s wartime financing, their complexity, exceptions, and uneven enforcement reveal the broader challenge this paper examines, namely the difficulty of translating large-scale economic coercion into decisive strategic outcomes.

Collectively, the sanctions imposed since 2022 represent one of the most significant examples of economic coercion ever used against a major world power. They fundamentally changed Russia’s integration within global financial markets and its energy relationship with Europe. Yet as the following sections will demonstrate, the efficacy of these measures, as well as their effectiveness as bargaining tools in future negotiations, ultimately depends on the West’s ability to address the strategies used by Russia to evade these restrictions.

III - Mechanisms of Russian Sanctions Evasion

Financial and Banking Evasion

In response to being cut off from Western finance, Russia has shifted its financial dealings toward lenient jurisdictions that did not join Western sanctions. In these locations, banks have been known to process payments under false labels or using shell companies, which has allowed billions of dollars to move undetected by U.S. and EU regulators (“Russia outsmarts Western sanctions,” 2024). A global sanctions advisory published in 2024 by the U.S. Department of the Treasury alleges that Russia is increasingly relying on third-country intermediaries to evade export controls and conduct trade payments, demonstrating how enforcement gaps have led to the rise of trade networks vital to Russia outside of the West’s reach (Office of Foreign Asset Control, 2024a).

Meanwhile, to compensate for the loss of SWIFT access, Russia activated alternative payment systems. The CBR expanded use of its System for Transfer of Financial Messages (SPFS), Russia’s domestic alternative to SWIFT, and utilized China’s Cross-Border Interbank Payment System (CIPS) for yuan transactions (Office of Foreign Asset Control, 2024b; Reuters Staff, 2023). Although these channels are far less effective than SWIFT’s globally integrated network, they have enabled limited cross-border messaging and settlements, especially in yuan. This has led tothe yuan rapidly growing as a medium to conduct trade. By the end of 2022, yuan invoicing increased to 20 percent of Russia’s imports, up from just 3 percent in the previous year, indicating a shift away from the dollar and euro (Rosario, 2023). This “yuanization” of trade has been a deliberate sanctions evasion strategy, reducing Russia’s dependence on Western currenciesand lessening the amount of trade that has to pass through sanctions-compliant institutions.

Similarly, sanctions targeting individuals have faced extensive evasion measures. Many sanctioned elites shifted wealth into opaque jurisdictions, such as the UAE or Türkiye, or transferred ownership to family members and associates, allowing assets to remain effectively under their control despite formal freezes. Offshore trusts and shell companies — legal structures often established in foreign jurisdictions — have been central to Russia’s sanctions evasion. A trust allows assets to be held by a third party on behalf of beneficiaries, while a shell company is a registered business entity with little or no real operations which can be used as a front for illicit operations. Both can conceal the identity of the true owner by layering control through multiple intermediaries and jurisdictions. This masking of ownership complicates enforcement and delays asset seizures, as tracing beneficial ownership requires navigating complex legal and financial networks (“Global Advisory on Russian Sanctions Evasion,” 2023). In practice, while Western authorities have frozen yachts, villas, and bank accounts, many of these assets remain operational and effectively under the control of their Russian owners (Chatham House, 2023).

Energy Sector Evasion

Russia’s measures to evade energy sanctions are undoubtedly its most effective. After the EU imposed its oil embargo and the G7 implemented its price cap, Russia began to redirect its oil exports to other destinations. Specifically, exports that once went to Europe were rerouted to Asia, with China and India quickly becoming the largest customers of Russian crude oil (Soldatkin & Astrakhova, 2023). 

To facilitate this, Russia has created a large “shadow fleet” of tankers to ship its oil outside of Western oversight. These ships often switch off their Automatic Identification System (AIS) transponders, which are intended to be used for vessel identification and general safety. By going off-grid, conducting unreported ship-to-ship (STS) transfers at sea, and changing names or flags, they obscure their cargo, origin, and destination, making it difficult for regulators and insurers to monitor and enforce sanctions compliance. (Childs, 2025). By 2024, an estimated 70 percent of Russian seaborne oil was being transported by this fleet, according to a report from the Kyiv School of Economics (KSE) Institute (Hilgenstock et al., 2024). This results in a semi-covert shipping network that allows Russia to deliver oil to its customers, while avoiding Western detection and enforcement measures.

Meanwhile, to undermine the $60 per barrel price cap imposed by the West, Russia and its customers have exploited loopholes in transport and insurance procedures. For example, one method involves inflating the shipping fees and insurance costs on paper, effectively reducing the “declared” price of oil itself to meet the cap, even if the true cost to the buyer is higher (Lerh & Xu, 2023). 

Another tactic involves shifting away from Western insurance, relying on alternate Asian or Russian state-run insurers, since Western firms are not authorized to provide coverage for voyages shipping oil above the price of the cap. These alternate insurers underwrite the cargo at market prices, allowing sales above $60 (Childs, 2025). Thus, while Russia’s Urals oil did often trade near the cap in mid-2023, global price rises and evasion strategies frequently pushed the effective price well above the cap (Payne, 2023). 

It should be noted that the global price of oil dropped well below the oil cap in mid-2025, even prompting calls from G7 leaders to lower the cap itself (Payne & Irish, 2025). However, this does not mean oil prices will stay below the $60 cap in the long term, meaning a future surge could potentially decrease Western leverage. Moreover, a decoupling of Russian shipping from Western shipping infrastructure, such as insurance, decreases Western influence and oversight regardless of oil prices, demonstrating a need to make a response to sanctions evasion separate from the economic situation in global oil markets.

A final evasion strategy for oil is the third-country laundering of Russian crude. In this evasion method, Russian-origin oil is exported to countries like India and Türkiye, where it is refined into fuels or mixed with other crudes, and then those products are re-exported worldwide as goods of the nation they are refined in (Bowie, 2023). 

This process effectively circumvents origin-specific bans. Notably, after Europe halted direct imports of Russian oil, it increased imports of diesel and other fuels from India, Türkiye, and China, countries that were buying significant amounts of Russian crude. Europe was “effectively buying products made from Russian feedstock,” as analysis from Reuters noted, which defeated the purpose of the EU sanctions (Bousso, 2025). In this way, blending and refining in third countries have provided a claim of plausible deniability that allows Russian energy to continue indirectly flowing into the West. Notably, the EU recently fought back against this strategy, confirming restrictions on refined petroleum products from third countries that go into effect in 2026 (Smith et al., 2025)

Russia’s natural gas exports have also created gaps in the West’s sanctions regime. Pipeline gas exemptions were a significant policy concession. The EU’s initial sanctions exempted piped natural gas, given Europe’s heavy dependence (European Parliamentary Research Service, 2025). Even as overall EU imports fell, nations such as Hungary, Czechia, and Slovakia maintained or even increased Russian gas intake via pipeline. These political considerations forced a slower reduction for pipeline gas, which Russia took advantage of by continuing deliveries to sympathetic or dependent EU member states (Levi et al., 2025).

Meanwhile, LNG (liquefied natural gas) was entirely unsanctioned, a significant omission that Russia exploited. Russian LNG shipments to Europe actually rose after 2022, with imports increasing by 12–18 percent in 2024 (Jaller-Makarewicz, 2025). This loophole meant that while pipeline gas was reduced Russia simply pivoted to selling more LNG on the open market, including to European buyers, generating revenue and undermining the spirit of the EU’s energy sanctions.

Western sanctions on Russia’s financial and energy sectors have caused significant adaptations, demonstrating both their impact and their shortcomings. Financially, Russia has used third-party banks, alternative payment infrastructures, and obfuscated ownership structures, which shows resilience but also means a shift to more unreliable infrastructure. In terms of energy, crude redirection to Asia via a shadow fleet measures to undermine the price cap, coupled with pipeline exemptions and an LNG loophole, reveal how partial sanctions design enables Russia to continue earning revenue. Collectively, they demonstrate the risk of sanctions becoming a primarily symbolic measure rather than a genuine tool to wield geopolitical leverage.

IV. Case Studies of Third-Party Countries

China

China has been one of Russia’s largest energy customers post-2022, and Chinese refiners and traders have taken advantage of Russian discounts. In mid-2025, China increased its imports even as demand from India fell slightly, which demonstrates China’s willingness to import Russian crude despite the G7 price cap (Liu, 2025). 

Similarly, Chinese state banks and the CIPS payment system offer a financial safety net. U.S. Treasury Secretary Yellen identified China as the biggest source of evasion in early 2024 (Fabrichnaya & Marrow, 2024). Indeed, some Chinese banks continued to handle ruble clearing and yuan settlements for Russian trade until dissuaded by U.S. secondary-sanctions threats. Under such pressure, Chinese banks have recently increased compliance checks, but the sheer volume of China’s trade has largely offset Western restrictions (Reuters, 2024). This underscores the difficulty of implementing sanctions against major economies that possess parallel financial infrastructures and political motives distinct from the West’s, a central challenge for policymakers designing more resilient sanctions frameworks.

Western responses have focused on financial infrastructure. The EU and G7 sanctioned two regional Chinese banks for the first time in July 2025 for facilitating Russian oil trades, and the U.S. has repeatedly warned that Chinese entities purchasing sanctioned Russian energy or technology could face penalties (Foy et al., 2025; Fabrichnaya & Marrow, 2024). Western officials have also publicly urged China to do more to limit Russia’s war effort, rather than enabling it. However, China has largely dismissed these requests, insisting that it is conducting “normal trade” with Russia (Tian, 2022). Overall, Chinese companies and refineries are  undermining the effectiveness of sanctions by purchasing Russian oil exports and by aiding Russian financial operations.

India

India, like China, has been a major customer of Russian petroleum. It increased purchases of Russian oil from 2022 to 2023, exploiting discounts. According to a 2025 report from the Centre for Research on Energy and Clean Air, India has provided around a fifth of Russia’s oil revenue since the beginning of the war (TOI Business Desk, 2025). Moreover, it served as a hub for refining Russian fuel. By 2023, India had become one of Europe’s top diesel suppliers, even as over one-third of India’s own crude supply came from Russia (Narayan & Verma, 2023).

Western governments have taken a gradual but escalating approach to India’s role in Russian energy trade. In May 2022, U.S. officials raised concerns with the Indian government about rising Russian crude purchases and warned of reputational and financial risks if Indian refiners facilitated large-scale sanctions evasion (Gardner, 2022). In 2025, the Trump administration moved more aggressively by threatening tariffs on Indian imports due to India’s willingness to purchase Russian oil, which it then partially implemented (Shalal & Ahmed, 2025). As mentioned in Section III, the EU followed in 2025 by closing a significant loophole, announcing a ban on refined petroleum products that originated from Russian crude even if processed in third countries such as India (Smith et al., 2025). 

These measures demonstrate how the West has attempted to take concrete actions against Indian-facilitated sanctions evasion, yet it highlights the geopolitical challenges of trying to forcefully change the behavior of a Western partner. India’s case highlights how even strategic allies can become pressure points within the sanctions regime, revealing the tension between diplomatic partnerships and economic enforcement. Strengthening multilateral cooperation with such nations will be crucial for the policy recommendations later outlined in this paper.

Türkiye

Türkiye has become an important transport hub of Russian energy exports. After the EU oil embargo in early 2022, Ankara nearly doubled its imports of discounted Russian crude. The Carnegie Endowment notes that this allowed Turkish refiners to “acquire Russian oil, refine it, and resell it,” which is a practice that has been considered sanctions evasion (Siccardi, 2024). At the same time, Turkish banks have been willing to support Russian finance.: Until late 2023, state-owned Ziraatbank and Vakifbank were still processing ruble and dollar payments for Russian oil imports (Reuters, 2024).

Western policymakers have pressured Türkiye to tighten enforcement. The U.S. Treasury has blacklisted some Türkiye-based firms for supplying dual-use goods to Russia; while not directly related to finance or energy, it is indicative of the relationship between Türkiye and the broader West (U.S. Department of the Treasury, 2023). In practice, enforcement has focused on shipping controls: the EU added dozens of tankers to its blacklist and ramped up inspections (Payne, 2025). Ankara itself insists it is neutral and cites its own export controls, but U.S. and EU officials have maintained their rhetoric, warning that the use of Turkish infrastructure to transport Russian oil fundamentally undermines the G7 price cap. Türkiye’s balancing of its Western commitments and economic pragmatism illustrates the structural limits of sanctions without consistent regional enforcement mechanisms, which is an area this paper’s recommendations later address through proposals for coordinated monitoring and secondary sanctions.

United Arab Emirates

Finally, the UAE has emerged as a major provider of financial services to Russia. Dubai and Abu Dhabi banks offered correspondent services and trade accounts to Russian firms, enabling payments for oil and other exports. For example, in 2024 certain Emirati banks froze several Russian-linked accounts only after U.S. sanctions warnings, reflecting prior leniency (Reuters, 2024). On the energy side, Dubai-based trade institutions handled Russian oil exports, while Emirati tankers conducted shipments. In fact, in 2024, the U.S. Treasury sanctioned three UAE shipping firms for violating the G7 price cap (Psaledakis & Gardner, 2024).

Western governments have pressured Abu Dhabi to enforce sanctions more effectively. American and European diplomats met Emirati officials in 2024 demanding detailed export data and stronger export controls (Cornwell, 2024). 

The EU also flagged Dubai as a “re-export” concern in recent sanction rounds, listing additional tankers that used Emirati ports (Francis, 2025). Despite these efforts, the UAE has often resisted compliance with Western standards and protested secondary sanctions, insisting its existing controls are “robust” (Cornwell, 2024). While Western policymakers continue to press for greater transparency, many gaps remain in tracking and enforcing restrictions on Russian finances and trade. The UAE’s case exemplifies how regulatory leniency in global financial hubs can erode the overall credibility of sanctions, reinforcing the need for more unified oversight and standardized enforcement protocols.

Taken together, the cases of China, India, Türkiye, and the UAE demonstrate how third-party countries have aided Russia in evading both financial and energy-based sanctions. Though the West has taken steps to pressure these nations and even sanction violating institutions, without comprehensive policy towards third-party stakeholders, sanctions enforcement will remain partial, and Russia will continue to sustain its war effort and economy. Thus, each of these third-party relationships is a reminder of the central policy question of this paper: how can the U.S. and EU move from reactive enforcement to a proactive, coordinated strategy that fundamentally improves effectiveness?

V - The Importance of Sanctions in Negotiations

Sanctions as a Tool of Coercive Diplomacy

Economic sanctions have emerged as the central tool of the West to conduct coercive diplomacy. From a geopolitical perspective, sanctions improve Western bargaining power by imposing costs on Russia’s economy, changing the nation’s calculations of whether the benefits of continuing the war outweigh the economic and political costs (Kolyandr, 2025). Crucially, the unprecedented coordination among the U.S., EU, and G7 partners on Russia has, in theory, maximized pressure and made sanctions “sticky”: difficult to remove once imposed (Vaynman & Volpe, 2022). This persistence means Russia cannot easily wait out the sanctions, knowing that their withdrawal will not come without the relevant concessions on its end.

Moreover, coercive bargaining theory argues that for sanctions to truly compel a change in behavior, rather than simply punish, the target must anticipate that pain will continue or even increase until it complies (Smith & Poplin, 2023; Sechser). In accordance with this logic, Western leaders have indeed threatened to increase sanctions in the case of Russian noncompliance. For instance, European Commission President Ursula von der Leyen said in May, “we have to increase the pressure,” before calling upon all G7 nations to improve their measures against Russia in June (Gray & Bytyci, 2025; Irish, 2025).

Overall, sanctions function as both pressure and incentive in potential peace negotiations. They carry the threat of escalation if Russia refuses to comply, while also holding out the possibility of relief if a ceasefire is achieved. However, the pressure must remain credible in order to preserve Western leverage.

Shaping Leverage in Ceasefire and Peace Negotiations

Sanctions have directly shaped the context and leverage of recent ceasefire and peace negotiations, such as the talks in Istanbul and Alaska. Western powers have used sanctions to bring Russia to the table and as leverage during talks. For example, Ursula von der Leyen warned in May that the EU was prepared to sanction additional Russian energy and financial targets “to draw [Russia] to the negotiating table” (CFR Editors, 2025). This pressure, combined with a similar stance from the U.S., resulted in Russian and Ukrainian delegations meeting in Istanbul for the first direct peace talks since 2022 (Guzel, 2025). 

Another test of sanctions-backed leverage came with the high-profile U.S.–Russia summit in Alaska. In the run-up to the summit, the Trump administration wielded an aggressive stick: the White House had imposed a 50 percent tariff on India as a retaliatory measure for the nation importing Russian oil (Kozul-Wright, 2025). European diplomats noted that U.S. sanctions pressure was “crucial to the diplomatic process,” observing that Putin was essentially “strong-armed into engaging” only after these measures hit Russia’s key oil clients (Gavin et al., 2025). 

During the summit itself, President Trump had hinted that “without a ceasefire at the end of the day he might slap Russia with new sanctions,” an explicit threat to incentivize a deal (Vlahos, 2025). Although no ceasefire was directly achieved — which highlights the negotiation power that Russia still holds as a result of sanctions evasion, and the need for a “tougher” approach according to commentary from Politico — the leverage Trump’s secondary sanctions did achieve is a demonstration of their potential (Gavin et al., 2025).

To maximize the leverage sanctions provide the West in peace negotiations, it must maintain its credibility as a tool to inflict economic pressure. Thus, a key principle is the adaptability and rigorous enforcement of the sanctions during negotiations. Maintaining leverage requires closing loopholes and demonstrating that pressure will tighten if aggression continues. 

Indeed, Western countries have steadily expanded sanctions to target Russia’s evasion tactics and third-party enablers to some extent already. For example, the U.S. and EU moved to sanction a handful of companies in China, Türkiye, and the UAE helping Russia bypass sanctions (CFR Editors, 2025). Proactive measures like these not only degrade Russia’s capacity to wage war but also strengthen the West’s negotiating position demonstrating that sanctions pressure can be applied to all avenues of economic activity, and be strengthened if a deal is not reached. There have even been calls in the West for building automatic sanctions triggers into a peace accord: measures that reinstitute sanctions if any stipulations of a peace deal are violated. (Jensen, 2025). Such sanctions serve as a powerful deterrent against Russian backsliding, thereby improving the chances that a peace deal holds.

Moreover, the material benefit to Russia from eventual sanctions relief is as important as the threat of sanctions imposition itself. Realist theory argues that state behavior is driven by cost-benefit calculations. Western leverage thus comes not only from raising the costs of war for Russia, but also from offering a path to reintegrate with the global economy if it accepts a peace deal. However, the offer must be valuable enough to Russia for it to accept. The challenge to this strategy is that Russia’s adaptations to avoid sanctions reduce the material value of any future relief, which makes the value of such proposals insufficient to Moscow (Kluge, 2024).

To keep sanctions as a valuable bargaining chip, Western states must create high-value concessions that Russia cannot easily substitute. For instance, full access to Western energy markets is an incentive Russia desires; a significant tightening (or conversely, the promise of loosening) of oil export constraints could provide critical leverage and make energy concessions more desirable. Overall, West maximizes its leverage by making sanctions relief a compelling incentive through the tighter enforcement of sanctions and closing of enforcement gaps, and a unified framework for their loosening and tightening. Maintaining this credible sanctions pressure will be essential for the West in attaining a favorable peace deal.

VI. Western Stakeholders and Considerations

Governing Bodies

Western governments are the primary architects and enforcers of sanctions, but specific attitudes and responses have varied. The U.S. government became a policy leader in financial sanctions, taking a more aggressive approach. As previously discussed in Section II, it rapidly imposed broad financial sanctions from 2022-2024, while repeatedly issuing advisories to improve enforcement. Moreover, despite President Trump’s closer relationship with Putin than Biden, he still took the decision to impose secondary sanctions on India due to its status as a major importer of Russian oil, as highlighted in Sections IV and V.

Meanwhile, the EU has led the design of energy sanctions but faced struggles with unity. EU sanctions require a consensus among 27 individual governments, so states with energy needs or shipping interests — such as Hungary and Slovakia — have at times blocked more severe measures (Jozwiak, 2025). This means that EU member states implemented sanctions with mixed enthusiasm. While Germany, France and the Baltic states readily froze assets and sanctioned Russian banks, other EU members, such as Malta and Cyprus have been criticized by the watchdog Transparency International EU for not being strict enough regarding Russian “dirty money” (“No New Sanctions Packages,” 2024).

Overall, Western executive governments have invested heavily in sanctions, but occasionally their individual geopolitical concerns have been prioritized over a strict enforcement of policy. The U.S. hesitated to initially sanction China or India with secondary sanctions, while the EU has generally balanced energy sanctions against domestic economic needs. This fragmented enforcement reflects a broader policy issue. While stricter coordination is feasible through existing institutions, it would require political trade-offs that risk domestic backlash over energy prices and foreign relations, which are costs that policymakers must weigh against the long-term credibility of sanctions. Thus, while Western governments keep their measures legally effective on paper, their effectiveness is dependent on political unity and the willingness to impose sanctions on opportunistic trade partners or even allies. 

Financial Institutions

Banks, insurers and other financial institutions are crucial stakeholders in enforcing financial sanctions. Prior to the invasion, several European banks had sizable subsidiaries or exposure in Russia, including UniCredit (Italy); Raiffeisen Bank International, or RBI (Austria); Société Générale, or SocGen (France); OTP Bank (Hungary); and others (Za, 2022). Following the invasion, most major Western banks agreed to eventually comply with sanctions, but some institutions initially put up resistance. For instance, RBI refused to divest capital until after investigations from the European Central Bank (ECB) and Office of Foreign Assets Control (OFAC), due to a significant amount of its profits being from its Russian branch (Wilkes & O’Donnell, 2024). However, regulatory and public pressures eventually meant banks were willing to take significant losses to exit the market. For example, SocGen took a 3.1 billion euro write-off when it sold off its Russian subsidiary, RosBank (Hummel, 2022). Overall, these pressures have meant that banks are mostly compliant as a stakeholder, and are prepared to work with Western regulators to enforce harsher sanctions. Moreover, the fact that their stake in the Russian market has mostly been divested means that they have less of an interest in the health of the Russian economy.

Shipping insurance providers also play a role in enforcing sanctions, especially due to the West’s dominance in the field. Western marine insurers broadly withdrew coverage from Russian oil shipments priced above the $60 price cap. However, some Western firms still underwrote some voyages under the cap as late as 2024, relying on promises from traders that the oil met the requirements of the price cap (Saul & Stolyarov, 2024). This “self-certification” approach, while formally allowed by the cap, does allow for potential price violations. As mentioned in previous sections, regulatory pressure has since increased, with the U.S. and EU conducting investigations on certain Western firms and vessels. Nonetheless, uncertainty has pushed many Western insurers to withdraw entirely from Russia-linked voyages (Childs, 2025). Overall, insurers have proven to be broadly cooperative, but their reliance on potentially unreliable verification methods highlight some level of challenge in involving insurance providers within sanctions policy. Policymakers must also account for the unintended consequence of over-deterrence. Excessive regulatory risk could drive insurers out of the market entirely, undermining transparency and shifting shipping coverage to less accountable jurisdictions.

Energy and Shipping Companies

Global energy traders, oil firms, and shipping companies directly mediate Russia’s exports and are decisive actors. Many Western energy corporations, such as Shell and BP, have exited the Russian market or ended Russian partnerships (Bousso et al., 2022). However, commodity trading houses have decided to honor long-term crude supply contracts with firms like Rosneft, facilitating Russian exports even after the war broke out (Payne, 2022). These traders have insisted that they are only fulfilling pre-war agreements, but they are enabling Russian sanctions evasion. Finally, some Western-owned or managed ships have even participated in Russia’s shadow fleet, and were recently targeted by EU sanctions (Francis, 2025)

Thus, while many Western corporate entities have enforced sanctions by suspending Russian business, others have effectively undermined sanctions by sustaining Russian exports under new arrangements. This dichotomy in corporate behavior is an important consideration for updated sanctions policy, and continuing to engage and pressure these companies will be essential to improve the credibility of sanctions. The phenomenon also raises feasibility and equity concerns for policymakers, as any future framework must minimize loopholes without imposing disproportionate burdens on compliant firms, ensuring that enforcement remains both credible and economically sustainable.

VII. Policy Analysis

Overall, the Western sanctions outlined in Section II will only achieve their intended strategic objectives if they are able to address the evasive measures taken by Russia, and if they adapt to the changing geopolitical and economic realities of the conflict. As Sections III and IV have demonstrated, Russia has collaborated with multiple countries, including major powers such as India and China, to evade sanctions, developing sophisticated strategies to counter both finance and energy-related measures. Moreover, Section VI outlines multiple Western stakeholders that play an important role in closing enforcement gaps and developing better sanctions policy.

The central policy challenge lies in balancing feasibility, cost, and equity. Stronger secondary sanctions and energy enforcement measures are feasible given existing legal authorities in the U.S. and EU, but they come with potential costs to diplomatic relationships and global market stability. These trade-offs are central to any sanctions policy, as policymakers must ensure that enforcement intensity does not undermine long-term unity or economic resilience.

Unintended consequences also exist. The expansion of secondary sanctions could strain relations with strategic partners such as India and Türkiye, while excessive regulation of financial institutions might discourage investment or push trade flows into opaque networks. Similarly, tightening maritime and insurance enforcement could raise energy prices globally, affecting consumers and industries across Europe. Policymakers must therefore weigh these risks against the cost of inaction, which would allow Russia to normalize sanctions evasion and weaken the credibility of Western economic statecraft.

At the same time, equity and accountability must be considered. Western sanctions should be structured to impose costs proportionate to complicity, targeting institutions and governments directly enabling Russia’s war financing rather than punishing compliant actors. This aligns with the principles discussed in Sections V and VI—that credibility depends on fairness, consistency, and transparency.

The following recommendations address these concerns through four priority areas: closing financial evasion channels, securing energy sanctions integrity, aligning Western stakeholders, and developing a flexible sanctions framework for negotiation and peacebuilding.

VIII. Policy Recommendations

Closing Financial Evasion Channels

One of the most persistent strategies of financial sanctions evasion has been the rerouting of Russian transactions and capital through lenient third-country institutions. As Sections III and IV noted, Turkish and Emirati banks have offered services to Russian clients until U.S. pressure forced limited compliance, and Chinese banks have handled yuan transactions despite Western warnings.

Therefore, it is essential for the West to decisively crack down on third-party channels handling Russian transactions through the use of secondary sanctions, a strategy which was advocated for in a recent report from the Foundation for Defense of Democracies (Meizlich & Hardie, 2025). Although some third-party institutions have indeed already been sanctioned by the West, the overall trend has been one of a lack of accountability. Without some level of consequence for lenient nations, regulatory bodies, and institutions, Russia will undoubtedly continue to exploit convenient financial infrastructure with little to no consequence. The U.S. and EU must build its prior enforcement of secondary sanctions into a comprehensive campaign targeting all institutions in nations where it holds leverage, especially Türkiye and the UAE.

Notably, this should also include banks participating in Russia’s SPFS system. A 2024 OFAC alert already warned that participating institutions “may be designated” as sanctions targets (Office of Foreign Asset Control, 2024b). The U.S. and EU could expand this into a formal presumption of sanctionability. Ultimately, any bank connected to SPFS or processing Russia-related cross-border payments should be automatically flagged for secondary sanctions unless it exits the system within a set wind-down period.

While these nations will face a certain cost in decoupling their financial channels from Russian clients, access to Western markets and institutions is much more crucial; the U.S. and EU represent a far more significant portion of the world economy than Russia. Moreover, access to the dollar and euro—considering their role as the most significant global reserve and trade currencies—is indispensable for any financial institution, especially those still conducting transactions with Western institutions. Therefore, threatening strict and immediate secondary sanctions would be likely to enforce compliance and remove Russia’s remaining access to global finance (Allison & Keatinge, 2025).

However, such measures would require an overhaul of the current sanctions infrastructure present. The OFAC and EU would need unified designation lists to prevent arbitrage and allow the effective joint enforcement of sanctions. Moreover, the U.S. and EU should allocate funding and resources to their sanctions monitoring and financial data agencies with the specific purpose of more comprehensive tracking for third-party institutions handling Russian capital or trade. Indeed, the expansion and unification of sanctions bodies has been a strategy specifically advocated for by Vladyslav Vlasiuk, Zelenskyy’s Sanctions Commissioner, in a CEPR article (Vlasiuk, 2025).

While the yuanization of Russian trade, and its participation in CIPS, may be more difficult to prevent due to China’s more powerful economy and global influence, improved data collection could still provide the U.S. and EU with more operational clarity when decision-making. Moreover, this would provide leverage to publicly pressure complicit Chinese regional banks and urge regional partners such as Singapore and Japan to tighten oversight.

Overall, the West requires more powerful and centralized sanctions infrastructure to implement secondary sanctions, which could decisively restrict Russia’s access to global finance.

Securing Energy Sanctions Integrity

Despite sanctions, energy remains the core source of income the Russian government relies on for war financing. As covered in Section III, Russia’s shadow fleet and related exploitation of regulatory loopholes have allowed it to transport oil outside the reach of Western regulators to customers. To address this, the most effective measure will be the expanding of port-state control checks of vessels. The EU has recently broadened its blacklist of vessels suspected of sanctions evasion, but this effort should be combined with better inspections at European ports to identify shadow fleet tankers (Payne, 2025).

Ideally, the approach should be expanded beyond European ports, with diplomatic pressure on nations like the Gulf States (ex. UAE, Oman, Kuwait, etc.) and Türkiye to enforce the G7 oil cap and their own trade controls more effectively. The West could potentially expand the financial data collection measures outlined above to also apply to shipping, allowing for public pressure. This strategy would allow for increased scrutiny and diplomatic pressure towards nations that have chosen to increase purchases of Russian petroleum, such as India, as stated in Section IV.

Refining and re-export loopholes also undermine the effectiveness of energy sanctions. Section IV highlighted how India and Türkiye purchase Russian crude at a discount, refine it into diesel or other fuels, and then re-export the products to Europe and global markets. The aforementioned EU ban on refined petroleum products derived from Russian crude, even when processed in third countries, is an essential measure to address this loophole (Smith et al., 2025). The U.S. should mirror this approach by banning imports of refined products linked to Russian crude, aiming for unified sanctions policy with the EU to strengthen Western unity.

Moreover, natural gas sanctions also remain incomplete. Section III described how initial EU sanctions exempted pipeline gas due to Europe’s dependence, and how LNG imports weren’t effectively targeted, resulting in an increase in imports in 2024. The U.S. and EU should begin phasing in LNG restrictions, narrowing exemptions to genuine emergencies and incentivizing alternative supplies from the U.S., Qatar, and Norway, as urged for by a recent report from Bruegel (Keliauskaitė, 2025). Unless addressed, the LNG exemption will continue to provide Russia with billions in annual revenues, weakening Western leverage.

Finally, the U.S. and EU should address issues regarding their own insurance and shipping finance corporations, which have proven to be more lenient regarding sanctions and reliant on the self-certification of cargo prices by traders, explained in Section VI. This has allowed Russia to sell oil that complies with the price cap on paper through the manipulation of accounting, but this has a higher true cost to the buyer, as mentioned in Section III. To close this loophole, regulators should mandate independent verification of cargo prices for voyages seeking Western insurance coverage. Indeed, according to the Insurance Journal, insurance companies have previously flagged self-certification as a concern, which would corroborate the need for such independent verifications (Lerh & Xu, 2023). Furthermore, such audits should be used to pressure other private corporations, such as commodity trading houses, into aligning themselves more closely with the Western sanctions regime.

Aligning Western Stakeholders

As Section VI emphasized, the credibility of sanctions is dependent upon the coordination and unity of Western governments, banks, and other private actors. A key structural challenge has been differences in policies between the U.S. and EU, which decreases coordination and creates opportunities for Russia to exploit regulatory arbitrage. For example, U.S. measures can often precede EU counterparts by weeks or months, and compliance standards for financial institutions can vary significantly across nations.

To address this, U.S. and EU policymakers should develop a transatlantic sanctions framework that unifies U.S. and EU listings and enforcement procedures. Increased policy unification has been suggested in the past by sources such as American University’s reputed Transatlantic Policy Center (Reinert, 2023). Such a framework would likely involve the American OFAC, multiple EU bodies, as well as national regulatory agencies.

Moreover, the unification would likely place increased direct pressure on nations within the EU that are less cooperative to sanctions measures, such as Hungary, through closer contact with the U.S., which as Section VI noted, has been an aggressive sanctions leader. This could potentially help in shifting the overall direction of sanctions to be more severe, allowing easier implementation of measures like the aforementioned secondary sanctions.

Equally important to sanctions coordination is coordination between the public and private sectors. As noted in Section VI, many banks, insurers, and energy companies have been mostly cooperative enforcers of sanctions, but may operate without the necessary level of guidance (Thomson Reuters Institute, 2022). Therefore, a cooperation forum between the U.S. and EU should also include business leaders from the various industries discussed. These forums could standardize compliance checklists and due diligence requirements, and provide private sector actors with a better picture of the expectations that apply to them. Moreover, direct accountability would be made easier through closer contact with transatlantic governments.

Overall, closer coordination between all important Western stakeholders would improve coordination and accountability, preventing Russia from exploiting cracks in Western unity and bolstering U.S. and EU leverage.

Developing a Flexible Sanctions Framework

Finally, as mentioned in Section V, sanctions are not simply punishments but also tools the U.S. and EU must use in peace negotiations. Coercive bargaining theory argues how they can only compel change when the target believes that noncompliance will increase their intensity. Moreover, Western leverage in negotiations will undoubtedly depend on an organized and deliberate approach to the measures on the table. This aligns with the findings of a 2024 report from Brookings Institution, which corroborates that sanctions function best when integrated within a deliberate and modular framework, instead of being implemented as ad hoc reactions (Itskhoki & Ribakova, 2024).

Therefore, policymakers should design a modular sanctions framework that can change depending on Russian compliance, with specific timelines and measures outlined. Such a framework would establish pre-announced tiers of escalation that can be activated if Russia fails to comply with negotiated commitments, while also outlining pathways for sanctions relief if benchmarks are met. Even after a deal has been reached, the U.S. and EU should consider implementing the automatic sanctions triggers highlighted in Section V. Transparency in this design would send credible signals, while flexibility would allow shifts in the material and geopolitical conditions of the conflict.

Crucially, a flexible sanctions framework should undoubtedly outline clear actions regarding the frozen CBR reserve funds and their interest, as explained in Section II. The outright seizure of these funds would set a potentially dangerous legal and financial precedent, undermining global trust in the Western financial order. Instead, the funds should ideally be frozen until a negotiated end to the conflict (Obasun, 2024). Meanwhile, the interest that is not directly owed to Russia should be earmarked to finance the reconstruction of Ukraine.

Ultimately, by integrating enforcement and conditionality into one framework, the U.S. and EU can ensure that sanctions remain a genuine source of leverage rather than a symbolic geopolitical gesture, bridging towards sustainable peace.

IX - Policy Implementation

Translating the recommendations of this paper into practice requires a structured, politically feasible, and well-resourced plan that leverages the previously discussed stakeholders. Implementation must reflect the criteria of feasibility, cost, unity, and equity outlined in Section VII while still remaining adaptable to future geopolitical considerations and developments. The ultimate goal is not just to tighten sanctions enforcement, but to institutionalize sanctions as a unified framework of Western economic statecraft.

The first step must be the creation of a formal mechanism for transatlantic coordination. As discussed in Section VI, inconsistent enforcement and staggered policy rollouts have repeatedly allowed Russia to exploit regulatory gaps. A unified sanctions coordination framework, which would likely be jointly led by the American OFAC and the European Commission’s Directorate-General for Financial Stability (DG FISMA), could coordinate lists and enforcement actions. This system could operate through a sort of transatlantic council that hosts quarterly meetings to review implementation data in order to update blacklists and issue joint advisories. Moreover, including the European External Action Service (EEAS) and the U.S. Treasury would ensure that both regulatory and diplomatic perspectives inform the council’s decisions.

Political feasibility remains a major constraint. As noted in Section VI, certain EU member states such as Hungary and Slovakia have resisted comprehensive energy measures due to domestic vulnerabilities. To maintain unity, policymakers should offer phased compliance schedules and limited transitional exemptions tied to measurable progress in diversification. Framing secondary sanctions as a defense of Western credibility rather than a punitive act would help strengthen support in the U.S. and EU alike, building political legitimacy for deeper enforcement.

Resource allocation is another key condition for success. Monitoring third-party evasion, described in Sections III and IV, will require expanded data analytics and maritime tracking. Both the U.S. and EU should increase funding for sanctions monitoring agencies, ensuring that new measures can be implemented effectively. A portion of the accrued interest on frozen Russian central bank reserves, discussed in Section V, could fund these upgrades, aligning enforcement resources with the moral responsibility of postwar reconstruction.

Private-sector engagement is also essential. As discussed in Section VI, banks, insurers, and energy traders have been broadly cooperative but lack clear and consistent guidance. Regular compliance forums, hosted under the Transatlantic Sanctions Council, could standardize checklists and due diligence requirements, while allowing firms to seek direct clarification from regulators. Such forums and advisories are already being implemented to some extent under European and American frameworks, as discussed previously, but now require unification. Moreover, clearer guidance would also prevent over-deterrence, where uncertainty drives firms out of markets, while reinforcing confidence that compliance mechanisms are fair, transparent, and predictable.

Diplomatic outreach will remain a pillar of effective implementation. Section IV demonstrated how countries such as India, Türkiye, China, and the UAE have sustained Russian evasion networks. To reduce dependency on coercion alone, Western policymakers should engage these nations through targeted diplomacy, offering technical assistance for financial transparency while making clear that continued complicity risks isolation from Western markets. Special envoys for sanctions coordination could ensure that enforcement and diplomacy are coordinated rather than at odds with each other.

Implementation should proceed in phased stages. Short-term efforts would focus on establishing coordination mechanisms and enhancing port inspections, while medium-term goals include expanding secondary sanctions and LNG restrictions. In the long term, the modular sanctions framework outlined in Section VII should be institutionalized as part of postwar negotiations, ensuring that sanctions evolve alongside shifts in Russia’s behavior.

While challenges remain, which range from diplomatic backlash to market volatility, these risks can be mitigated through incremental enforcement and active dialogue with both private and foreign partners. If executed effectively, these measures would close the largest gaps in the Western sanctions regime and restore the credibility of economic coercion as a strategic tool. By integrating sanctions into a unified system, the U.S. and EU can transform them from reactive punishment into a forward-looking framework for stability, deterrence, and hopefully, peace.