US and EU Sanctions on Iran and Russia: Failing to Deliver, Seeking New Strategies

Despite sanctions against the Iran's oil industry, record amounts of Iranian oil are being shipped to China

by Sededin Dedovic
US and EU Sanctions on Iran and Russia: Failing to Deliver, Seeking New Strategies
© Richard Medhurst / YOutube channel

Iran knows it, China knows it, and the U.S. government obviously knows it. Despite sanctions against the oil industry of the Islamic Republic, record amounts of oil from Iran are being shipped to China. "If you believe the Chinese government, the country is not importing oil from Iran.

Zero. Not a single barrel. Instead, it imports a lot of Malaysian crude oil. So much so that, according to official data from the Chinese customs, the country buys more than twice as much Malaysian oil as Malaysia actually produces," commodities expert Javier Blas describes the label fraud on the Bloomberg news portal.

With a simple trick, says Blas, Iranian crude oil becomes "Malaysian." According to oil traders, this is the "easiest and cheapest way to bypass U.S. sanctions." And so, last year, Malaysia officially became the fourth largest foreign oil supplier to China, behind Saudi Arabia, Russia, and Iraq.

For years, Iran has been using the United Arab Emirates as a center for evading sanctions. Goods on long blacklists of the United States or the European Union often reach the Islamic Republic via Dubai. For this purpose, banned oil shipments are arranged and processed through the Emirates.

Whether it's spare parts for vehicles or planes, Iran has long modified supply chains so that everything can be procured through trading and financial centers like Dubai. This is more expensive than direct imports. But Western sanctions, especially those of the U.S., have been circumvented in this way for many years.

Russia also has transshipment points for sanctioned goods. And here, there is hardly a product that cannot be obtained from a third country. For example, spare parts for German luxury cars or electronic components used for weapon guidance.

Former Soviet republics in Central Asia play a key role. Moscow's advantage is that the Russian Federation is connected to countries like Kazakhstan and Kyrgyzstan in a customs union where cross-border movement of goods is child's play.

This means that sanctioned products from the West, which are supposed to be forbidden fruit for Russia, can almost freely cross borders. Control? Almost impossible. Just the border between the Russian Federation and Kazakhstan is about 7,500 kilometers long.

Another example is Armenia: sales of German cars and auto parts increased almost tenfold last year. Since February 22, 2024, Moscow has faced the thirteenth package of EU sanctions, making Russia the most sanctioned country in the world.

This is evidenced by data from Castellum.AI, a platform for comparing the private sector from the U.S. Nevertheless, Russia continues aggression against Ukraine, violating international law, and the Russian economy is anything but collapsing.

The explanation is a slap in the face to supporters of Western sanctions. According to the IMF, the Russian economy is driven by high government spending and investments related to the war against Ukraine and - despite Western sanctions - high oil export revenues.

Before Russia, Iran was the most severely sanctioned country in the world. Russia has now been subjected to more than 5,000 different targeted sanctions, more than Iran, Venezuela, Myanmar, and Cuba combined.

Ebrahim Raisi,the president of Iran, among the participants in the ceremony Quds Day ,on April 5, 2024 in Tehran, Iran.

The fune© Majid Saeedi / Getty Images

So why continue imposing sanctions if they cannot achieve the goal - changing the behavior of states? "We live in the age of sanctions. If no sanctions were imposed at all, it would be almost like unspoken support.

Or as if there was no response to this attack on international law," says Christian von Zest, a sanctions expert at the German Institute for Global and Regional Studies (GIGA), to DW. He is the author of the book "Sanctions: Powerful Weapon or Helpless Maneuver?" published a year ago.

He says sanctions have not led to a change in Russia's or Iran's behavior. But the U.S. and EU are tightening measures. According to The Wall Street Journal, the U.S. is preparing sanctions against a number of Chinese banks to exclude them from the global financial system.

Authorities want to stop Beijing's financial support for Russian arms production, the U.S. newspaper reports, citing "people familiar with the matter." The EU has also resolved to better enforce sanctions. Since January 2023, there has been an EU sanctions official, senior diplomat David O'Sullivan.

"His job is, for example, to travel to post-Soviet states in Russia's neighborhood and persuade the governments there to enforce sanctions more strongly," explains Christian von Zest. "There is now also the so-called Russia-free clause, which aims to compel exporters to prove that the goods they supply - machinery, vehicles, automotive parts - do not go further into Russia.

We know such a clause on ultimate use from the War Weapons Control Act," adds the sanctions expert. Pressure is also increasing on the United Arab Emirates, which the American think tank At

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