UK Focusing on Closing Russia Sanctions Loopholes, Restricting Services, Official Says

LONDON -- The U.K. government is pouring more resources into enforcement of its sanctions and export controls, with a particular focus on closing loopholes that may be allowing Russia to receive restricted business services or continuing to buy critical items for its military, a senior U.K. trade official said this week.

Rosemary Pratt, the Department for Business and Trade’s export control and sanctions director, said the U.K.’s main focus has “shifted” over the past year from introducing new Russia sanctions to strengthening its existing measures.

“Pretty much everything is sanctioned apart from food and medicine,” she said during a defense industry conference this week hosted by SAE Media. “Our focus is very much around implementing better and preventing circumvention." Although Russia is going to “great lengths to circumvent sanctions, we are seeking to close loopholes and maximize the global impact," Pratt said.

She said the U.K.’s enforcement powers will receive a boost from the country’s Office of Trade Sanctions Implementation, a new agency with investigatory powers that will begin operating next month (see 2409130015). But Pratt said greater enforcement can also come from discussions with trading partners, including the U.S. and the EU.

The U.K. is speaking with the U.S. specifically about sanctions and enforcement issues related to intangible transfers, Pratt said, such as legal and accounting services that some companies are still providing to Russia. Stopping those services is “very, very difficult to do because they are intangible, and it's difficult to enforce,” she said. “But we have to try to do it.”

Coordinating enforcement for those restricted services can also be challenging because the U.S. Treasury Department oversees those restrictions even though Pratt's “direct counterpart” works for the Commerce Department. “So before you can get anywhere on that, you've got a whole dance to get all the right people in the room and to have the right conversation,” she said. “The U.S. government is vast, and bringing that collaboration together can be quite challenging sometimes, but they've done an amazing effort.”

She said the U.K. faces similar challenges with the EU, which must coordinate restrictions across 27 member states.

Pratt added that the U.K. is meeting with partners regularly as part of the Quadrilateral Security Dialogue -- which also includes the U.S., the EU and Japan -- to discuss Russia-related sanctions loopholes. Those meetings have included “analysts” from each member state, who are “working really, really closely together to make sure that we don't have those loopholes.”

Those analysts “do big presentations with loads and loads of graphs to tell the story of where the analysis is getting us,” Pratt said. “So, yes, there will be loopholes, but we are always working to close them.”

She also said the U.K. is carefully monitoring whether Chinese companies are helping Russia evade sanctions. But she added that “you need to be really careful to distinguish between” Chinese companies that may be shipping to Russia while not necessarily violating any U.K. laws.

These are “big questions of international diplomacy,” she said. “Make no mistake, that is absolutely front of mind for our government and a number of other governments.”

Pratt also pushed back on the notion that export controls and sanctions on Russia have so far been ineffective. Over the past two years, she said the U.K. has sanctioned over $25 billion worth of trade in goods to Russia, and nearly $500 million worth of services. She also said imports from Russia “have fallen by 99%” in 2023 compared with 2021, and said direct exports to Russia have fallen by over 75% during that same period.

Although Russia is still waging war against Ukraine, the restrictions are making it “much more expensive to buy military hardware for the front line,” Pratt said. “They can't access new, high quality hardware from the U.K. and our coalition partners.” She said about 1% of foreign components found in Russian equipment recovered from battlefields came from U.K. sources.

“I think they are working, but it is a slow, painful, cumulative process,” she said of sanctions. “They're carefully targeted to increase pressure over time, and we will keep going.”