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Over 20,000 sanctions have been levied against Russia since it invaded Ukraine – but that hasn’t stopped EU companies from trading with it, propping up its war-time economy.

by Kyiv Post | October 2, 2024, 4:19 pm

Editor’s note: This is the first in a series of Kyiv Post articles on how Russia evades sanctions to wage its war against Ukraine.

When Russian President Vladimir Putin called the new T-90M Proryv “the best tank in the world” last year, he lauded the country’s military leadership and manufacturing sector for working together to produce the hardware needed to fulfill Russia’s imperialist objectives abroad. Few would have believed that the tank, now seen regularly on the battlefield in occupied Ukraine, is reportedly constructed with tools and parts sourced from across the world – including European countries that have issued expansive economic sanctions against Russia aimed at preventing such cooperation.

Roughly 20,000 sanctions have been levied against Russian companies and individuals by the US, EU, and allies since the country began its full-scale invasion of Ukraine in Feb. 2022. 

And yet a small manufacturing company in central Italy, M.T. Marchetti (M.T.S.R.L.), is allegedly responsible for providing the machine parts used to construct the high-tech sights of T-90Ms that enable troops to visualize their surroundings from inside the vehicle, according to an investigation by The Insider. Without the sights, Russian soldiers would essentially be operating blind, dependent on drones controlled by a paired unit for eyes on the ground. The contributions from Italy are essential to the tank’s construction.  Although Italian companies and individuals are legally restricted from doing business directly with Russian entities, existing sanctions leave a swathe of loopholes that make it simple for businesses to bypass the limitations and continue business as usual

M.T. has been doing business in Russia for decades. To adhere to sanctions, the company appears to work with Russian clients through a subsidiary – MT-Tools, also referred to as Comand Tool. M.T. Marchetti advertised attending the annual Metallurgy Conference in Moscow in 2016 and 2019, appearing in the expo’s vendor list under that name. But later, company representatives continued attending the conference under the name of Comand Tool – as recently as this year. The subsidiary’s website is active and lists the contact information of a local agent to contact for more information.

World leaders have said time and again that the Union’s wide-reaching sanctions would result in a crippled Russian economy that would strip Putin of his power and end the country’s invasion of Ukraine. But companies like M.T. seem to demonstrate how easy it is to flout these regulations. The Italian company has continued its business relationships in Russia via loopholes despite posting a “No-Russia Clause” in March declaring its adherence to international sanctions, stating that the company “shall not in any event, re-sell, re-export in Russia or re-sell or re-export for the use in Russia, goods or technology” as listed in EU regulations.Thousands of other European companies and entrepreneurs appear to be using the same type of backdoors into the Russian market through third-party countries or subsidiary companies, bypassing international sanctions in just a few bureaucratic steps. Although information about sanction busting by companies like M.T. can be found easily through open-source investigations, enforcement of these regulations and penalties for those who strategically dodge sanctions is lacking. 

Ukrainian officials and allied leaders have pointed out these gaping holes and called for a more robust network of international sanctions and accountability for rule-breakers. 

“We should treat modern-day electronics used in rockets the way that the EU treats sausages,” Ukrainian MP Maryan Zablotsky, a member of the parliamentary Finance Committee, told Kyiv Post.