France and Germany do not want to deprive russian oligarchs of luxury cars

Germany and France oppose the European Union's efforts to close a loophole that allows high-end goods, including luxury cars, to enter russia through Belarus.

According to the three diplomats, the opposition from Berlin and Paris has forced EU countries to weigh whether to split the 14th package of sanctions against russia and similar measures against Belarus in order to reach a deal before the G7 summit in Italy on June 13-15. This would allow the EU to move forward with the main sanctions, while ending the fight for sanctions against Belarus.

The sanctions against Belarus have loopholes that have allowed the country to become a transshipment base for sanctioned goods that subsequently reach russia - the two countries have a common customs union and are closely integrated.

“If we take weak measures against Belarus, knowing that the goods arrive in Moscow through Minsk, it will be a bit ridiculous,” said one EU diplomat.

"The principle is clear: if a sanction is approved, all loopholes must be closed. When the export of luxury goods to russia is banned, such goods should not get to russia through third countries,” said Zsolt Darvas, senior researcher at the Bruegel think tank.

According to the German Ministry of Economy, in 2023, imports of cars from the EU to Belarus increased to $2.6 billion, which is more than four times more than in 2021.

The researchers observed the largest relative growth in the luxury car sector, which accounted for two-thirds of the total increase in imports worth $1.4 billion. Given that this growth is contrary to the development of the domestic automotive market in Belarus, it is “probably” due to further re-exports to russia.

A French diplomat noted that Paris favors “strong sanctions against countries that sanction evasion,” but said the focus should be “on goods that serve the russian war effort.”

In a similar context, a German diplomat emphasized that “Germany supports strong measures against sanctions circumvention, but the focus should be on goods related to russia's aggressive war.”

Opponents of the sale of luxury goods to russia argue that Putin wants to keep his elite on his side and maintain his own position in the Kremlin, precisely by providing his main allies with gourmet food and high-end cars.

Source: Politico