The Evolution of Dual-Use Sanctions: Closing the Raw Material Loophole
The battle against sanctions evasion is shifting from finished products to the raw materials that fuel them. A critical example is the case of raw glycerin, a chemical with legitimate civilian uses that can similarly be repurposed to produce explosives for military industrial complexes.
Until recently, sanctions regimes often focused on refined versions of chemicals. However, as highlighted by the Economic Security Council of Ukraine (ESCU), this creates a “dual-use” gap. When refined glycerin was sanctioned by the EU on June 25, 2024, the flow of raw glycerin continued, providing a workaround for those seeking to sustain military production.
The trend moving forward suggests a more granular approach to sanctions. Regulatory bodies are increasingly pressured to treat the potential military utility of a substance as a primary factor in its classification, regardless of its common civilian applications.
Mapping Shadow Supply Chains: The Role of Transit Hubs
The movement of restricted goods often relies on complex networks of subsidiaries and third-party logistics providers. This “shadow” infrastructure allows materials to move through EU borders although obscuring the final destination.
Data indicates that specific corridors have become hotspots for these transactions:
- Latvia: Exported 36,443 tons of crude glycerin, with companies like Vega Stividors (a subsidiary of Russia’s Delfin Group) shipping to firms linked to the Kazan Powder Plant, an ammunition manufacturer.
- Poland: Served as a route for UK-registered Smasty Limited, which shipped 2,039 tons worth $25.4 million to Russian customers.
- Lithuania: Saw exports via UAB Velum Maris, with products from UAB Rapsoila reaching Russian wholesalers.
Future trends indicate that the EU will likely implement stricter “Know Your Customer” (KYC) requirements for exporters of dual-use chemicals to prevent the use of intermediaries to bypass blacklists.
The Rise of OSINT in Economic Security
The detection of sanctions evasion is no longer solely the domain of government intelligence. Independent organizations and Open Source Intelligence (OSINT) are now driving policy changes.
The ESCU, an independent Kyiv-based institution established in 2021, utilizes proprietary OSINT methodology to identify threats to economic sovereignty. By analyzing import and export data, they can pinpoint exactly how many tons of a substance are moving and which companies are facilitating the trade.
This shift toward data-driven advocacy means that companies can no longer rely on the anonymity of bulk trade data. As OSINT tools become more sophisticated, the window for undetected sanctions evasion is closing.
The Intersection of Economic Sanctions and Cyber Warfare
Economic security is increasingly entwined with cybersecurity. While physical goods like glycerin are monitored, the industrial supply chains managing these goods are becoming targets for state-sponsored hacker groups from Russia, Iran, China, and North Korea.
Current trends present a shift toward personalized attacks targeting employees’ personal devices through fake job offers and tailored online platforms. As foreign specialists provide military assistance and integrate western technologies into Ukraine, the pool of potential targets expands to include contractors, engineers, and consultants.
This creates a transnational security issue where the protection of the supply chain requires both physical sanctions and robust cyber defense mechanisms to prevent hostile operations.
Frequently Asked Questions
What are “dual-use” goods?
Dual-use goods are items, software, or technology that can be used for both civilian and military applications, such as raw glycerin which is used in both consumer products and explosives.
How does the ESCU contribute to sanctions enforcement?
The Economic Security Council of Ukraine investigates schemes used to evade sanctions and provides analytical recommendations to government agencies to close legislative gaps.
Why is raw glycerin a concern for EU security?
Because it can be used to produce ammunition and rocket fuel, its export to companies connected to Russia’s military industrial complex directly supports war efforts.
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How should the EU balance trade with security when dealing with dual-use goods? Do you believe OSINT is the future of sanctions enforcement? Share your thoughts in the comments below or subscribe to our newsletter for the latest insights on international trade and security.
