Why the EU’s public prosecutor wants a slice of the sanctions action

Good morning. The EU will send Ukraine vital artillery ammunition within weeks under a new Brussels-managed reimbursement programme, according to officials working on multiple proposals to increase the continent’s defence production.

Today, we detail an offer from the EU’s in-house public prosecutor to spearhead efforts to tackle the big buzzword: sanctions evasion. And our man in the Baltics previews the far-right nationalists eyeing gains in Sunday’s election in Estonia.

From smuggling to sanctions

There’s a new entrant in the debate about who should lead EU efforts to stop sanctions circumvention: the 20-month old European Public Prosecutor’s Office, writes Alice Hancock.

The EU has imposed ten sanctions packages against Russia since Moscow launched its invasion of Ukraine, but recent packages have been focused on making sure those sanctions are being obeyed.

The trouble with having 27 member states with different customs authorities and levels of enforcement is that smugglers can easily go forum shopping to find the bloc’s weakest links.

Enter the EPPO.

“We are the best available tool at this moment at European level and we are the only ones who can make investigations at this time,” its chief prosecutor Laura Kövesi told the FT.

The EPPO, which has a mandate to prosecute cross-border crimes, has a “helicopter view” of smuggling across the bloc, she said. Last year it investigated 236 cases of non-VAT related fraud, which usually involves smuggling.

But to get involved, the EPPO’s powers would have to be extended. At the moment, it is only responsible for tackling misuse of EU funds (which in 2022 resulted in €14.1bn in estimated damages) and that is “very far from the circumventions topic”, noted one EU diplomat.

Kövesi said she has had a “theoretical discussion” with the European Commission and that member states including Germany, France and several eastern European countries back the idea.

The Netherlands and Finland have also circulated papers pushing for more information sharing between member states on sanctions-busting, though neither have directly cited a role for the EPPO. Kövesi has not been in touch with the EU’s recently appointed sanctions envoy, David O’Sullivan.

Meanwhile, the EPPO’s 217 staff members are already busy busting financial crimes — not least the allegedly inappropriate allocation of Covid vaccine contracts by commission president Ursula von der Leyen and several expenses scandals in the European parliament. Kövesi said that the vaccine contracts case was “a complex investigation” that could take “a few months” to unravel.

She also noted that owing to the outpouring of national and EU level support schemes rolled out in response to the coronavirus pandemic, the EPPO expects its financial crime caseload to double this year.

That will require member states to allocate more of their investigators to EPPO activities: “It’s obvious that we have to achieve more. And I think we’re going to need more resources,” Kövesi said.

Chart du jour: Staying high

Eurozone inflation fell less than economists expected last month, fuelling expectations that interest rates have higher to go. Price rises for services, goods and food all gained pace, as energy prices fell.

Crashing the party

Estonia has long cultivated an image of a liberal, digitally-savvy, powerful foreign policy voice that punches well above the weight of the Baltic state’s 1.3mn people. But Sunday’s parliamentary elections may well put this to the test again, writes Richard Milne.

Kaja Kallas, Estonia’s prime minister and permanent fixture on western TV screens in the past year, may hog the headlines as her liberal Reform party is set to come in first place, according to opinion polls. Locally, however, much of the focus will be on the performance of the main challenger to Reform, the far-right party Ekre.

The nationalist party caused consternation in liberal circles in Tallinn by making white supremacist gestures, insulting US president Joe Biden, and attacking journalists when they were previously in power in Estonia from 2019 to 2021.

Most recent opinion polls give Kallas’s party a solid 6-13 percentage point lead over Ekre, but a couple of outliers suggest the gap could be much smaller: just 1-2 points.

That could cause a serious case of déjà vu for Kallas. Reform came first in the previous elections in 2019 and everybody assumed she would become prime minister. But Ekre combined with her conservative rival, Centre, to form a coalition that for 18 months seriously tested Estonia’s golden image internationally.

“They were insulting our allies and attacking everyone. On the international level, they were doing a lot of damage,” Kallas told the FT. Expect messy coalition talks after Sunday’s vote.

What to watch today

1. German chancellor Olaf Scholz meets US president Joe Biden in Washington.

2. Spanish prime minister Pedro Sánchez meets Finnish prime minister Sanna Marin in Helsinki.

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