www.alphadictionary.com

"Switzerland will not be used to circumnavigate EU sanctions on Russia, government says" (CNN headline).

Is this even a possible usage, or did they really mean circumvent?

I think you are right and the intended meaning is "circumvent." How it became "circumnavigate" is impossible to determine at this point: it could have been the author, the editor or the proofreader who put it in. On 1976 when William Tillman circumnavigated Spitsbergen in his cutter Baroque, he ended up more or less where in started out. Whereas if, in his voyage to Patagonia, he had circumvented the Straights of Magellan, he would have gone around Cape Horn instead.

I'm becoming more and more convinced that the concepts of editor and proofreader are passé, especially on the internot.

I’m sure it was a mistake, but the word is used figuratively. The OED has such a citation from nearly two hundred years ago.