The EU has imposed a series of new sanctions against Russia in response to the military aggression against Ukraine. Find out what this means in practice.
Since Russia’s recognition of the non-government-controlled areas of the Donetsk and Luhansk oblasts in Ukraine on 21 February 2022 and the unprovoked and unjustified invasion of Ukraine on 24 February 2022, the EU has imposed a series of new sanctions against Russia.
They add to existing measures imposed on Russia since 2014 following the annexation of Crimea and the non-implementation of the Minsk agreements.
Sanctions include targeted restrictive measures (individual sanctions), economic sanctions, and diplomatic measures.
The aim of the economic sanctions is to impose severe consequences on Russia for its actions and to thwart the Russian ability to continue the aggression effectively.
The individual sanctions target people responsible for supporting, financing, or implementing actions that undermine the territorial integrity, sovereignty, and independence of Ukraine or who benefit from these actions.
The EU has also adopted sanctions against Belarus in response to its involvement in the invasion of Ukraine.
The sanctions do not block the export and transactions related to food and agricultural products.
EU leaders stressed at the European Council on 23-24 June 2022 that Russia is solely responsible for the global food crisis and that EU sanctions do not target food and agricultural products. Food security and affordability are key priorities for the EU and its member states.
EU sanctions do not impact food security and cover only bilateral trade between the EU and Russia – not international trade.
EU sanctions explicitly exclude food supplies and fertilizers: there are no sanctions on Russian exports of food to global markets. Anyone can operate, buy, transport, and ensure food and fertilizers coming out of Russia.
The restrictions on the import of certain potash fertilizers under the EU sanctions only apply to products imported to the EU and do not concern exports of them to Ukraine from the EU or from Russia.
The EU has also made exceptions within its sanctions: although European airspace is not open to Russian aircraft, EU member states can authorize overflight of their airspace by Russian aircraft if that is required for humanitarian purposes. EU member states are also authorized to grant Russian-flagged vessels access to EU ports and Russian road carriers entry to the EU for importing or transporting agricultural products, including fertilizers and wheat, that are not subject to restrictions.
In total, also taking into account earlier individual sanctions imposed after the annexation of Crimea in 2014, the EU has sanctioned 108 entities and 1206 individuals. The list includes:
Russia’s President, Vladimir Putin
Russia’s Minister for Foreign Affairs, Sergey Lavrov
pro-Russian former President of Ukraine, Viktor Yanukovych
oligarchs linked to the Kremlin, such as Roman Abramovich
351 members of the Russian State Duma (the lower house of parliament) who voted in favor of the recognition of Donetsk and Luhansk on 15 February 2022
members of the National Security Council
local politicians such as the mayor of Moscow
high-ranking officials and military personnel
prominent businesspeople (i.e. people active in the Russian steel industry and others who provide financial services, military products, and technology to the Russian state)
propagandists and disinformation actors
individuals responsible for the atrocities committed in Bucha and Mariupol
individuals involved in the recruitment of Syrian mercenaries to fight in Ukraine
selected family members of some of the abovementioned individuals
Sanctions on individuals consist of travel bans and asset freezes. Travel bans prevent listed individuals from entering or transiting through EU territory, by either land, air, or sea.
Asset freezes mean that all accounts belonging to the listed persons and entities in EU banks are frozen. It is also prohibited to make any funds or assets directly or indirectly available to them.
This ensures that their money can no longer be used to support the Russian regime nor can they try to find a safe haven in the EU.
As part of the economic sanctions, the EU has imposed a number of import and export restrictions on Russia. This means that European entities cannot sell certain products to Russia (export restrictions) and that Russian entities are not allowed to sell certain products to the EU (import restrictions).
The list of banned products is designed to maximize the negative impact of the sanctions on the Russian economy while limiting the consequences for EU businesses and citizens. The export and import restrictions exclude products primarily intended for consumption and products related to health, pharma, food, and agriculture, in order not to harm the Russian population.
The bans are implemented by the EU’s customs authorities.
Moreover, the EU, in collaboration with other like-minded partners, has adopted a statement reserving the right to stop treating Russia as the most favored nation within the WTO framework. The EU has decided to act on this not through an increase in import tariffs, but through restrictive measures that include bans on the import or export of certain goods. The EU and its partners have also suspended any work related to the accession of Belarus to the WTO.
The list of sanctioned products includes among others:
cutting-edge technology (e.g. quantum computers and advanced semiconductors, high-end electronics and software)
certain types of machinery and transportation equipment
specific goods and technology needed for oil refining
energy industry equipment, technology, and services
aviation and space industry goods and technology (e.g. aircraft, spare parts or any kind of equipment for planes and helicopters, jet fuel)
maritime navigation goods and radio communication technology
a number of dual-use goods (goods that could be used for both civil and military purposes), such as drones and software for drones or encryption devices
luxury goods (e.g. luxury cars, watches, jewelry)
The list of sanctioned products includes among others:
cutting-edge technology (e.g. quantum computers and advanced semiconductors, high-end electronics and software)
certain types of machinery and transportation equipment
specific goods and technology needed for oil refining
energy industry equipment, technology, and services
aviation and space industry goods and technology (e.g. aircraft, spare parts or any kind of equipment for planes and helicopters, jet fuel)
maritime navigation goods and radio communication technology
a number of dual-use goods (goods that could be used for both civil and military purposes), such as drones and software for drones or encryption devices
luxury goods (e.g. luxury cars, watches, jewelry)
The list of sanctioned products includes among others:
crude oil and refined petroleum products, with limited exceptions (with phase-out of 6 to 8 months)
coal and other solid fossil fuels (as there is a wind-down period for existing contracts, this sanction will apply as from August 2022)
gold, including jewelry
steel and iron
wood, cement, and certain fertilizers
seafood and liquor (e.g. caviar, vodka)
In June 2022, the Council adopted the sixth package of sanctions that, among others, prohibits the purchase, import, or transfer of crude oil and certain petroleum products from Russia to the EU. The restrictions will apply gradually: within six months for crude oil and within eight months for other refined petroleum products.
A temporary exception is foreseen for imports of crude oil by pipeline into those EU member states that, due to their geographic situation, suffer from a specific dependence on Russian supplies and have no viable alternative options.
Moreover, Bulgaria and Croatia specifically will benefit from temporary derogations concerning the import of Russian seaborne crude oil and vacuum gas oil respectively.
As the majority of the Russian oil delivered to the EU is seaborne, these restrictions will cover nearly 90% of Russian oil imports to Europe by the end of the year. This will significantly reduce Russia’s trade profits.
The EU has prohibited Russian and Belarusian road transport operators from entering the EU, including for goods in transit.
This sanction aims to restrict the Russian industry’s capacity to acquire key goods and to disrupt road trade both to and from Russia. However, EU countries can grant derogations for:
the transport of energy
the transport of pharmaceutical, medical, agricultural, and food products
humanitarian aid purposes
transport related to the functioning of diplomatic and consular representations of the EU and its countries in Russia, or of international organizations in Russia which enjoy immunities in accordance with international law
the transfer or export to Russia of cultural goods on loan in the context of formal cultural cooperation with Russia
The ban does not affect mail services and goods in transit between Kaliningrad Oblast and Russia.
In February 2022, the EU refused access to EU airports for Russian carriers of all kinds and banned them from overflying EU airspace. This means that airplanes registered in Russia or elsewhere and leased or rented to a Russian citizen or entity cannot land at any EU airports and cannot fly over EU countries. Private aircraft, e.g. private business jets, are included in the ban.
In addition, the EU banned the export to Russia of goods and technology in the aviation and space industry.
Insurance services, maintenance services, and technical assistance related to these goods and technology are also prohibited. The United States, Canada, and the United Kingdom imposed similar restrictions.
This means that Russian airlines cannot buy any aircraft, spare parts, or equipment for their fleet and cannot perform the necessary repairs or technical inspections. As three-quarters of Russia’s current commercial air fleet were produced in the EU, the US, or Canada, over time the ban is likely to result in the grounding of a significant proportion of the Russian civil aviation fleet, even for domestic flights.
The EU has closed its ports to Russia's entire merchant fleet of over 2 800 vessels. However, the measure does not affect vessels carrying:
energy
pharmaceutical, medical, agricultural, and food products
humanitarian aid
nuclear fuel and other goods necessary for the functioning of civil nuclear capabilities
coal (until 10 August 2022, after which imports of coal into the EU will be banned)
The measure also does not affect vessels in need of assistance seeking a place of refuge, or vessels making an emergency port call for reasons of maritime safety or saving life at sea.
The ban will also apply to vessels that try to evade the sanctions by changing their Russian flag or registration to that of another state. Port authorities can identify an attempt to reflag or change registration by checking a vessel’s IMO number (the unique identification number assigned on behalf of the International Maritime Organization).
The ban prevents ten Russian and four Belarusian banks from making or receiving international payments using SWIFT.
SWIFT is a messaging service that substantially facilitates information exchange between banks and other financial institutions. SWIFT connects more than 11 000 entities worldwide.
As a result, these banks can neither get foreign currency (as a transfer of foreign currencies between two banks is generally processed as a transfer abroad involving a foreign intermediary bank) nor transfer assets abroad. This has negative consequences for the Russian and Belarusian economies.
Technically, banks could carry out international transactions without SWIFT, but it is expensive, complex, and requires mutual trust between financial institutions. It brings payments back to the times when telephone and fax were used to confirm each transaction.
The European Union has prohibited all transactions with the National Central Bank of Russia related to the management of the Russian Central Bank’s reserves and assets. As a result of the central bank asset freeze, the central bank can no longer access the assets it has stored in central banks and private institutions in the EU.
In February 2022, Russia’s international reserves accounted for $643 billion (€579 billion). Among other purposes, having reserves in foreign currencies helps keep the exchange rate of a country’s own currency stable.
Due to the ban on transactions from the EU and other countries, it is estimated that more than half of Russian reserves are frozen. The ban was also imposed by other countries (such as the US, Canada, and the UK) which also store a share of Russia’s foreign reserves.
Consequently, Russia cannot use this cushion of foreign assets to provide funds to its banks and thus limit the effects of other sanctions. Even the gold reserves stored in Russia now appear to be more difficult to sell due to international sanctions affecting Russian entities.
The EU has also prohibited the sale, supply, transfer, and export of euro-denominated banknotes to Russia. The aim is to limit access to cash in euros by the Russian government, its Central Bank, and natural or legal persons in Russia with a view to preventing the circumvention of sanctions.
Similar sanctions apply to Belarus.
The Russian Federation has engaged in a systematic, international campaign of disinformation, information manipulation, and distortion of facts in order to enhance its strategy of destabilizing both its neighboring countries and the EU and its member states.
To counteract this, the EU has suspended the broadcasting activities in the EU of five Russian state-owned outlets:
Sputnik
Russia Today
Rossiya RTR/RTR Planeta
Rossiya 24/Russia 24
TV Centre International
Russia uses all these state-owned outlets to intentionally spread propaganda and conduct disinformation campaigns, including about its military aggression against Ukraine.
The restrictions against Sputnik and Russia Today (together with their subsidiaries, such as RT English, RT Germany, RT France, and RT Spanish) have been in place since 2 March 2022. The restrictions on the other three entities have been in place as of 4 June 2022.
They cover all means of transmission and distribution in or directed at the EU member states, including cable, satellite, Internet Protocol TV, platforms, websites, and apps.
In line with the Charter of Fundamental Rights, these measures will not prevent those media outlets and their staff from carrying out activities in the EU other than broadcasting, e.g. research and interviews.
Sanctions are more effective if a broad range of international partners is involved. The EU has worked closely over the last few weeks with like-minded partners such as the United States in order to coordinate sanctions.
The EU is working with the World Bank Group, the European Bank for Reconstruction and Development (EBRD), the Organisation for Economic Co-operation and Development (OECD), and other international partners to prevent Russia from obtaining financing from such institutions.
To coordinate this international effort, the newly formed Russian Elites, Proxies, and Oligarchs (REPO) Task Force allow the EU to cooperate with the G7 countries – Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States – as well as with Australia, to ensure sanctions are implemented.
Although the EU works closely with many partners, each of these non-EU countries decides unilaterally which sanctions it will impose.
All EU sanctions are fully compliant with obligations under international law, whilst respecting human rights and fundamental freedoms.
Once political agreement is reached among EU member states, the necessary legal acts are prepared by the European External Action Service and/or the European Commission and submitted to the Council for adoption.
Council regulations and decisions, as legal acts of general application, are binding on any person or entity under EU jurisdiction. This means any person or entity within the EU, any EU national in any location, and all companies and organizations incorporated under the law of an EU member state.
Europeans have already shown Russia that economic blackmail is a double-edged sword. In short, too much interdependence with imprudently chosen partners can be dangerous. Europeans are understandably eager to cut off all channels of Russian influence over their continent, especially in energy. But this interdependence has also allowed them to push back against Russian aggression. On natural gas, Europe cannot yet rule out the prospect of a bleak winter. But even this interdependence with Russia may prove to be much less potent leverage in Moscow’s hands than many Europeans previously feared. The Russian authorities likely hoped to use gas to create such intense price volatility and supply uncertainty that the European public and governments alike would re-evaluate their stances on Ukraine. The EU may even achieve independence from Russian gas as early as next year, assuming Europeans succeed in limiting demand too. Gas prices might still be high – but they should be much lower than during the panic from spring to fall. To be sure, this does not mean that Europe’s future interdependence with Russia should continue to be chiefly in the realm of fossil fuels (not least because of the green transition); nor does it mean that Berlin and some other member state capitals should escape criticism for the years of myopia on their energy relationship with Russia. Instead, policymakers should ensure that any future interdependence with Russia strengthens European security rather than undermines it.
ReplyDeleteMany countries in Central and Eastern Europe are working to address the unique challenges caused by their high reliance on Russian natural gas. Significant progress has been made, but accelerated efforts need to continue if governments want to wean their economies off Russian supplies.
ReplyDeleteAs a consequence of Russia's steep supply cuts, the share of Russian gas in the European Union’s gas demand fell from 40% in 2021 to 9% so far in 2022. The direct effects are being felt most strongly in Central and Eastern Europe. Gas plays an important role in Central and Eastern Europe’s industry, power generation, and space heating. The region’s gas demand could even increase in the coming years as coal-fired power plants are phased out.
Member states are pursuing these efforts at different speeds, and plans vary by country, reflecting the degree of dependence on Russian gas and their degree of preparation for the possibility of an eventual cut-off. For Central and Eastern Europe, a region traditionally highly reliant on Russian gas, any accelerated phase-out of Russian gas requires quickly scaling up clean energy investments, including in energy efficiency and renewables, as well as diversifying gas supplies through building liquified natural gas (LNG) import capacity and better integrating regional gas markets. On the demand side, residential, commercial, and industrial gas consumers need to boost efficiency, increase their use of biomethane and prepare for the deployment of hydrogen.