EU sanctions against Russia following the invasion of Ukraine

Mar 23 2022 Stefano Rossi

The conflict between Russia and Ukraine has met with the determined opposition of a large part of public opinion and of the EU institutions, which, since the outbreak of the escalation, has decided to issue sanctions and restrictive measures against the Russian Federation which may be considered "unprecedented".

These measures have the purpose of:

• weaken the Kremlin's ability to finance the war;
• inflict clear economic and political costs on the Russian political elite responsible for the invasion;
• reduce its economic base.

Since 24 February, in a series of decisions, the EU has adopted four packages of sanctions, targeting Russia's financial system, its high-tech industries and its corrupt elite.

I. Background

Since March 2014, the EU has progressively imposed restrictive measures in response to the:

• illegal annexation of Crimea in 2014;
• decision to recognize the non-government-controlled areas of Donetsk and Luhansk oblasts as independent entities in 2022;
• unprovoked and unjustified military aggression against Ukraine in 2022.

On 13 January 2022, the EU Council decided to extend the restrictive measures concerning specific economic sectors of the Russian Federation by six months, until 31 July 2022. The Council decision follows the latest assessment, carried out at the European Council on 16 December 2021, of the state of play of the implementation of the Minsk agreements.

The EU restrictive measures can be therefore summarized as follows:

• diplomatic measures;
• individual restrictive measures (asset freezes and travel restrictions);
• restrictions on economic relations with Crimea and Sevastopol, and with the non-government controlled areas of Donetsk and Luhansk;
• economic sanctions;
• restrictions on media;
• restrictions on economic cooperation.

II. Individual restrictive measures

As mentioned above, a first set of restrictive measures against Russia were issued after the Foreign Affairs Council meeting of 17 March 2014: EU ministers decided to introduce a first set of measures against 21 officials responsible for actions threatening Ukraine's territorial integrity. By "Council Regulation (EU) No 269/2014 of 17 March 2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine", 877 people and 62 entities were subject to an asset freeze and a travel ban because their actions against Ukraine's territorial integrity, sovereignty and independence. The list of sanctioned persons and entities were kept under constant review and were subject to periodic renewals by the Council.

The above-mentioned Regulation has been recently amended by EU Regulations no. 236-260-261-262-328-332-336 del 2022 of 2022 and the sanctions against people and entities were last extended until 15 September 2022.

In particular, on 25 February 2022, the EU decided to freeze the assets of Vladimir Putin, President of the Russian Federation, and of Sergey Lavrov, Minister for Foreign Affairs of the Russian Federation. In addition, it has imposed restrictive measures on the members of the National Security Council of the Russian Federation and on the remaining members of the Russian State Duma who supported Russia’s immediate recognition of the self-proclaimed Donetsk and Luhansk “republics”.

On 9 March 2022, the Council decided to impose new restrictive measures on an additional 160 individuals.

The listed individuals include:

• 14 oligarchs and prominent businesspeople involved in key economic sectors providing a substantial source of revenue to the Russian Federation
• 146 members of the Russian Federation Council
• Altogether, EU restrictive measures now apply to a total of 862 individuals and 53 entities.

III. Restrictions on financial-economic relations

From an objective point of view, it should be emphasized that, compared to the measures adopted in 2014, the scope of application of the sanctions has been significantly extended.

Restrictions on economic relations with Crimea and Sevastopol

The measures apply to EU nationals and EU-based companies. Their scope is limited to the territory of Crimea and Sevastopol.

These measures include:

• an import ban on goods;
• restrictions on trade and investment related to certain economic sectors and infrastructure projects;
• a prohibition on supplying tourism services;
• an export ban on certain goods and technologies.

On 21 June 2021, the Council extended these measures until 23 June 2022.

Restrictions on economic relations with non-government-controlled areas of Donetsk and Luhansk

The Council adopted restrictive measures in response to the decision by the Russian Federation to proceed with the recognition of the non-government-controlled areas of Donetsk and Luhansk oblasts in Ukraine as independent entities, and the ensuing decision to send Russian troops into these areas.

The scope of the measures is limited to the non-government-controlled territories of Donetsk and Luhansk oblasts. These measures include:

• an import ban on goods;
• restrictions on trade and investment related to certain economic sectors;
• a prohibition on supplying tourism services;
• an export ban on certain goods and technologies.

These measures are in place until 24 February 2023.

Economic sanctions targeting exchanges with Russia in specific economic sectors

In July and September 2014, the EU imposed economic sanctions targeting exchanges with Russia in specific economic sectors.

In March 2015, EU leaders decided to align the existing sanctions regime to the complete implementation of the Minsk agreements, which was scheduled for the end of December 2015. Since this did not happen, the Council extended the economic sanctions until 31 July 2016.

The economic sanctions have been extended successively for six months at a time since 1 July 2016. The decision to extend them was made each time following an assessment of the implementation of the Minsk agreements. The economic sanctions are currently extended until 31 July 2022.

These sanctions target the financial, trade, energy, transport, technology and defence sectors. They include:

• restricted access to EU primary and secondary capital markets for certain Russian banks and companies;
• a ban on transactions with the Russian Central Bank and the Central Bank of Belarus;
• a SWIFT ban for seven Russian banks and three Belarusian banks;
• a prohibition on the provision of euro-denominated banknotes to Russia and Belarus;
• a ban on the overflight of EU airspace and on access to EU airports by Russian carriers of all kinds;
• a ban on exports to Russia of goods and technology in different sectors (including the aviation, space, oil refining and metallurgical industries);
• a ban on export to Russia of dual-use goods for military use;
• an export and import ban on arms.

Sanctions on Russia Today and Sputnik

On 2 March 2022, the EU approved the suspension of the broadcasting activities in the EU of Sputnik and Russia Today until the aggression against Ukraine is ended and until the Russian Federation and its associated outlets cease conducting disinformation and information manipulation actions against the EU and its member states.

Sputnik and Russia Today are under the permanent direct or indirect control of the authorities of the Russian Federation and are key to promoting and supporting the military aggression against Ukraine and to destabilising its neighbouring countries.

EU agrees new measures targeting Belarus

In response to the involvement of Belarus in the unjustified and unprovoked Russian military aggression against Ukraine, the Council has adopted additional measures targeting the Belarusian financial sector.

The agreed measures will:

• restrict the provision of specialised financial messaging services (SWIFT) to three Belarusian banks;
• prohibit transactions with the Central Bank of Belarus;
• prohibit the listing and provision of services in relation to shares of Belarusian state-owned entities on EU trading venues;
• significantly limit the financial inflows from Belarus to the EU;
• prohibit the provision of euro-denominated banknotes to Belarus.

IV. Fourth package of sanctions against Russia

On 15 March 2022, the EU imposed a fourth package of economic and individual sanctions in response to Russia’s military aggression against Ukraine.

The new measures include a ban on:

• all transactions with certain state-owned enterprises;
• the provision of credit rating services to any Russian person or entity;
• new investments in the Russian energy sector;

The Council expanded the list of persons connected to Russia’s defence and industrial base, on whom tighter export restrictions were imposed regarding dual-use goods, and goods and technology which might contribute to Russia’s technological enhancement of its defence and security sector.

The EU also introduced:

• trade restrictions for iron, steel and luxury goods;
• sanctions on an additional 15 individuals and 9 entities.

---

[UPDATE MARCH, 29]

EU approves an additional €500 million to support the Ukrainian armed forces

On 23 March 2022, the Council decided to double the funding under the European Peace Facility to support the Ukrainian armed forces. The total amount will be increased by an additional €500 million, thereby reaching a total of €1 billion.

The European Peace Facility allows the EU to support the capabilities and resilience of the Ukrainian armed forces in order to:

- defend the country’s territorial integrity and sovereignty
- protect the civilian population against the ongoing military aggression

The agreed assistance measures will finance the provision of equipment and supplies such as personal protective equipment, first aid kits and fuel, as well as military equipment and platforms designed to deliver lethal force for defensive purposes.

---

V. Conclusions

Given the current international political context, it will be important for companies to carefully evaluate the ways in which business activities are carried out in international trade of a commercial and financial nature. Just as it will be necessary to consider not only the sanctions imposed by the EU, but also the restrictive measures issued by the American authorities, to avoid the application of the so-called "Secondary measures".

Companies with commercial interests in the Russian market are therefore advised to adopt a "sanctions compliance program" to prevent possible violations, by implementing:

• screening and control activities on technologies and exported goods to verify the exclusion of the latter from the restrictive measures;
• periodic checks of customers and suppliers to ascertain their exclusion from the group of individual and legal entities to whom the sanctions are addressed;
• the inclusion of specific safeguard clauses within the contracts stipulated with Russian natural and legal persons to protect oneself from the risks deriving from the application of the "sanctions compliance program".

Experts with a long range vision, ready to overcome barriers and take on new challenges in new professional environments. Up to date on developments in Italy and abroad.

Via di Ripetta, 141
00186 - Roma

+39 06 6876917

This email address is being protected from spambots. You need JavaScript enabled to view it.

Via Fontana, 22
20122 - Milano

+39 02 30573573

This email address is being protected from spambots. You need JavaScript enabled to view it.

1000 5th Street, Suite 200
Miami Beach, FL, 33139

This email address is being protected from spambots. You need JavaScript enabled to view it.

News

EU sanctions against Russia following the invasion of Ukraine

EXP Contacts