The European Union has imposed a new set of sanctions with respect to the ongoing crisis in Ukraine.  On May 12, 2014 the EU adopted Council Decision 2014/265/CFSPCouncil Regulation 476/2014 and Council Implementing Regulation 477/2014 which entered into force on May 12, 2014 (the date of publication).

The new sanctions target a top advisor to President Putin, a commander of the Russian paratroopers, and a number of pro-Russian separatist leaders in eastern Ukraine.  The latest additions bring the number of Russians and Ukrainians subject to EU sanctions to 61.  For the first time, they also affect two energy companies in Crimea.

Newly sanctioned individuals

The new individuals subject to a visa ban and an asset freeze are listed below.  EU persons and entities are also prevented from providing “economic resources” and therefore should not conduct transactions, dealings or business with these designated individuals. 

  • Vyacheslav Viktorovich Volodin, First Deputy Chief of Staff of the Presidential Administration of Russia
  • Vladimir Shamanov, Commander of the Russian Airborne Troops, Colonel-General
  • Vladimir Nikolaevich Pligin, Chair of the Duma Constitutional Law Committee
  • Petr Grigorievich Jarosh, Acting Head of the Federal Migration Service office for Crimea
  • Oleg Grigorievich Kozyura, Acting Head of the Federal Migration Service office for Sevastopol
  • Viacheslav Ponomariov, self-declared Mayor of Slaviansk
  • Igor Mykolaiovych Bezler, one of the leaders of self-proclaimed militia of Horlivka
  • Igor Kakidzyanov, one of the leaders of armed forces of the self-proclaimed “Donetsk People's Republic"
  • Oleg Tsariov, Member of the Rada
  • Roman Lyagin, Head of the “Donetsk People's Republic” Central Electoral Commission
  • Aleksandr Malykhin, Head of the "Lugansk People's Republic" Central Electoral Commission
  • Natalia Vladimirovna Poklonskaya, Prosecutor of Crimea
  • Igor Sergeievich Shevchenko, Acting Prosecutor of Sevastopol

Newly sanctioned entities

Previous EU sanctions stopped short of targeting specific industries or companies.  However, they already involved asset freezing and a ban from the provision of economic resources to entities owned, held or controlled by designated persons.  As we have previously advised, the exact identification of those legal entities which are owned and controlled may be a difficult exercise under EU sanctions.

The new set of sanctions go a step further by identifying two energy companies in Crimea, namely a gas company, PJSC Chernomorneftegaz, and an oil supplier, Feodosia.  Their inclusion, however, has made it necessary to broaden the legal criteria for the designation of additional persons/entities.  The two companies are not listed because they are owned or controlled by designated individuals, but because their ownership has been unlawfully transferred and their new owners now benefit from this transfer.

The previous sanctions only covered “the freezing of and recovery of assets of persons identified for the misappropriation of Ukrainian state funds and persons responsible for human rights violations in Ukraine.”  The new Regulation 467/2014 and Council Decision 2014/265/CFSP extend the criteria to additional persons (as well as those persons and legal entities associated to them) either because:  (i) they actively support or implement actions or policies which undermine the territorial sovereignty of Ukraine; or (ii) they obstruct the work of international organizations in Ukraine.

Additional criteria cover legal entities in Crimea or Sebastopol whose assets have been unlawfully confiscated in violation of Ukrainian law, as well as those benefitting from it.  It is by virtue of the latter criteria that the two Crimean entities are listed.  The list may well be extended by implementing regulation in the event of further unlawful confiscations.

Conclusion

This is the first time that the EU has targeted legal entities directly in response to the Ukraine crisis.  This action is well-defined, and limited, reflecting Member State concerns about their economic relations with Russia.  The situation is, however, unstable and may further escalate in advance of the May 25 Presidential elections in Ukraine.  The May 12 Foreign Affairs Council conclusions acknowledge this possibility and send a clear signal inasmuch as Ministers noted that “the preparatory work by the Commission and Member States is underway on possible targeted measures, as requested by the European Council in March, so that further steps can be taken should events require.  The European Union will pay particular attention to all parties' attitudes and behavior towards the holding of free and fair Presidential elections when deciding about possible future measures.”