The EU has today published further sanctions against Russia, following agreement between the EU and the US that additional measures were required to respond to, what the EU and US view as, Russia’s continued efforts to destabilise the Ukraine. The US has indicated that it will publish its sanctions later on today.
The latest measures have been introduced despite the fact that, last week, Russia and the Ukraine agreed to a cease-fire which, although fragile, remains in place. However, the President of the European Council has emphasised the “reversibility and scalability” of the measures, suggesting that if the cease-fire holds, the sanctions could be amended or even repealed. This reflects the concern, thought to be held by some EU Member States, that further sanctions are unnecessary and potentially damaging to the EU, given Russia’s repeated statements that it will retaliate with additional sanctions of its own against the EU. The Member States’ concerns potentially explain the delay between the EU’s announcement on Tuesday that it was considering fresh sanctions and the publication of those sanctions today.
Detail of the measures
The latest EU sanctions strengthen the restrictions on Russia’s access to EU capital markets, by prohibiting EU persons/companies from providing loans or credit to, and from trading in various financial instruments issued by, five major Russian state-owned banks, three Russian defence companies and three Russian energy companies. Providing services related to the issuing of those financial instruments is also prohibited. A key change to the existing restrictions is the reduction in maturity deadlines of these financial instruments from 90 days to 30 days after 12 September 2014. For a non-prohibited export, it remains possible to give commercial credit of a longer duration but care is required.
Additionally, it is also now prohibited for EU persons/companies to supply certain services necessary for deep water oil exploration and production, arctic oil exploration or production and shale oil projects in Russia.
In terms of military/dual-use restrictions, the existing ban on exporting dual-use goods and technology to Russia for military use has been extended to prohibit exports of dual-use goods from the EU to nine Russian defence companies.
Finally, another twenty-four Russian individuals/entities have been added to the list of designated persons subject to asset freezes and visa bans by the EU.
Whilst these measures undoubtedly make it more difficult for European companies to trade effectively with Russia, it is still possible to do so, providing care is taken to ensure that no prohibited goods or services are being supplied and that European companies are not engaging with designated persons. Companies currently exporting, or considering exporting, to Russia should monitor the situation closely as the US and the EU have shown they are willing and able to respond quickly to developments in the Ukraine by introducing new measures.