Sun. May 29th, 2022

Brussels, 15 March 2022

Following up on the informal meeting of the EU heads of state and government on 10-11 March, the Council today decided to impose a fourth package of economic and individual sanctions in respect of Russia’s military aggression against Ukraine.

As President Putin’s war against Ukrainian people continues, so does our resolve to support Ukraine and cripple the financing of Kremlin’s war machinery. This fourth package of sanctions is another major blow to the economic and logistic base upon which Russia relies on to carry out the invasion of Ukraine. The aim of the sanctions is that President Putin stops this inhuman and senseless war.

Josep Borrell, High Representative for Foreign Affairs and Security Policy

The Council decided in particular to:

  • prohibit all transactions with certain state-owned enterprises,
  • prohibit the provision of any credit rating services, as well as access to any subscription services in relation to credit rating activities, to any Russian person or entity,
  • expand the list of persons connected to Russia’s defence and industrial base, on whom tighter export restrictions are imposed regarding dual-use goods and goods and technology which might contribute to Russia’s technological enhancement of its defence and security sector,
  • prohibit new investments in the Russian energy sector, as well as a to introduce a comprehensive export restriction on equipment, technology and services for the energy industry,
  • introduce further trade restrictions concerning iron and steel, as well as luxury goods.

Furthermore, the Council decided to sanction key oligarchslobbyist and propagandists pushing the Kremlin’s narrative on the situation in Ukraine as well as key companies in the aviation, military and dual use, shipbuilding and machine building sectors.

Statement in the WTO context

Separately, the Council gave a green light to the Commission to join, on behalf of the EU, a plurilateral statement on aggression by the Russian Federation against Ukraine with the support of Belarus, that is expected to be issued in the context of the World Trade Organization (WTO). Like other WTO Members that are to co-sponsor that statement, the EU confirms its readiness to take any actions that are considered necessary to protect our essential security interests. These may include actions in support of Ukraine, or actions to suspend concessions or other obligations with respect to the Russian Federation, such as the suspension of most-favoured-nation treatment to products and services of the Russian Federation. Furthermore, in light of Belarus’ material support to the actions of the Russian Federation, the EU considers that its WTO accession process is to be suspended.

Russia’s unprovoked and unjustified military aggression against Ukraine grossly violates international law and the principles of the UN Charter and undermines European and global security and stability. It is inflicting unspeakable suffering on the Ukrainian population. Russia, and its accomplice Belarus, bear full responsibility for this war of aggression and those responsible will be held to account for their crimes, including for indiscriminately targeting civilians and civilian objects.

The European Union demands that Russia ceases its military action and withdraws all forces and military equipment from the entire territory of Ukraine immediately and unconditionally, and fully respects Ukraine’s territorial integrity, sovereignty and independence within its internationally recognised borders.

The relevant legal acts will soon be published in the Official Journal.

Source – EU Council


European Commission welcomes today’s agreement by the Council to adopt a fourth package of restrictive measures against Russia

Brussels, 15 March 2022

 

The European Commission welcomes today’s agreement by the Council to adopt a fourth package of restrictive measures against Russia in response to its brutal aggression against Ukraine and its people. These sanctions will further contribute to ramping up economic pressure on the Kremlin and cripple its ability to finance its invasion of Ukraine. They have been coordinated with international partners, notably the United States.

The agreed measures are the following:

  • A full prohibition of any transactions with certain Russian State-owned enterprises across different sectors – the Kremlin’s military-industrial complex.
  • An EU import ban on those steel products currently under EU safeguard measures, amounting to approximately € 3.3 billion in lost export revenue for Russia. Increased import quotas will be distributed to other third countries to compensate.
  • A far-reaching ban on new investment across the Russian energy sector, with limited exceptions for civil nuclear energy and the transport of certain energy products back to the EU.
  • An EU export ban on luxury goods (e.g. luxury cars, jewellery, etc.) to directly hit Russian elites.
  • Moreover, the list of sanctioned persons and entities has been further extended to include more oligarchs and business elites linked to the Kremlin, as well as companies active in military and defence areas, which are logistically and materially supporting the invasion. There are also new listings of actors active in disinformation.
  • A ban on the rating of Russia and Russian companies by EU credit rating agencies and the provision of rating services to Russian clients, which would result in them losing even further access to the EU’s financial markets.
Denying Russia most favoured nation status

The EU, together with other World Trade Organization (WTO) members, agreed today to deny Russian products and services most favoured nation treatment in EU markets. This follows an announcement on Friday 11 March by G7 members. This will suspend the significant benefits that Russia enjoys as a WTO member. These actions against Russia protect the essential security interests of the EU and its partners in light of Russia’s unprovoked, premeditated and unjustified aggression against Ukraine, assisted by Belarus. They are fully justified under WTO law.

More Information

Today’s agreement builds on the wide-ranging and unprecedented packages of measures the EU has been taking in response to Russia’s acts of aggression against Ukraine’s territorial integrity and mounting atrocities against Ukrainian civilians and cities. As guardian of the EU Treaties, the European Commission is in charge of monitoring the enforcement of EU sanctions across the Union. The EU stands united in its solidarity with Ukraine and will continue to support Ukraine and its people together with its international partners, including through additional political, financial and humanitarian support.

For More Information

European Commission website on Ukraine

Q&A on restrictive measures

Source – EU Commission

 


Question and Answers: fourth package of restrictive measures against Russia

Brussels, 15 March 2022

What has the EU adopted today?

The EU adopted today a fourth package of restrictive measures against Russia in response to its brutal aggression against Ukraine and its people. These sanctions will further ramp up economic pressure on the Kremlin, and undercut its technological base and curtail its ability to finance its invasion of Ukraine.

The agreed measures are the following:

  • A full prohibition of any transactions with key Russian State-owned enterprises across different sectors – the Kremlin’s military-industrial complex.
  • An EU import ban on those steel products currently under EU safeguard measures, amounting to approximately € 3.3 billion in lost export revenue for Russia. Increased import quotas will be distributed to other third countries to compensate.
  • A far-reaching ban on new investment across the Russian energy sector, with limited exceptions for civil nuclear energy and the transport of certain energy products back to the EU.
  • An EU export ban on luxury goods (e.g. luxury cars, jewellery, etc.) to directly hit Russian elites.
  • A ban on the rating of Russia and Russian companies by EU credit rating agencies and the provision of rating services to Russian clients, which would result in them losing even further access to the EU’s financial markets.
  • The list of sanctioned persons and entities has been further extended to cover 15 more individuals and 9 more entities. Altogether the list now apply to a total of 877 individuals and 62 entities.
  • The EU, together with other World Trade Organization (WTO) members, agreed today to deny Russian products and services most-favoured-nation treatment in EU markets.

Why are State-owned banks, railways and the maritime shipping register partly excluded from the prohibition on transactions?

When imposing specific sanctions, the EU selects the most appropriate and targeted measures to achieve the goals pursued by the sanctions regime. It also takes into account possible indirect effects on EU operators complying with the measures. In this case, the EU considered that the measure was most effective by selecting specific transactions with certain State-owned companies. In any event, EU sanctions are scalable and, as the intense activity of the past weeks shows, they are scaled up depending on the situation on the ground.

Will the United States also ban Russian companies from their credit rating agencies?

This EU measure has been coordinated closely with international partners. It is for the United States to announce the exact measure they will be adopting.

What steel products are covered? Are iron products covered?

The list of steel products covered is referred to in Annex 2 of the Amending Regulation, as published in the Official Journal of the EU.  Iron products are not covered.

Why did you not fully ban investment in the Russian energy sector?

The investment ban on the Russian energy sector is far-reaching and comprehensive. Yet, some transactions are needed to ensure the supply of certain energy products into the EU. To ensure close scrutiny, such investments are subject to prior approval from the national competent authorities in the EU.

What luxury goods are covered by the ban? Are there any thresholds? How will they be implemented?

The ban covers a large range of luxury goods, from luxury cars to products for domestic use to watches, to give a few examples.

There are different thresholds depending on the category of luxury goods, so that the ban does not hit the more regular needs of the population in Russia. The minimum threshold is €300.

The ban will be implemented by the EU’s customs authorities: banned products are not allowed to be exported to Russia.

Does the ban on luxury goods also cover imports from Russia (such as caviar or vodka)?

No, the focus of this package of sanctions is on depriving Russia from EU luxury goods.

How will the EU avoid the risk of circumvention of banned products via third countries? Will the EU introduce further trade restrictions in the future?

Under the current Regulation, there is already a clear prohibition from circumventing the restrictive measures including via third countries. It constitutes a violation of sanctions.

What are you doing to prevent oligarchs from using crypto assets to circumvent sanctions?

The sanctions package adopted on 9 March 2022 fully clarifies that crypto assets fall under the scope of “transferable securities”. It also confirms the common understanding that loans and credit also include crypto assets. These clarifications will help ensure the proper implementation of the restrictions in place.

The circumvention of the restriction on some banks to use SWIFT is theoretically possible via crypto-assets or by other means. However, it is not immediately possible to do so in a timely and efficient manner. Markets are broadly aware of this. At first sight, it might be that the use of crypto to avoid sanctions is more relevant for our restrictions on capital outflows from Russia.

While sanctions evasion via crypto currencies is harder to detect in the first place, once detected it is easy to investigate because crypto transactions are fully traceable and it is practically impossible to alter that.

If and when large amounts of crypto assets are converted to fiat currencies (and vice versa), these transactions will fall under anti-money laundering due diligence rules.

We continue to constantly monitor the market situation. Any indications for non-compliance with the sanctions will be looked at by the relevant authorities in the Member States.

What are the consequences of denying Russia most-favoured-nation (MFN) status?

Removal of MFN status means suspending the benefits that come from being a WTO Member, more specifically the benefit of not being discriminated against by other Members. For example, MFN treatment guarantees that a Member will not be subject to higher tariffs than other Members, or to import bans that do not apply to other Members. Suspension of MFN treatment means that the Member concerned – in this case Russia – may be subject to higher tariffs and import bans.

The EU has decided to act not through an increase on import tariffs, but through set of sanctions that comprise bans on the imports or exports of goods, as this is much quicker and more effective than preparing a completely new tariff schedule from scratch.

In practice, the EU has already removed a number of trade benefits that Russia previously enjoyed through the imposition of sanctions. Additionally, the EU has restricted the provision of SWIFT financial services to certain Russian banks, which constitutes a disapplication of MFN vis-à-vis Russia under the General Agreement on Trade in Services (GATS). Today’s sanctions remove further trade benefits from Russia.

President von der Leyen said that Russia’s financing by leading multilateral and international financial institutions would be suspended. Which institutions are they?

The institutions consist of the International Monetary Fund, the World Bank Group, the European Bank for Reconstruction and Development (EBRD), and the Organisation for Economic Co-operation and Development (OECD). While Russia’s membership of these institutions cannot often be suspended as such, the EU is working with its international partners to prevent Russia from obtaining financing from these institutions.  For example, the EU is working with its partners to make sure that the EBRD suspends Russia and Belarus’ access to EBRD finance and expertise.

Can you tell us more about the International Task Force that has been set up to coordinate action on sanctions?

As announced by the G7, an International Task Force has started its work on sanctions implementation, for example the enforcement of asset freezes against listed individuals. Within the Commission, Commissioner Reynders leads the “Freeze and Seize” Task Force, which coordinates work done at national level by law enforcement authorities, prosecution services and judicial authorities, to identify, freeze and, where possible, confiscate assets of Russian and Belarussian individuals subject to EU sanctions.  The Commission’s Task Force seeks coordinated actions between Member States, Eurojust and other agencies, such as Europol and eu-LISA. It works closely with international partners, including the International Task Force.

For More Information

Press release

Official Journal

European Commission website on Ukraine

Q&A on restrictive measures