Wed. Dec 25th, 2024

14th EU sanctions package against Russia targets sanction-breakers and energy (updated Q&A))

Jun 24, 2024 , , ,
Impact of EU sanctions on Russia's oil exports 2021-2023. Source: International Energy Agency

Luxembourg, 24 June 2024

The EU Foreign Affairs Council adopted today a 14th package of economic and individual restrictive measures dealing a further blow to Putin’s regime and those who perpetuate his illegal, unprovoked and unjustified war of aggression against Ukraine.

These measures are designed to target high-value sectors of the Russian economy, like energy, finance and trade, and make it ever more difficult to circumvent EU sanctions.

Our sanctions have already significantly weakened the Russian economy and prevented Putin from accomplishing his plans to destroy Ukraine, although he still continues the illegal aggression targeting civilians and civilian infrastructure. The 14th package of sanctions demonstrates our unity in supporting Ukraine and seeking to limit Russia’s criminal activities against Ukrainians, including efforts to circumvent EU measures.

Josep Borrell, High Representative for Foreign Affairs and Security Policy

Today’s package includes restrictive measures on additional 116 individuals and entities responsible for actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine, as well as the following sectoral measures:

Energy

In order to ensure that EU facilities are not used to tranship Russian liquified natural gas (LNG) to third countries, and thereby reduce the significant revenues that Russia derives from LNG sale and transport, the EU will forbid reloading services of Russian LNG in EU territory for the purpose of transshipment operations to third countries. This covers both ship-to-ship transfers and ship-to-shore transfers, as well as re-loading operations, and does not affect import but only re-export to third countries via the EU. The European Commission will monitor the implementation and development of this decision and may propose mitigating measures if necessary.

Furthermore, the EU will prohibit new investments, as well as the provision of goods, technology and services for the completion of LNG projects under construction, such as Arctic LNG 2 and Murmansk LNG. Import restrictions are introduced on Russian LNG through EU terminals not connected to the natural gas system.

Anti-circumvention

The EU is equipping itself with additional tools to crack down on circumvention.

First of all, EU parent companies will be required to undertake their best efforts to ensure that their third-country subsidiaries do not take part in any activities resulting in an outcome that the sanctions seek to prevent.

Second, in order to help counter the re-exportation of battlefield goods found in Ukraine or critical to the development of Russian military systems, it was decided that EU operators selling such battlefield goods to third countries will need to implement due diligence mechanisms capable of identifying and assessing risks of re-exportation to Russia, and mitigating them.

In addition, EU operators transferring industrial know-how for the production of battlefield goods to third-country commercial counterparts will now have to include contractual provisions to ensure that such know-how will not be used for goods intended to Russia.

Finance

The Council decided to outlaw the use of the ‘System for Transfer of Financial Messages’ (SPFS), a specialised financial messaging service developed by the Central Bank of Russia to neutralise the effect of restrictive measures. EU entities operating outside of Russia will be forbidden from connecting to the SPFS or equivalent specialised financial messaging services.

In addition, EU operators will be barred from making transactions with specifically listed entities using SPFS outside of Russia.

Furthermore, the Council is introducing a ban on transactions with targeted credit and financial institutions and crypto assets providers established outside of the EU, when these entities facilitate transactions that support Russia’s defence-industrial base through the export, supply, sale, transfer or transport towards Russia of dual-use goods and technology, sensitive items, battlefield goods, firearms and ammunition.

Funding of political parties and other organisations

In view of the continued Russian attempts to interfere with the democratic processes in the EU and undermine its democratic foundations, including through influence campaigns and the promotion of disinformation, the Council decided that political parties and foundations, non-governmental organisations, including think tanks, or media service providers in the EU, will no longer be allowed to accept funding coming from the Russian state and its proxies.

In line with the Charter of Fundamental Rights, the measures agreed today will not prevent media service providers and their staff from carrying out other activities in the EU, such as research and interviews.

Transports

For the first time, the EU has adopted a measure targeting specific vessels contributing to Russia’s warfare against Ukraine, which are subject to a port access ban and ban on provision of services. These vessels can be designated for various reasons such as the transport of military equipment for Russia, the transport of stolen Ukrainian grain, and support in the development of Russia’s energy sector, for instance through the transport of LNG components or transshipments of LNG. This measure also targets tankers part of Putin’s dark fleet which circumvent the EU and Price Cap Coalition’s caps, while adopting deceptive shipping practices in complete disregard of international standards. 27 vessels were targeted today on these grounds.

Furthermore, in order to avoid other forms of circumvention, the Council decided to

  • widen the EU flight ban. The prohibition to land in, take off from or overfly the territory of the EU will also apply to any aircraft used for a non-scheduled flight, and where a Russian natural or legal person, entity or body, is in a position to effectively determine the place or time for its take-off or landing to reach, for instance, a holiday destination or a business meeting. Furthermore, operators must provide any information requested by member states’ national competent authorities about non-scheduled flights, including ownership of the aircraft and possibly passengers
  • broaden the prohibition on the transport of goods by road within the territory of the EU, including in transit, so as to cover EU operators which are owned 25% or more by a Russian natural or legal person.
Import-export controls and restrictions

The Council added 61 new entities to the list of those directly supporting Russia’s military and industrial complex in its war of aggression against Ukraine. They will be subject to tighter export restrictions concerning dual use goods and technologies, as well as goods and technology which might contribute to the technological enhancement of Russia’s defence and security sector. Some of these entities are located in third countries (China, Kazakhstan, Kyrgyzstan, Türkiye, and the United Arab Emirates) and have been involved in the circumvention of trade restrictions and engaged in the procurement of sensitive items used for example in the production of drones, or providing material support for Russian military operations.

Furthermore, today’s decision expands the list of restricted items that could contribute to the technological enhancement of Russia’s defence and security sector by adding certain machine tools and certain “All Terrain Vehicles”.

The EU also introduced further restrictions on exports of goods which contribute in particular to the enhancement of Russian industrial capabilities (e.g. chemicals, including manganese ores and compounds of rare-earths, plastics, excavating machinery, monitors and electrical equipment), as well as further restrictions on the import of helium from Russia, which is a source of significant revenues for the regime.

Liechtenstein is added to a list of partner countries which apply a set of restrictive measures on imports of iron and steel from Russia, and a set of import control measures that are substantially equivalent to those of the EU.

Protection of EU operators

The package also includes measures to allow EU operators to claim compensation from damages caused by Russian companies due to sanctions implementation and expropriation. It also creates the instrument to draw up a list of company subject to a transaction ban for meddling with arbitration and court competence.

Other measures

Today’s package will impose restrictions on accepting applications for registrations in the EU of certain intellectual property rights by Russian nationals and companies, with the aim of offsetting the actions of the Russian government and courts illegitimately depriving EU intellectual property rights holders of their protection in Russia.

Lastly, it will be forbidden to purchase, import, transfer or export Ukrainian cultural property goods and other goods of archaeological, historical, cultural, rare scientific or religious importance, where there are reasonable grounds to suspect that the goods have been unlawfully removed from Ukraine.

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

Background

In its conclusions of 17 and 18 April 2024, the European Council reiterated its full unwavering support to Ukraine, its people and its independence, sovereignty and territorial integrity within its internationally recognised borders.

In its previous conclusions, the European Council also called for further steps to weaken Russia’s ability to continue waging its war of aggression, including by strengthening the sanctions, and implementing existing sanction fully and effectively.

On 21 May 2024 the Council greenlighted the use of net profits stemming from unexpected and extraordinary revenues accruing to central securities depositories in the EU, as a result of the implementation of the EU restrictive measures, for further military support to Ukraine, as well as its defence industry capacities and reconstruction.

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EU lists additional 69 individuals and 47 entities

As part of the comprehensive fourteenth package of sanctions adopted earlier today, the Council decided to impose restrictive measures on an additional 69 individuals and 47 entities responsible for actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine.

Today’s new listings target several businesspersons, propagandists and public figures, members of the army and the judiciary, persons responsible for deportation of Ukrainian children, as well as members of the Federal Security Service of the Russian Federation (FSB) involved in religious persecution in illegally annexed Crimea, and of the government.

Among the listed companies, there are some actively involved in circumventing EU sanctions through financial transactions and delivery of prohibited EU goods, and a company operating the Vostochny port that was used to ship weapons and ammunitions from the Democratic People’s Republic of Korea into Russia.

The list then includes several Russian military and defence industry companies, companies providing vital dual-use technologies used in the battlefield, and companies transporting weapons and military personnel towards the war zone.

Additionally, the EU designated Volga Dnepr Group and its subsidiaries for their role in providing services to the Russia’s military-industrial complex, as well as its shareholders.

Sovcomflot, Russia’s largest shipping company specialising in the transportation of liquefied gas, crude oil, and petroleum products, is also listed, together with its CEO, and other leading companies in the energy sector.

The EU sanctioned the ‘International Children’s Center Artek‘, which organises camps for children from Ukraine, including in the illegally occupied territories, the Kadyrov Foundation carrying out re educational programmes for Ukrainian children and teenagers, and the Belarusian Republican Youth Union, which is active in the deportation of Ukrainian children from the illegally occupied territories. Some of their notable representatives were also blacklisted.

Altogether, EU restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine now apply to over 2200 individuals and entities. Those designated today are subject to an asset freeze and EU citizens and companies are forbidden from making funds available to them. Natural persons are additionally subject to a travel ban, which prevents them from entering or transiting through EU territories.

The relevant legal acts, including the names of the listed individuals and entities, have been published in the Official Journal of the EU.

Background

In its conclusions of 17 and 18 April 2024, the European Council reiterated its full unwavering support to Ukraine, its people and its independence, sovereignty and territorial integrity within its internationally recognised borders. In its previous conclusions, the European Council also called for further steps to weaken Russia’s ability to continue waging its war of aggression, including by strengthening the sanctions, and implementing existing sanction fully and effectively.

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The EU Commission welcomes the Council’s adoption of a 14th package of sanctions against Russia

Brussels, 24 June 2024

The Commission welcomes the Council’s adoption of a 14th package of sanctions against Russia. The new package responds to the needs and findings on the ground, and tackles enforcement issues. As the Russian aggression against Ukraine continues, the EU remains determined to keep acting to further reduce Russia’s sources of revenue and capacity to wage war. Today’s measures send a clear and strong signal of EU unity and of our support to Ukraine and its people.

The package contains important new energy-related measures targeting liquified natural gas (LNG), and measures targeting vessels which support Russia’s war. As regards LNG, the package prohibits all future investments in, and exports to, LNG projects under construction in Russia. It will also prohibit, after a transition period of 9 months, the use of EU ports for the transshipment of Russian LNG. Moreover, the package prohibits the import of Russian LNG into specific terminals which are not connected to the EU gas pipeline network.

For the first time, the EU has adopted a measure targeting specific vessels contributing to Russia’s warfare against Ukraine, which are subject to a port access ban and ban on provision of services. These vessels can be designated for a broad array of reasons such as their support through the transport of military equipment for Russia, the transport of stolen Ukrainian grain and support in the development of Russia’s energy sector, for instance through the transport of LNG components or transshipments of LNG. This measure also targets tankers part of Putin’s dark fleet which circumvent the EU and Price Cap Coalition’s caps, while adopting deceptive shipping practices in complete disregard of international standards. In this first round of listings, the EU has placed 27 vessels on this list. This list can be updated as regularly as needed to address the ever-evolving involvement of those vessels helping Russia to wage war against Ukraine.

Moreover, the package introduces new listings targeting individuals and entities responsible for actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine. A total of 116 additional listings of 69 individuals and 47 entities are subject to asset freezes, and – in the case of individuals – also to travel bans.

Today’s package significantly strengthens our financial sanctions by introducing a ban for EU banks outside Russia to use the financial messaging system SPFS, which is the Russian equivalent of SWIFT. It also allows the Council to draw up a list of non-Russian third country banks connected to such system; those banks will be banned from doing business with EU operators. Last, it introduces a ban on transactions with banks and crypto assets providers, in Russia and third countries, that facilitate transactions supporting Russia’s defence-industrial base. These new sanctions will curb the ability of the Kremlin to channel funds to finance its war machine.

One of the key objectives remains to continue limiting Russian revenues, and to reinforce export restrictions on industrial goods and advanced technology. The package restricts export of nine additional dual-use and advanced technology items (e.g. microwave and aerial amplifiers, flight data recorders and All-Terrain Vehicles) and extends the export bans on certain types of industrial products chemical, plastics, vehicle parts and machinery goods (EUR 5 billion of EU exports prior to the invasion, in 2021). In addition, the export as well as the transfer of manganese ore are now prohibited.

The package also imposes stricter restrictions for the export of dual-use and advanced technology items to 61 entities – established in Russia (28) and in third countries (33) – which are directly or indirectly associated to Russia’s military complex and thus contribute to supporting the Russia’s war of aggression. In addition, the package also extends the import ban to helium which generates significant revenues for Russia.

As Russia is constantly looking for ways to circumvent sanctions, the EU has reassessed and adjusted its strategies. To further limit Russia’s ability to access restricted goods and technology, this package contains several measures meant to boost private sector compliance, support enforcement by national competent authorities, and hamper sanctions circumvention, including by keeping in check the foreign subsidiaries of EU operators.

It moreover includes specific initiatives to protect EU operators from expropriation and to respond to other illegitimate actions of the Russian state, including the theft of intellectual property.

The package also finetunes the import ban on Russian diamonds already agreed in the 12thsanctions package. It clarifies that the ban does not apply to diamonds that were located in the EU or in a third country (other than Russia), or were polished or manufactured in a third country, before the ban on Russian diamonds entered into force (so-called ‘grandfathering’). It also allows temporary imports or exports of jewellery, for example for trade fairs or repairs. Furthermore, the package prolongs by six months (until 1 March 2025) the sunrise period after which the full-traceability scheme for imports of rough and polished natural diamonds will become mandatory. In addition, it postpones the ban on jewellery incorporating Russian diamonds processed in third countries other than Russia until the Council decides to activate the ban in the light of action taken within the G7 to pursue that measure.

Furthermore, the new package includes measures that protect our democratic processes and combat Russian interference, such as prohibiting political parties from receiving funding from the Russian state. It also includes measures strengthening existing transport restrictions, and in particular the flight ban and the road transport prohibition.

A complete overview of the package is available in ourQ&A.

Background

The EU stands firmly with Ukraine and its people, and will continue to strongly support Ukraine’s economy, society, armed forces, and future reconstruction. EU sanctions are at the core of the EU’s response to Russia’s unjustified military aggression against Ukraine, as they degrade Russia’s military and technological capability, cut the country from the most developed global markets, deprive the Kremlin from the revenues it is financing the war with, and impose ever higher costs on Russia’s economy. In this respect, sanctions contribute to fulfilling the EU’s key objective, which is to continue to work for a just and lasting peace, not another frozen conflict. Their effects grow over time as the sanctions erode Russia’s industrial and tech base. The EU also continues to ensure that its sanctions do not impact energy and agrifood exports from Russia to third countries. As guardian of the EU Treaties, the European Commission monitors the enforcement of EU sanctions by EU Member States.

Anomalous, growing trade figures for some specific products/countries are hard evidence that Russia is actively attempting to circumvent sanctions. This calls for us to redouble our efforts in tackling circumvention and to ask our neighbours for even closer cooperation. EU Sanctions Envoy David O’Sullivan continues his outreach to key third countries to combat circumvention. The first tangible results are already visible. Systems are being put in place in some countries for monitoring, controlling, and blocking re-exports. Working with like-minded partners, we have also agreed alist of Common High Priority sanctioned goodsto which businesses should apply particular due diligence and which third countries must not re-export to Russia. In addition, within the EU, we have also drawn up alist of sanctioned goods that are economically criticaland on which businesses and third countries should be particularly vigilant.

More information

Link to Q&A

Link to Official Journal

More information on sanctions

 

EU Commission Q&A on the 14th package of restrictive measures against Russia

Brussels, 24 June 2024

CONTENTS OF THE PACKAGE

What does the 14thpackage consist of?

The14thpackageincludes the following elements:

ENERGY-RELATED MEASURES
  • Prohibition on providing goods, technology or services to LNG projects under construction in Russia, such as new terminals like Arctic LNG 2 or Murmansk LNG. This limits the future expansion of Russian LNG capacities.
  • Prohibition on the transshipment of Russian LNG through EU ports:this important restriction prohibits Russian LNG from being transhipped via EU ports, as well as the provision of related technical services. A derogation can be requested for transshipment of LNG when the destination of the cargo is another Member State. This will increase costs for Russia, which will no longer be able to use EU infrastructures to optimise the transport of its LNG across the world. The measure includes a 9-month wind-down.
  • Prohibition on the import of Russian LNG into specific terminals which are not connected to the EU gas pipeline network.This will complement the measures under the Decarbonised Gases and Hydrogen package which allow Member States to limit the import of Russian gas into their national network, in line with the REPowerEU objectives.
  • Listings of vessels supporting the Russian warfare:these vessels are prohibited from accessing ports and receiving services (see more in the section on transport measures).
ANTI-CIRCUMVENTION MEASURES
  • Best efforts obligation concerning foreign subsidiaries: EU companies will have to undertake their best efforts to ensure that their subsidiaries in third countries do not take part in any activities undermining EU sanctions.
  • “No Russia” clausefor Intellectual Property Rights (IPR) transfers, to ensure that industrial know-how transferred outside the Union is not used to manufacture Common High Priority (CHP) goods intended for Russia.
  • Due diligence requirements for CHP goods: EU companies will have to perform due diligence to prevent CHP goods from reaching Russia, and to ensure that their foreign subsidiaries trading in CHP goods do the same.
ADDITIONAL LISTINGS
  • A total of116 additional listingsof 69 individuals and 47 entities subject to asset freezes, and – in the case of individuals – also to travel bans.Listings touch upon various sectors of the Russian state, including military companies, companies active in space engineering, in the chemical sector or in the explosives sector and leading Russian energy companies. The listings include actors involved in disinformation/propaganda activities, in support of Russia’s war of aggression against Ukraine.
FINANCIAL SECTOR MEASURES
  • Prohibition for EU banks outside Russia to connect and carry out transactions using the Financial Messaging System of the Central Bank of Russia (SPFS).SPFS is an initiative of the Central Bank of Russia aimed at avoiding international sanctions. Currently around 160 banks in the world are connected to SPFS. The measure is expected to contain the development of this system, curb Russia’s capacity to wage war and prevent our sanctions from being undermined.
  • Prohibition on transactions with third-country banks using SPFS to increase Russia’s financial resilience and to support the circumvention of our sanctions.It will be prohibited for EU operators to engage with any of the listed third-country banks.
  • Prohibition on transactions with banksand crypto assets providers, in Russia and third countries, that facilitatetransactions supporting Russia’s defence-industrial base. It will be prohibited for EU operators to engage with any of the listed banks and crypto assets providers.
TRADE-RELATED MEASURES
EXPORTS
  • Extension of the export restrictions on dual use/advanced technology items(e.g., “quadbikes”, microwave and aerial amplifiers and digital flight data recorders), aiming to further weaken Russia’s military capabilities.
  • Reinforcement of the current export bans on industrial goodsfocusing on four sectors which are key to Russia’s war economy:chemicals, plastics, vehicles parts and machinery,worth EUR 5 billion of annual exports prior to the invasion (2021).
  • Addition of 61 Russian and third-country entitiesto the list of entities associated to Russia’s military-industrial complex (including 33 entities registered in third countries: 19 in China/Hong Kong, 9 in Türkiye, 2 in Kyrgyzstan, 1 in India, 1 in Kazakhstan, 1 in UAE).
IMPORTS
  • Import ban on helium: Russia is substantially investing in its (energy-intensive) production of this component, which is key for the semiconductor and health industries. The aim of the ban is to avoid new dependencies and to create revenue potential for Russia.
  • Finetuning of the import ban on Russian diamonds: clarifying that the ban does not apply to diamonds that were located in the EU or in a third country (other than Russia), or were polished or manufactured in such third country, before the ban on Russian diamonds entered into force (so-called ‘grandfathering’). Allowing temporarily imports or exports of jewellery, for example for trade fairs or repairs. Prolonging by six months (until 1 March 2025) the sunrise period after which the full-traceability scheme for imports of rough and polished natural diamonds will become mandatory. Postponing the ban on jewellery incorporating Russian diamonds processed in third countries other than Russia until the Council decides to activate the ban in the light of action taken within the G7 to pursue that measure.
  • Extension of the Common High Priority (CHP) list: the CHP list, compiled by the EU and its international partners, was updated to include five HS codes concerning computer numerical control (CNC) machine tools used for weapons production. This update is now reflected in EU legislation.
TRANSPORT MEASURES
  • Aviation:prohibition on non-scheduled flights if a Russian person decides the origin or destination(regardless of ownership and control over the aircraft); introduction of uniform obligation to provide information about non-scheduled flights upon request of national authorities regarding aircraft ownership, passengers etc., also to avoid circumvention of the flight ban.
  • Road:tightening the existing prohibition to transport goods by road in the EU, including transit, to EU-companies owned 25% or more by Russian persons. Current EU road transport undertakings owned 25% or more by Russian persons would no longer be allowed to transport goods. In addition, companies owned 25% or more by Russian persons would no longer be allowed to become EU road transport undertakings.
  • Maritime: prohibition on port access and services for listed vessels. In the 14thpackage, 27 vessels are placed on this list, for their contribution to the Russian warfare in various sectors such as the transport of military equipment for Russia and the transport of stolen Ukrainian grain, participation in the dark fleet transporting Russian oil while conducting deceptive shipping practices, and support in the development of Russia’s energy sector, for instance through the transport of LNG infrastructure components or LNG transshipments.
PROTECTION OF EU OPERATORS
  • Legal basis for compensation claims in Member States courts: creation of a legal basis for EU operators to claim compensation in the EU for damages caused by Russian companies linked to sanctions implementation and expropriation. This will enable EU companies to recover such damages from the Russian counterpart’s possible assets in the EU.
  • Transaction ban to protect arbitration:this new measure allows imposing a transaction ban on those Russian companies that meddle with arbitration and court competence rules.
MEASURES PROTECTING INTELLECTUAL PROPERTY RIGHTS (IPR)
  • Prohibition on the acceptance, by EU and Member States’ intellectual property offices and authorities, of applications forregistration of, among others,new trademarks and patents requested by Russian persons and persons resident in Russia.
MEASURES COMBATTING RUSSIAN INTERFERENCE
  • Prohibition on accepting financingfrom theRussian stateand its proxies by political parties, NGOs and media service providers in the EU. This measure will help safeguard the integrity and independence of EU political processes, protect EU citizens from manipulation and defend the EU’s internal affairs from malign interference, against the background of increasing evidence of coordinated disinformation and interference campaigns in the EU linked to Russia.
ADDITIONAL MEASURES
  • Prohibition on EU and Member States funding to all Russian entities – and not only state-owned ones as was previously the case.This would align with already existing restrictions on public procurement.
  • Import ban on stolen Ukrainian cultural items:for cultural heritage products stolen from Ukraine.

 

ENERGY-RELATED MEASURES

How will the transshipment ban hurt Russian revenues from LNG?

Russia is currently using EU port facilities to unload Russian liquified natural gas from its large ice-breakers to smaller, cheaper vessels thereby optimising the transport of its gas to the rest of the world. The EU should no longer be facilitating the transport and sale of Russian LNG by allowing Russia to reduce its logistical costs. It will need to find alternative transshipment facilities, thereby increasing its costs.

How will the prohibition on investments and exports to LNG facilities under construction in Russia affect Russia’s LNG production?

Despite extensive export bans already in place, in particular in the energy sector, Russia still relies on key components manufactured by EU companies to finalise the construction of its new LNG terminals, such as Arctic LNG 2 and Murmansk LNG. EU high value products and technology should no longer serve the expansion of Russian LNG production and exports. EU operators will need to conduct their due diligence in order to verify that the goods and services they are exporting are not for use in Russian LNG facilities under construction.

Will the LNG-related measures impact the security of gas supply of the EU? Will they trigger a price increase for EU consumers?

The LNG-related measures are designed to continue ensuring the security of gas supply to the EU. The transshipment ban only affects Russia’s logistic costs to export LNG, but it does not prohibit (or target in any way) imports into the EU or anywhere else. LNG supplies to the EU will remain unaffected. At the same times, prices are not expected to be affected as LNG is a global market where prices are determined by the interplay between demand and supply globally, and global supply would not be affected by this transshipment ban.

 

DESIGNATION/LISTING OF VESSELS
Why are vessels listed? 

This provision empowers the EU to list vessels that are supporting Russia’s warfare against Ukraine. Such vessels can be listed on the basis of criteria such as the transport of military equipment, the transport of stolen Ukrainian goods such as grain, their participation in the dark fleet transporting Russian oil and their support to the exploitation or development of the Russian energy sector such as the transport of LNG infrastructure or transshipment of Russian LNG.

Which vessels are affected by this measure? 

Vessels subject to this measure are listed in Annex XLI. In the 14thpackage, for the first time the EU has listed 27 vessels for their involvement in the transport of military equipment and stolen Ukrainian grain, their participation in the dark fleet transporting Russian oil and their support to the development of the Russian LNG sector.

What is the scope of the measure against vessels? 

A vessel listed in Annex XLI is subject to a port access ban, and a prohibition to provide a broad array of maritime services and others services such as financing and financial assistance including insurance and brokering flag registration, technical assistance, bunkering, ship supply services, crew changes services, other services including bunkering, ship supply services, crew changes services, cargo loading and discharge services, fendering and tug services. This means that such services cannot be provided by EU operators, in ports or outside of territorial waters. It is also prohibited to charter, operate or crew such a vessel, as well as to engage in ship-to-ship transfers or any other transfer of cargo with, or procure any services from, such a vessel. The full list of services is accessible in Article 3s of Council Regulation 833/2014.

 

ANTI-CIRCUMVENTION MEASURES

Is the Council extending the reach of sanctions beyond EU territory?

EU sanctions are not extraterritorial. At the same time, it is important that the foreign subsidiaries of EU companies do not engage in activities that go against the purpose of our sanctions, weakening their impact. It falls on the parent companies to work in this direction, through the leverage they have over their foreign subsidiaries. The legislation adopted as part of the new package requires them to undertake their “best efforts” in doing so. Moreover, it requires them to ensure that their subsidiaries are particularly careful when it comes to trade in specific types of sensitive goods, by using the “no Russia” clause in their contracts, and by conducting appropriate due diligence.

Have any changes been made to the “no Russia” clause provision?

A few elements have been added in order to reduce the implementation burden for EU operators:

  • First, for contracts concluded before the adoption of the 12thpackage, the deadline to ensure compliance was extended from 20 December 2024 to 1 January 2025.
  • Second, an exemption was added for contracts concluded as part of public procurement in third countries. Such contracts will still need to be notified to the national competent authorities;
  • Third, Iceland and Liechtenstein have been added to the list of partner countries.

The Commission will assess the impact of the “no-Russia clause” in order to understand its impact on deterring circumvention. The Commission will also consider other appropriate actions to curb Russia’s access to sensitive goods, including the possibility of requiring Union operators to ensure that their subsidiaries in third countries also use the “no-Russia clause”.

How does the “no Russia” clause for intellectual property rights work?

The 11thsanctions package prohibited the transfer to third parties of industrial know-how, such intellectual property rights and trade secrets, if that was to be used, for instance, to manufacture goods intended to Russia which are subject to export restrictions. This measure addressed the practice of certain EU companies of delocalising production of restricted goods to third countries, so that manufacturing could take place locally and export to Russia could be done avoiding any control.

The new measure adopted in this package requires EU companies to include in their contractual arrangements with third-country parties an obligation that their transferred intellectual property right will not be used, by them or their sublicensees, for manufacturing CHP goods destined to Russia.

What are the new due diligence requirements about?

The new requirements focus on Common High Priority (CHP) items. Union operators selling, supplying, transferring or exporting such items to third countries, other than partner countries, will be required to have due diligence mechanisms capable of(i)identifying and assessing the risks of re-exportation to Russia and(ii)mitigating such risks. This will help combat the re-exportation of CHP goods to Russia. Moreover, Union operators will need to ensure that their foreign subsidiaries that deal in CHP items also implement these requirements. These measures will serve to further restrict Russia’s access to CHP items.

How was the road transportprohibition tightened?

There was increasing evidence that the current road transport prohibition was at risk of being circumvented through the establishment or purchase by Russian persons of EU road transport undertakings. The 14thpackage therefore introduces an additional measure preventing EU companies which are owned 25% or more by Russian natural or legal persons from becoming EU road transport undertakings. Current EU road transport undertakings which have 25% or more Russian ownership will also no longer be allowed to transport goods. Any EU road transport undertaking may be requested by its national authority to provide information on its ownership structure.

 

ADDITIONAL LISTINGS

Who have you targeted?

The 14thpackage of EU sanctions adds 69 individuals and 47 entities to the list of natural and legal persons subject to asset freezes and the prohibition to make funds and economic resources available to them.

What entities have been targeted and in which countries?

The new listings touch upon various sectors of the Russian state, including military companies, companies active in space engineering, in the chemical sector or in the explosives sector and leading Russian energy companies. The listings also include key players involved in propaganda and disinformation activities in support of Russia’s war of aggression against Ukraine.

 

FINANCIAL SECTOR MEASURES

How is the SPFS ban going to work in practice?

The new package prohibits transactions using the Financial Messaging System of the Bank of Russia (SPFS). SPFS is the Russian equivalent of SWIFT. The system is an initiative of the Central Bank of Russia, aimed at neutralising the impact of EU sanctions. The new measure prohibits the Union entities which operate outside of Russia from directly connecting to this system. The new measure also allows for the listing of specific third country operators (e.g., foreign banks) that use SPFS in a transaction ban. Since the EU long-standing stance is that its sanctions against Russia do not target in any way the trade in agricultural and food products, including grain and fertilisers, between Russia and third countries, the wholesale exemption for agri-food trade in the transaction ban is maintained also for entities using the SPFS.

The measures have a dual approach. First, they prohibit the direct connection of EU banks, which operate outside of Russia to the SPFS. The proposal provides for exceptions, such as for energy payments or repayment of debt. Second, to impose a transaction ban on certain entities in third countries that are using SPFS. Those entities (e.g., third country financial institutions) would be listed in an annex.This is expected to significantly curb Russia’s capacity to wage war and prevent the frustration of our sanctions. Again, specific exemptions are provided, for example on agri-food transactions or humanitarian assistance.

 

TRADE-RELATED MEASURES

What are the “improved export bans” introduced with the 14thpackage of sanctions?

The 14thpackage introduces new bans that do not concern “new” categories of products, but rather reinforce current sanctions: this focuses on chemicals, plastics, vehicles parts, machinery. This is to deny Russia additional technology and inputs for its war economy.

The measures are broadening several of the existing 6-digit bans to full 4-digits. This will make it easier for customs officials to check compliance of exports with sanctions. This concerns in particular:

  • Products of the chemical industry, including manganese ores, silicon dioxide, chlorides, carbonate, as well as compounds of rare-earths, refractory cements, chemicals for batteries.
  • Products of the plastic industry: this would cover the full scope of cellulose products and their derivatives.
  • Vehicles parts, incl. replacement parts for trucks; engines for all types of vehicles; and a limited number of car parts.
  • Machinery and appliances like boring/excavating machinery, appliances for pipes; electrical equipment; monitors, radios, and video/audio equipment.
Why do you need a finetuning of the import ban on Russian diamonds?

Overall, the proposed sanctions on Russian diamonds are part of a concerted G7 effort to introduce aninternationally coordinated diamond ban, that aims at depriving Russia of this important revenue stream estimated at EUR 4 billion per year, of which approximately EUR 1.5 billion are annual imports into the EU.

To finetune the ban already agreed in the12thsanctions package, we need a grandfathering clause for stocks of diamonds held in the EU and in third countries (but outside Russia). These stocks no longer provide revenue to Russia, so this is not a “concession”. The 14thpackage clarifies that diamonds that were physically located in the EU or a third country other than Russia, or were polished or manufactured there, before the import ban on Russian diamonds entered into force, are not subject to the ban.

We are also introducing the possibility to temporarily import or export jewellery, for example for trade fairs or repairs.

To allow more time to set up the G7 traceability scheme, we are prolonging by six months (until 1 March 2025) the sunrise period during which the G7 certification mechanism is still recommended to facilitate importation but optional and importers of diamonds may continue providing documentary evidence for importation of both rough and polished natural diamonds into the EU. On 1 March 2025 the full-traceability scheme for imports of rough and polished natural diamonds will become mandatory.

Finally, we are postponing the ban on jewellery incorporating Russian diamonds processed in third countries other than Russia, which was foreseen to enter into force on 1 September. The Council may decide to activate the ban at a later stage when partners within the G7 pursue that measure.

 

PROTECTION OF EU OPERATORS

Why do we need a legal basis for EU operators to claim compensation for damages caused by Russian companies?

Currently, EU companies that, for instance, end a contract with a Russian firm to comply with sanctions are shielded by possible claims in the EU. However, they can be sued in Russia for that and have their assets there seized. The new instrument establishes a specific legal basis for EU companies to recover such damages from the Russian counterpart’s possible assets in the EU. An additional provision was also adopted to allow EU companies to recover damages from those who benefit from the illegitimate temporary management imposed by the Russian Government on certain EU companies that are located in Russia.

How is the transaction ban to protect arbitration going to work in practice?

An amendment to the Russian Commercial Procedural Code enabled Russian companies to have a Russian-court “order” EU-companies to stop arbitrations or proceedings outside Russia, against Russian entities, under the threat of seizure of their assets in Russia. Today’s measure allows imposing a transaction ban on those Russian companies that by doing this meddle with arbitration and court competence rules.

 

MEASURES PROTECTING INTELLECTUAL PROPERTY RIGHTS (IPR)

Why has the EU imposed a ban on accepting applications for registration of certain intellectual property rights? 

Russia is on the offensive on depriving protection of intellectual property rights of our companies in Russia. Russia wants to get hold of Union industrial know-how, which is the result of R&D investments. It does that to localise production and cut economic dependency on the EU and ultimately neutralising sanctions. The new measure requires Union Intellectual Property Offices and other competent institutions not to accept new applications for patents, trademarks and other intellectual property rights from Russians. Russians can still use their new trademarks and technology in the Union. They will simply not be protected against the use by a Union company or exchanges as a property title. Their existing registered intellectual property rights will not be cancelled.

OTHER MEASURES

What do the new aviation measures consist of?

Two provisionshave been included with the aim of tackling circumvention of the flight ban and ensuring its full implementation:

  • Ban on non-scheduled flights decided by Russian persons

The flight ban applies not only to Russian airlines and to aircraft owned or controlled by Russian persons or companies but also to any aircraft where a Russian person or company decides origin or destination of the flight.

It is also specified that the flight ban does not apply to smaller aircraft when used for recreational or training purposes.

  • Obligation to provide information on non-scheduled flights

Introduction of a uniform obligation to provide in advance information about non-scheduled flights upon request of national authorities, including with respect to: (i) the actual ultimate beneficial owner of the aircraft and the person or company ultimately chartering the aircraft; and (ii) (where are reasons to suspect circumvention) the passengers of the flight, including documents such as a general declaration, passenger manifest and other official documents.

Why has the prohibition on public financing been extended?

EU sanctions on Russia already included a prohibition to provide any public support, including financing to publicly owned entities in Russia. This is now broadened to all entities established in Russia. Limited derogations apply, in particular for Member States cultural and educational centres or civil society organisations still operating in Russia.

Political parties, NGOs and media service providers will now be prohibited from accepting financing from the Russian state. How is this justified?

The 14thpackage introduces a prohibition on certain EU entities from accepting donations, economic benefits or other financing from the Russian state, state-owned entities or its proxies. European and national political parties, non-governmental organisations (NGOs) and media service providers in the EU will be prohibited from accepting this financing. This is done to combat Russian interference in the EU’s democratic processes and attempts by the Russian state to undermine our democratic foundations and public opinion forming processes, including through influence campaigns and the promotion of disinformation aiming to justify and support its war of aggression against Ukraine. This also complements the objectives the EU’s Defence of Democracy Package, which introduces common transparency standards to protect the EU democratic sphere, promote institutional trust and protect open public debate from interference.

 

GENERAL

What is the added value of imposing such sanctions?

EU sanctions fulfil the EU’s key objective, which is to continue to work for a just and lasting peace, not another frozen conflict.

The EU stands firmly with Ukraine and its people, and will continue to strongly support Ukraine’s economy, society, armed forces, and future reconstruction.

EU sanctions are at the core of the EU’s response to this unjustified military aggression against Ukraine, as they aim at concrete and measurable results linked to the weakening of Russia’s economic capacity, thereby limiting its ability to finance the war.

The data available at this stage show that the sanctions have already imposed an immediate, high, and growing cost on the Russian economy. This is not only about EU exports to Russia, which have decreased by 60% between 2021 and 2023. This is also about Russia not being able to replace these exports.

Sanctions need to be properly implemented. Ensuring an effective and diligent implementation of sanctions is key to prevent circumvention. This is primarily the responsibility of Member States. In this process, the European Commission is fully committed to assisting national authorities and ensuring a consistent implementation across the Union.

More information

Press release

Link to Official Journal 

European Commission website on Ukraine

Q&A on restrictive measures

 

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