On 16 December 2022, the EU again tightened economic sanctions against Russia in response to its ongoing war of aggression against Ukraine. The ninth sanctions package builds on those of 6 October 2022 (newsletter of 10 October 2022), 21 July 2022 (newsletter of 28 July 2022), 3/4 June 2022 (newsletter of 9 June 2022), 9 April 2022 (newsletter of 12 April 2022), 16 March 2022 (newsletter of 18 March 2022), 28 February/2 March 2022 (newsletter of 7 March 2022) and 24 and 26 February 2022 (newsletter of 28 February 2022).
The ninth package continues to target the Russian economy and those who are instrumental in the war. It therefore introduces a number of measures ranging from additional personal sanctions to new export controls and restrictions, further action against banks and the media, and the extension of the ban on consultancy services and on investments in the energy and mining sectors.
The latest sanctions package (comprising Regulations (EU) 2022/2474 and 2022/2475 and Implementing Regulation (EU) 2022/2476) tightens and modifies the existing sanctions against Russia – in particular, the personal sanctions in Regulation (EU) 269/2014 and the financial and trade sanctions in Regulation (EU) 833/2014.
Personal sanctions
The EU has added 141 individuals and 49 entities to the list of personal sanctions, which now has more than 1,500 entries. Regulation (EU) 269/2014 freezes funds and economic resources belonging to, owned or held by the persons and entities listed in Annex I to the Regulation. No funds or economic resources may be made available, directly or indirectly, to or for the benefit of these persons and entities.
- The ninth sanctions package expands the list in Annex I to Regulation (EU) 269/2014 to include additional persons from the Russian government and political sphere, in particular persons responsible for various events in connection with Ukraine as well as family members of persons already listed. The Credit Bank of Moscow and JSC Dalnevostochny Bank have also been added, as well as several entities from the Russian defence, industry and media sectors.
- Ongoing sales or transfers under Article 6b(2b) and (2c) Regulation (EU) 269/2014, for which funds and economic resources may be released by special authorisation, can now be completed by 17 June 2023 instead of the previously specified 31 October 2022. Both this special authorisation option and the exemptions under Article 6e relating to agricultural products have been extended to cover the newly listed Credit Bank of Moscow and JSC Dalnevostochny Bank. This does not mean, however, that sales that do not meet the requirements under this Regulation will become valid retroactively. The deadline specified in connection with the special authorisations under Article 6b(3) Regulation (EU) 269/2014 has been extended from 31 December 2022 to 28 February 2023.
Financial and trade sanctions
The EU also adopted further measures expanding and tightening financial and trade sanctions:
- The export restrictions on goods and technologies that might contribute to Russia’s military and technological enhancement or the development of the defence and security sector (Annex VII to Regulation (EU) 833/2014) have been broadened, in particular. The list of bodies connected to Russia’s military-industrial complex (Annex IV to Regulation (EU) 833/2014) has also been extended by 168 entries. To avoid circumvention, some Russian-controlled entities based in illegally annexed Crimea or Sevastopol are also included in the list.
- The ban on new investments in the Russian energy sector under Article 3a Regulation (EU) 833/2014 has been expanded, and new investments in the Russian mining sector are now prohibited as well. Exceptions apply to activities involving certain critical raw materials.
- The ban on exporting goods and technologies suited for use in aviation or the space industry laid down in Article 3c Regulation (EU) 833/2014 has been extended to aircraft engines and their parts. This applies to both manned and unmanned aircraft, meaning that from now on the direct export of drone engines to Russia and any third country that could supply drones to Russia – such as Iran – is prohibited. The new paragraph 6b of Article 3c Regulation (EU) 833/2014 provides for special authorisations for space technology and goods intended only for medical, pharmaceutical or humanitarian purposes.
- The import bans on iron and steel products under Article 3g Regulation (EU) 833/2014 have been specified in greater detail. For example, import volume quotas have also been introduced for goods falling under CN code 7224 90 (slabs of other alloy steel).
- The wind-down periods have been extended until 18 June 2023 for the import ban on methanol and methyl alcohol (Article 3i(3ba) Regulation (EU) 833/2014) and until 8 January 2023 for the export ban on certain goods pursuant to Article 3k in conjunction with Annex XXIII to Regulation (EU) 833/2014. In addition, special authorisation can now be obtained for certain household goods or the provision of related technical or financial assistance if such goods or assistance are necessary for personal household use of natural persons (Article 3k(5a) Regulation (EU) 833/2014).
- The provisions restricting Russian oil imports have been modified to allow the transfer of petroleum products to Ukraine; in addition, certain reporting requirements now apply for transactions involving natural gas condensates of subheading CN 2709 00 10 originating in Russia (Articles 3m and 3n Regulation (EU) 833/2014).
- The prohibition on nationals of an EU Member State holding posts in governing bodies has been extended under the new Article 5aa(1b) Regulation (EU) 833/2014 to all Russian state-owned or state-controlled legal persons, entities or bodies established in Russia.
- Similarly, the prohibitions on consulting and other services in Article 5n Regulation (EU) 833/2014 have been broadened to include market research and public opinion polling services, technical testing and analysis services and advertising services. A corresponding wind-down period applies until 16 January 2023.
- Article 12b(1) Regulation (EU) 833/2014 introduces the possibility of authorising – until 30 September 2023 – the sale, supply or transfer of goods and technologies listed in Annexes II, VII, X, XI, XVI, XVIII, XX and XXIII, which is in principle prohibited under Articles 2, 2a, 3, 3b, 3c, 3f, 3h and 3k Regulation (EU) 833/2014, if this is strictly necessary for the divestment from Russia or the wind-down of business activities in Russia. For this to be the case, the goods and technologies must be owned, at least indirectly, by a national of or an entity from a Member State and must have been physically located in Russia before the relevant prohibitions entered into force, and there must be no indication that they have a military end-use in Russia. Article 12b(2) Regulation (EU) 833/2014 contains a similar provision for authorising the import or transfer of goods listed in Annexes XVII and XXI, which is in principle prohibited under Articles 3g and 3i Regulation (EU) 833/2014.
This is to make it easier for European companies to wind down their business activities in Russia and withdraw completely from the Russian market.
Conclusion and outlook
Given the plethora of new provisions – especially relating to import and export restrictions – companies should be extremely vigilant as sanctions are now linked to a wide variety of circumstances. Further variations and increasingly specific exceptions have also been added, especially in connection with winding down business activities in Russia. The various (and once again extended) prohibitions on services under Article 5n Regulation (EU) 833/2014 have very specific practical implications and businesses and consultants alike should pay particular attention to them.
As before, companies need to keep a close eye on developments, monitor the complicated web of EU and U.S. sanctions as well as Russian countersanctions, and adapt their business operations accordingly. We will of course keep you informed of the latest changes in this regard as there is currently no end in sight to the sanctions against Russia. On the contrary: further sanction packages and consequently further changes in the legal situation are to be expected.
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