Latest EU sanctions package targets Russian LNG, cracks down on circumvention
The European Union has announced its 14th package of sanctions against Russia, which it says, ‘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.’
On 20 June, the EU levied a fresh round of sanctions against Russia for its war in Ukraine, among other measures targeting dozens of individuals and entities in China, Kazakhstan, Kyrgyzstan, Turkey and United Arab Emirates (‘UAE) for alleged circumvention of sanctions and unleashing a host of other restrictions.
In a press release, 24 June, the Council explained that under the new measures:
● 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[1]to-shore transfers, as well as re-loading operations, and does not affect import but only re[1]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.
● 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, the Council 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.
● 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.
● 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.
● 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.
● 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.
● The prohibition on the transport of goods by road within the territory of the EU has been broadened.
● 61 new entities have been added to the list of those supporting Russia’s military and industrial complex, some of them located in third countries including China, Kazakhstan, Kyrgyzstan, Turkey and the United Arab Emirates (‘UAE’).
● ‘All Terrain Vehicles’ have been added to the list of restricted items that could contribute to the technological enhancement of Russia’s defence and security sector.
● There are 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 has been 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.
● Measures to allow EU operators to claim compensation from damages caused by Russian companies due to sanctions implementation and expropriation have been introduced, as well as an instrument to draw up a list of companies subject to a transaction ban ‘for meddling with arbitration and court competence.’
