EU announces second round of economic sanctions against Russia

Out-Law News | 09 Sep 2014 | 5:21 pm | 2 min. read

An enhanced package of economic sanctions against the Russian Federation will come into force shortly, the European Union has announced.

The measures, which reportedly include new restrictions on access to European financial markets by Russian state-owned oil companies, are aimed at "promoting a change of course in Russia's actions destabilising eastern Ukraine," according to a statement by EU council president Herman Van Rompuy.

They will enter into force "in the next few days" to allow time for a new cease-fire agreement in the region to take effect, and may be reviewed depending on the outcome of that agreement, Van Rompuy said. Details of the new sanctions will only be made public the day before they come into force, when they will be published in the EU's Official Journal.

The new measures build on and reinforce sanctions adopted by the EU on 31 July and cover "access to capital markets, defence, dual use goods and sensitive technologies", according to the announcement. The Wall Street Journal said that the package would prevent state-owned oil companies from raising funds with maturities of longer than 30 days in the EU's capital markets. These restrictions would apply to Transneft, Rosneft and the oil production subsidiary of state-owned gas company Gazprom.

The EU will also extend its list of individuals covered by existing travel bans and asset freezes to include the new leadership in Donbass, the government of Crimea, as well as Russian decision-makers and oligarchs, it said.

"The selection and assessment of the options considered for this second round of economic sanctions followed the same criteria (effectiveness, cost/benefit, balance across sectors and member states, international coordination, reversibility/scalability, legal defensibility/ease of enforcement) which guided the work on the previous package," said Van Rompuy and José Manuel Barroso, president of the European Commission, in a letter to member states (1-page / 65KB PDF).

"The package agreed in July was in fact designed to be scaled up if necessary, with different gradation possible for action in the four areas concerned," they said.

The existing sanctions package entered into force on 31 July and prevents EU nationals and companies from buying or selling new bonds, equity and similar financial instruments with a maturity of more than 90 days issued by the major state-owned Russian banks. Imports and exports of arms and related materials to and from Russia, and exports of goods and technology on the EU's list of dual use goods are also banned.

The current sanctions also restrict the exports of certain 'sensitive technologies', particularly energy-related equipment and technology, to Russia. Any such exports must receive prior authorisation from the government of the relevant member state and permission will be denied if the products are destined for deep-water oil exploration or production, arctic oil exploration or production, or shale oil projects in Russia.

Last month, the Russian Federation banned imports of EU agricultural products including meat, fish, dairy products, fruit and vegetables for one year in retaliation for the EU's sanction package. The European Commission has already put in place a number of emergency measures to support the producers of peaches, nectarines and perishable fruit and vegetables, as well as certain dairy products, affected by the ban. At its latest meeting, the European Council called for these measures to be extended and to potentially include "well-targeted compensation" for those producers most affected.