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Ukraine Crisis – EU Sanctions Update

Mayer Brown
30/06/2022

UPDATE:

June 29, 2022

  • Council Takes the First Step to Make Violation of EU Sanctions an EU Crime: On 28 June 2022, the Council reached an agreement at technical level on the Commission’s proposal to make violation of EU sanctions an EU crime. This would allow the Commission to propose a directive defining the scope and the criminal penalties for the violation of sanctions across Member States in a consistent manner. The Council’s Permanent Representative Committee still has to officially endorse the agreement and to request the consent of the European Parliament before the final adoption of the text. (https://data.consilium.europa.eu/doc/document/ST-10556-2022-INIT/en/pdf).

  • EU Commission Extends Support for the Integration of Ukrainian Refugees: The European Commission adopted a new comprehensive package to extend the support provided under the Cohesion’s Action for Refugees in Europe (“CARE”) to further speed up and simplify Member States’ support to the integration of third country nationals. The new package provides for more support for Member States, local authorities and civil society organizations welcoming displaced people, ensures that investments go where they are needed and provides practical support to solve the problem of delayed implementation of projects. (https://ec.europa.eu/commission/presscorner/detail/en/IP_22_4043).
  •  NATO Formally Invites Finland and Sweden to Alliance: NATO formalized its invitation to Finland and Sweden to the alliance, according to a statement from NATO Heads of State and Government on Wednesday. The statement added, “The accession of Finland and Sweden will make them safer, NATO stronger, and the Euro-Atlantic area more secure.” (https://www.cnn.com/2022/06/29/politics/joe-biden-nato-day-2/index.html).

UPDATE:

June 28, 2022

UPDATE:

June 27, 2022

  • Lithuania’s President Vows To Stick To Kaliningrad Restrictions: Lithuanian President Gitanas Nauseda has stressed that his Baltic country “must” and “will” enforce EU sanctions on Russian goods amid harsh rhetoric from Moscow over Vilnius’s recent restrictions affecting the Russian exclave of Kaliningrad. He called for an “urgent” start to consultations with the European Commission to protect Lithuania’s interests and international obligations in the shadow of sanctions against Ukraine’s “aggressor.” (https://www.rferl.org/a/lithuania-kaliningrad-eu-sanctions-enforce-russia/31915719.html).

  • Russian Hackers Temporarily Disable Lithuanian Government Websites: On Monday, the websites for the Lithuanian State Tax Inspectorate and the Migration Department were temporarily disabled as a result of a distributed denial of service (“DDOS”) attack. A pro-Moscow hacking group, Killnet, has claimed responsibility for the actions. Russia repeatedly warned Lithuania that the country would “retaliate” in response to Lithuania’s decision to disrupt transportation to the Russian enclave of Kaliningrad. (https://www.nbcnews.com/tech/security/cyberattack-hits-lithuania-sanctions-feud-russia-rcna35488).

  • EU Commission Answers Parliamentary Question of Circumvention: Commissioner McGuinness answered a parliamentary question seeking clarification on how the European Union plans to prevent Russia circumventing sanctions through illegal transactions using dummy companies. The Commission notably recalls that it will conduct a review of practices that circumvent and undermine sanctions which will inform possible legislative proposals or implementation guidelines. (https://www.europarl.europa.eu/doceo/document/E-9-2022-001491-ASW_EN.pdf).

  • France Pushes for Cap on Oil Prices Worldwide: While G7 leaders have been debating a price-cap plan targeting Russian oil exports, the services of the French president confirmed that France is pushing for a cap on oil prices “not only on Russian oil” but that “take[s] into account all market players”.  (https://www.politico.eu/article/france-wants-worldwide-cap-on-oil-prices/).

  • Hungary Will Not Discuss Ban on Russian Oil With EU: Speaking over Facebook, Hungarian Foreign Minister Peter Szijjarto said on Monday that “Hungary doesn’t want to hold talks on a gas embargo… That would practically incapacitate our economy and the entire country…” (https://tass.com/economy/1472149)

UPDATE:

June 24, 2022

  • Germany Considering Nationalizing Nord Stream II Pipeline: On Friday, reports emerged that Germany is considering nationalizing part of the Nord Stream II Pipeline. This would allow the pipeline to connect to a floating LNG terminal that is already connected to Germany’s gas transmission system. German analysts are still working through the legal and political consequences of the action. (https://news.yahoo.com/germany-could-nationalize-part-nord-162000632.html).

  • Russia Sanctions vs. Recession Risk in Europe: EU States Look to Stem Rising Inflation: Since Russia invaded Ukraine four months ago, the cost of living crisis has become a global issue. Prices have gone up around the world. In Europe, the countries that use the euro saw an average of 8.1 percent inflation in May. Pressure on prices, combined with stuttering economic growth, has sparked fears of a recession. These concerns could still come into play regarding the EU’s response to the Russian invasion of Ukraine. In this program, we’re joined by two MEPs to discuss how the EU should balance sanctions against Russia with the risk of recession. (https://www.france24.com/en/tv-shows/talking-europe/20220624-russia-sanctions-vs-recession-risk-in-europe-eu-states-look-to-stem-rising-inflation). 

UPDATE:

June 23, 2022

  • Uncertainties Regarding the Application of Sanctions to Kaliningrad: Following the decision of Lithuania to ban the transit of goods under EU sanctions from mainland Russia to Kaliningrad, the Commission is said to be working on new guidance that makes clear that Lithuanian customs authorities have to check the goods to avoid sanctions evasion, but can allow onward transport of metals if they are destined for Russia’s internal market. Lithuanian Prime Minister Ingrida Šimonytė insists, however, that the transit ban on steel and ferrous metal through the EU is part of the bloc’s sanctions, as agreed by all 27 members. (https://www.politico.eu/newsletter/brussels-playbook/kaliningrad-simmers-enlargement-hypocrisies-renew-and-bulgaria/).

  • Hungary Pushes for Ceasefire, No Additional Sanctions: Speaking on the sidelines of an EU summit on Thursday, Balazs Orban, a senior aide to Hungarian Prime Minister Viktor Orban stated that the bloc should not seek any more sanctions on Russia, and instead push for Russia and Ukraine to organize a ceasefire and conduct negotiations. He stated, “At the end of the day Europe will be on the losing side of this war because of the economic problems. Our recommendation would be that we should stop the sanction process.” (https://www.reuters.com/world/europe/no-more-eu-sanctions-russia-needed-negotiations-better-option-hungary-2022-06-23/).

  • Germany Moves to Gas “Alert Level”: On Thursday, Germany announced that it had moved to its so-called “alert level” of its emergency gas plan. The move means that Germany now seeks a high risk of long-term gas supply shortages. The shift can come  when there is “disruption of gas supply or exceptionally high gas demand which results in significant deterioration of the gas supply situation occurs but the market is still able to manage that disruption or demand without the need to resort to non-market-based measures.” (https://www.cnbc.com/2022/06/23/germany-triggers-alert-level-of-emergency-gas-plan-sees-high-risk-of-long-term-supply-shortages.html).

UPDATE:

June 22, 2022

  • Council of the EU Adopts Conclusions on a Framework for Coordinated EU Response to Hybrid Campaigns: The Council of the EU adopted its non-binding conclusions on a framework for coordinated EU response to hybrid campaigns. While recalling that primary responsibility for countering hybrid threats lies within Member States, the Council identified the main principle that should guide coordinated EU response. The Council notably calls on Member States to develop an efficient monitoring mechanism and to collect relevant early signals and exchange information. Priority should be given to measures aiming to mitigate and terminate the impact of a detected campaign, as well as to prevent its further expansion and escalation. (https://www.consilium.europa.eu/en/press/press-releases/2022/06/21/council-conclusions-on-a-framework-for-a-coordinated-eu-response-to-hybrid-campaigns/).

  • Council of the EU to Remove Russian Lobbies from Transparency Register: The French presidency of the Council informed national diplomats last week of its intention to have representatives of Russian interests suspended from the EU’s transparency register. Inclusion in the register is a requirement for access to the European Commission, Parliament and Council premises. The European Parliament already banned lobbyists for Russia-based entities earlier this month. (https://www.politico.eu/article/eu-russia-lobbyist-ban/).

UPDATE:

June 21, 2022

  • Top Advisor to German Chancellor Suggests Focusing on Long-Term Relationship with Russia: German Chancellor Olaf Scholz’s top foreign policy aide suggested Europe should focus more on preserving long-term relations with Russia and less on the specifics of German tank shipments to Ukraine. He also called for a softer approach toward China and argued that Ukraine should not be granted any “rebates” on its bid to become an EU member. (https://www.politico.eu/article/plotner-unplugged-top-germany-adviser-controversy-russia-comments/).

  • Airbus Calls on International Community to Spare Russian Titanium from Sanctions: On Tuesday, major European aerospace manufacturer Airbus urged the international community to avoid imposing sanctions on Russian titanium, as the company is heavily reliant on the product in its operations and approving new suppliers is difficult. Though Airbus is not the only importer of Russian titanium, American companies Boeing and Raytheon have publicly announced their intent to cease partnerships with Russian titanium providers. (https://www.wsj.com/articles/airbus-calls-on-west-to-avoid-sanctions-on-russian-titanium-11655817028).

UPDATE:

June 20, 2022

  • Member States Push for Seventh Sanctions Package, Funds for Ukraine: Reuters reported on Monday that “about one-third of the 27 EU governments, mostly Nordic and eastern states, want the EU Commission to begin work on a seventh round of sanctions.” Draft copies of conclusions obtained by Reuters do not currently indicate new sanctions are coming, but the draft may be revised. In addition, Sweden and Poland are also calling for additional funds to Ukraine through the European Peace Facility. (https://www.reuters.com/world/europe/eu-nations-push-new-russia-sanctions-more-military-aid-ukraine-2022-06-20/).

  • Germany Conducts First Seizure of Sanctioned Real Estate: Prosecutors in Munich seized three private apartments and a bank account owned by a member of the Russian Duma and his wife on Monday. It is believed to be the first seizure of real estate assets of an individual sanctioned under the new Russia sanctions regime in Germany. The tenants currently occupying the apartments will continue living in the flats, but will pay rent directly to the Munich district court. (https://www.dw.com/en/germany-seizes-first-russian-owned-property-under-sanctions/a-62191796).

  • Russian Gas Cuts Impact Summer Filling Season: On Monday, The Wall Street Journal looked at the impact recent gas cuts had on European energy companies, noting that the summer months are typically the “filling season,” where energy companies stock up on gas supplies for the winter while demand for heat is low. Given the reduction in Russian gas exports, this filling campaign is going slower than usual, which has led some countries, like Germany, to unveil mitigation strategies even while demand is low. (https://www.wsj.com/articles/less-russian-gas-puts-europes-winter-fuel-supply-in-jeopardy-11655725207?mod=hp_lead_pos10).

UPDATE:

June 19, 2022

  • Polish Official Calls for Tougher Sanctions on Russia: In a Saturday interview with German newspaper Welt am Sonntag, Poland’s Deputy Foreign Minister Marcin Przydacz said that the sixth EU sanctions package “was not enough to weaken Putin and his military machine sufficiently.” His proposals for a seventh EU sanctions package include a total ban on the export of EU dual use goods to Russia. Polish negotiators are expected to push for a seventh EU package during an EU foreign minister’s meeting on Monday in Luxembourg. (https://www.thefirstnews.com/article/poland-calls-for-tougher-sanctions-on-russia-31142).

  • Lithuania Bans Transit Through its Territory to Kaliningrad: Lithuania’s national rail service announced on Saturday that it had banned transit through its territory of goods bound for the Russian enclave of Kaliningrad. The Governor of Kaliningrad estimated that the ban, which entered into force on Saturday, would cover 40 to 50 percent of the items Kaliningrad imports from and exports to Russia, and, if it remains in place for a long time, the Governor promised to work with the Russian government to get more ferries to move items from mainland Russia to the enclave. (https://www.aljazeera.com/news/2022/6/18/lithuania-enforces-eu-sanctions-on-goods-to-russias-kaliningrad).

  • Italy Receives Reduced Gas Volumes from Gazprom: On Sunday, Italian energy company Eni announced that it was receiving gas from Gazprom, though at approximately 50 to 65 percent of its requested volumes. (https://tass.com/economy/1468153).

UPDATE:

June 17, 2022

  • Commission Recommends EU Council to Confirm Ukraine’s EU Candidate Status: On Friday June 17, 2022, the European Commissions issued its recommendation regarding Ukraine’s EU candidate status, and recommended the EU Council to grant Ukraine EU candidate status. A similar opinion was issued regarding Moldova and Georgia.  (https://ec.europa.eu/commission/presscorner/detail/en/ip_22_3790).

UPDATE:

June 16, 2022

  • Germany Urges Citizens to Reduce Gas as Gazprom Cuts Supply: On Wednesday, Germany urged its citizens to reduce gas consumption as Russia curbs gas exports through the Nord Stream pipeline due to alleged technical problems. Gazprom also announced that it was experiencing problems with gas supplies to Italy, Slovakia, and Austria. European nations claim these curbs are not due to technical problems, but rather political motivations. (https://www.ft.com/content/9cdd8457-0e5a-4452-af3e-9df7107fd128).

  • Ukraine Contemplates Suing Russia for Environmental Crimes: Ukraine is gathering evidence and contemplating options to sue the Russian military for environmental crimes committed during the invasion as a potential source to finance reconstruction. Total damage is estimated at 6.6 billion euros. Ukraine could bring the case before its national courts, options before international courts are limited. (https://www.politico.eu/article/how-ukraine-want-make-russia-pay-for-war-environmental-damage/).

UPDATE:

June 15, 2022

  • Dutch Court Rules on Termination of Contracts in Russia: A Dutch Court has established that there are legal grounds for Western contractors with outstanding contracts in Russia to terminate their commitments and exit the country, thus offering a defense against future compensation claims by former Russian clients. In a judgement published on June 9 the Rechtbank district court in Amsterdam rejected an appeal from Dutch-registered Saren — acting on behalf of Russian operator Arctic LNG 2 — seeking payment of €39.5 million ($41.2 million). (https://www.upstreamonline.com/lng/dutch-court-paves-way-for-western-contractors-to-exit-russian-lng-projects/2-1-1238544).

  • Russian Oligarchs Flew Jets in EU Airspace, Despite Ban: On Wednesday, German newspaper Welt am Sonntagreported that at least 30 private jets and helicopters owned by Russian oligarchs have used EU airspace, despite the bloc’s ban on Russian aircraft in its airspace beginning on February 27. Aircraft belonging to Eugene Shvidler, Alexander Zanadvorov, Alisher Usmanov, Albert Avdolyan, Viktor Vekselberg, and Roman Abramovich were found in EU airspace in the research. (https://www.businessinsider.com/russian-oligarch-jets-helicopters-fly-eu-airspace-sanctions-ukraine-war-2022-6).   

  • EU Signs Gas Deal With Israel and Egypt: The EU, Israel and Egypt signed a tripartite natural gas export deal allowing “significant” exports of Israeli gas to Europe. Israeli gas will be brought via a pipeline to Egypt’s LNG terminal on the Mediterranean, where some will be liquefied and transported on tankers to European shores. In January, the EU and Israel already signed a deal for construction of an undersea electricity cable that will link the power grids of Israel, Cyprus and Greece. (EU signs gas deal with Israel, Egypt in bid to ditch Russia | Oil and Gas News | Al Jazeera).

  • Latvia Reports Over 400 Attempts at Sanctions Evasion: On Wednesday, Ieva Jaunzeme, head of the Latvian State Revenue Service, reported that the country has seen over 400 attempts at sanctions evasion since the start of Russia’s invasion of Ukraine. She said that most of the instances involved falsified contracts to allow otherwise embargoed goods to enter the country. She added that the Service has opened over a dozen criminal cases already based on the information obtained. (https://bnn-news.com/latvian-vid-uncover-more-than-400-attempts-to-breach-sanctions-against-russia-and-belarus-235494).

UPDATE:

June 14, 2022

  • Germany to Lend up to $10.4 billion to Rescue Ex-Gazprom Unit: Bloomberg reported Tuesday that the German government will lend as much as 10 billion euros ($10.4 billion) to rescue a former arm of Gazprom PJSC, which was brought under the control of the German energy regulator in April. The plan includes a loan from state-owned KfW Group, which could eventually be converted into a direct stake under a new form of trusteeship. The name of the company will change to Securing Energy for Europe GmbH. (https://www.bloomberg.com/news/articles/2022-06-14/germany-to-lend-up-to-10-4-billion-to-rescue-ex-gazprom-unit?srnd=premium).

UPDATE:

June 13, 2022

  • French, Italian, German Leaders Planning to Visit Ukraine This Week: On Sunday, sources within their respective governments stated that French President Emmanuel Macron, German Chancellor Olaf Scholz and Italian Prime Minister Mario Draghi were planning to visit Kyiv on Thursday, though they stressed that plans may change. The trip would be the first to Ukraine since the beginning of the war for the three Western leaders. (https://www.wsj.com/articles/russia-shells-chemical-plant-sheltering-civilians-ukraine-says-11655031115).

UPDATE:

June 11, 2022

  • Serbian President Does not Believe EU Sanctions are Efficient: Responding to calls implement EU sanctions, Serbian President Aleksandar Vucic said he did not believe sanctions to be “efficient.” German Chancellor Olaf Scholz visited Serbia on Friday, where he pressured the country, which is currently a candidate for EU membership, to implement sanctions on Russia similar to those in place in the EU. (https://www.reuters.com/world/europe/scholz-heads-western-balkans-help-eu-membership-bid-2022-06-10/).

UPDATE:

June 9, 2022

  • European Parliament Adopts Foreign Strategy Following the War in Ukraine: The European Parliament adopted a non-binding recommendation on the EU’s Foreign, Security and Defence Policy after the Russian war of aggression against Ukraine. Members of the European Parliament (MEPs) notably recommend introducing qualified majority voting for the adoption of EU personal sanctions regimes. MEPS also recommend to bring the UK into a framework for common cooperation on defence and foreign policy matters. (https://interfax.com.ua/news/general/837995.html).

  • EU Sets Up €20 Million Support Fund for Ukrainian Start-Ups: The European Commission launched a €20 million action to support Ukrainian start-ups through an amendment of the 2022 European Innovation Council (EIC) work program. The new initiative will support at least 200 Ukrainian deep tech start-ups with up to €60,000 each. (https://ec.europa.eu/commission/presscorner/detail/en/ip_22_3533).

  • Committee Defers Decision on Russian Credit Default Swaps:  The EMEA Credit Derivatives Determinations Committee said Thursday that it would defer its decision on how to hold a potential auction on Russian credit default swaps following an update on U.S. sanctions by the Treasury Department earlier this week with the goal of allowing “credit derivatives market participants time to assess the implications that the updated OFAC (Office of Foreign Assets Control) FAQs may have on the ability of market participants to participate in an auction.” (https://wtvbam.com/2022/06/09/committee-defers-decision-on-russia-cds-auction-after-u-s-sanctions-update/).  

UPDATE:

June 8, 2022

  • Luxembourg froze 4.2 Billion Euros in Russian Assets: Luxembourg Minister of Finance announced that the country froze 4.2 billion euros in Russian assets. According to the Grand-Duchy, 90 people and 1,100 legal entities were identified and sanctioned by Luxembourg. (https://www.law360.com/corporate-crime-uk/articles/1500682).

  • President of European Council Reports to Parliament after Addressing the UN Security Council: European Council President Charles Michel addressed the plenary session of the European Parliament after his speech before the UN Security Council. The President addressed the food crisis and reiterated that the EU did not impose sanctions on agricultural products. Charles Michel also mentioned the financing needs of Ukraine and said that Russia should pay to rebuild the country and said the EU is looking into the possibility of confiscating assets of sanctioned Russian individuals and entities. Finally, President Michel stated that the Commission is considering the possibility of trying to lower the gas price by capping it. (https://www.consilium.europa.eu/en/press/press-releases/2022/06/08/report-by-president-charles-michel-to-the-european-parliament-plenary-session/).

  • EU Commits 7.25 Million Euros to Support ICC Investigations: The European Commission launched a new project to support the investigating capacities of the International Criminal Court with 7.25 million euros to help the ICC respond to the ongoing investigations into war crimes committed by Russia in Ukraine. (https://ec.europa.eu/commission/presscorner/detail/en/MEX_22_3542).

  •  EU Commission Answers Parliamentary Question on SME Support: The European Commission replied to a question from a Member of the European Parliament regarding the support to SMEs affected by the Ukrainian crisis. Commissioner Breton recalled the existence of the Temporary Crisis Framework adopted in March 2022 and of the Recovery and Resilience Facility. There are no plans for additional financial support for businesses affected by this crisis from other EU programs, he stated. (https://www.europarl.europa.eu/doceo/document/E-9-2022-000826_EN.html).

UPDATE:

June 7, 2022

  • Commission Answers Parliamentary Question on Media Ban: The European Commission confirmed that only companies mentioned in Annex XV to Regulation 833/2014 will see their license suspended. However, transactions with companies associated with sanctioned individuals such as Yandex can be affected and operators need to exert appropriate due diligence when dealing with them. (https://www.europarl.europa.eu/doceo/document/E-9-2022-001234_EN.html).

  • EU High Representative Answers Question on Russia Arm Embargo: EU High Representative Josep Borell, on behalf of the Commission, clarified that the exemption for pre-2014 contracts from the arm embargo was deleted by the Council and that arms exports, beyond the arms embargo in place, are subject to the Common Position of December 8, 2008. (https://www.europarl.europa.eu/doceo/document/E-9-2022-001537-ASW_EN.pdf).

  • Deutsche Bank Offers to Relocate Russian Employees to Berlin: The Wall Street Journal reported Tuesday that Deutsche Bank had offered nearly 1500 employees from its technology center in Russia the opportunity to move with their families to Berlin. According to the report, about half of those given the offer accepted it. Deutsche Bank has not said publicly what it plans to do with the Russian center and the staff who will stay there, but it did note in March that it would be winding its Russian operations down. (https://www.wsj.com/articles/deutsche-bank-moves-hundreds-of-employees-from-russia-to-berlin-11654599210).

     
  • Cypriot Services Sector Struggling to Understand EU Sanctions Exemptions:  The services sector, as well as the Ministry of Finance, in Cyprus are reportedly working to understand the EU’s sixth tranche of sanctions on Russia, including the prohibition on the provision of auditing, accounting, business, administrative, and PR services to Russian entities. So far, it seems, the sanctions do not apply to the provision of services intended for the exclusive use of legal persons, entities or bodies established in Russia that are owned or controlled exclusively or jointly by a legal person, entity or body which is incorporated or constituted under the law of a Member State. The sector is trying to understand whether the exemption – a company established in Cyprus by Russians which in turn established another company in Russia – applies to Cypriot companies established by Russian entities. (https://cyprus-mail.com/2022/06/07/cypriot-services-sector-still-grappling-with-russian-sanctions-impact/).

     

     

UPDATE:

June 5, 2022

  • Investigation Shows European Companies Increased Purchases of Russian Oil:According to an investigation from Global Witness, Greek, Cypriot, and Maltese shipping firms have increased their shipments of Russian oil since the invasion of Ukraine began. Investigators are skeptical that the recently announced EU ban on Russian oil will change the situation, saying that European shipping companies are still permitted to ship Russian oil to non-EU ports even with the new restrictions.(https://www.independent.co.uk/news/business/russia-ukraine-oil-sanctions-shipping-b2092658.html).

  • EU Sanctions Impact “Google of Russia”: In response to EU sanctions, Arkady Volozh promptly resigned from his position as CEO and board member of Yandex NV, Russia’s most popular search engine known colloquially as the “Google of Russia.” Volozh does not own shares in Yandex directly, instead depositing his shares in a family trust after a 2019 restructuring. Though he called the sanctions “misguided,” he promised to not give directions to the trust after his designation. (https://www.bloomberg.com/news/articles/2022-06-06/the-internet-pioneer-brought-low-as-kremlin-ally-by-eu-sanctions).

     

UPDATE:

June 4, 2022

  • Melnichenko’s Wife Plans to Contest EU Sanctions: According a statement provided to Reuters on Saturday, Aleksandra Melnichenko, wife of sanctioned Russian oligarch Andrey Melnichenko, plans to “vigorously contest the unfortunate decision” by the EU to impose sanctions on her. Aleksandra is not a Russian citizen, but the EU sanctioned her because she “takes good advantage of the fortune and benefits from the wealth of her husband.” Andrey has already sued to contest the sanctions against him in EU courts. (https://www.reuters.com/world/europe/wife-russian-billionaire-melnichenko-contests-eu-sanctions-2022-06-04/).

  • EU Considering Options to Reduce Energy Consumption: The Wall Street Journal on Sunday reported on European efforts to reduce energy consumption. These efforts included French subsidies to homeowners to renovate their homes in a more energy-efficient manner, and bloc-wide efforts to switch from gas heating systems to electric heating systems. Still, members of European parliament warn that these efforts will take time and require significant investment. (https://www.wsj.com/articles/ukraine-war-drives-europe-to-accelerate-energy-efficiency-11654434181).

UPDATE:

June 3, 2022

  • EU Adopts 6th Sanctions Package: the EU has adopted its 6th sanctions package against Russia, which notably consists of:

    o   Asset freeze measures against members of the Russian armed forces, officials, media personalities, oligarchs, family members of previously designated individuals and entities involved in the industrial and technological sectors.

    –       Grounds for authorization have been introduced for the provision of electronic communication services under certain conditions.

    o   A prohibition on the purchase, import, or transfer of crude oil or petroleum products originating in or exported from Russia and the provision of related services.

    –       Exemptions apply for:

    –       One-off transactions and for contracts concluded before June 4, 2022, until December 5, 2022 for crude oil and until  February 5, 2022 for petroleum products, subject to notification requirements.

    –       Seaborne crude oil and petroleum departing or transiting through Russia provided the origin and owner of the goods are non-Russian.

    –       Crude oil delivered by pipeline (restrictions are foreseen on the transfer, transport or sale of crude oil delivered by pipeline into a Member State)

    –       For landlocked Member States if the supply of crude oil by pipeline is interrupted for reasons outside the control of that Member State.

    –       If required in order to meet the essential need of the purchaser in Russia or of humanitarian projects in Russia.

    –       Croatia and Bulgaria have longer phase-out periods.

    o   A prohibition on services related to the transport to third countries of crude oil and petroleum products originating in or exported from Russia.

    –       Exemptions apply (i) until December 5, 2022 for contracts concluded before June 4, 2022 and (ii) for oil and petroleum products departing or transiting through Russia provided the origin and owner of the goods are non-Russian.

     

    o   Extension of the list of entities for which enhanced dual-use controls apply.

    o   Extension of the list of items subject to controls to cover certain electronics, chemicals, and material processing items, spirits and liqueurs and heading 2303.

    o   Addition of exemptions for transactions with state-owned/related entities.

    o   Prohibition on the provision of financial messaging services (SWIFT) to Sberbank, Credit Bank of Moscow and JSC Russian Agricultural Bank and the entities in Russia they own for more than 50%, as of June 14, 2022.

    o   Prohibitions on the provision of accounting, auditing, including statutory audit, bookkeeping, or tax consulting services, or business and management consulting or public relations services to the Government of Russia and entities established in Russia, subject to exemptions and derogations.

    o   Derogation to allow for the granting of authorizations for deposits or the provision of wallet, account or custody services intended exclusively for the payment of fees or service charges for the routine holding or maintenance of frozen funds or economic resources.

    o   Extension of the derogations relating to the sale of transferable securities denominated in an EU currency to EEA and Swiss nationals and residents.

    o   The entry into force of prohibitions affecting trusts at an earlier date.

    o   Extension of the broadcasting prohibition to three additional entities and the advertising of products or services.

    o   Enforcement provisions clarify that Member States shall have criminal penalties, as appropriate, and provide for appropriate measures of confiscation of the proceeds of sanctions infringements.

    o   Belarussian sanctions have been reinforced with inter alia additional individuals and entities subject to asset freeze measures, reinforced trade controls, prohibition of financial messaging services to Belinvestbanks and the entities in Belarus it owns for more than 50 percent as of June 14, 2022.

    See the press release and Q&A:

    https://ec.europa.eu/commission/presscorner/detail/en/IP_22_2802

    https://ec.europa.eu/commission/presscorner/detail/en/qanda_22_2823

    See the legal texts:

    https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ:L:2022:153:TOC

  • EU, Israel, and Egypt Near Deal on Natural Gas:  Bloomberg reports that the EU is set to sign an agreement this month with Egypt and Israel to supply the bloc with natural gas amidst its efforts to reduce its dependence of Russian supplies. The memorandum of understanding outlining the terms of the arrangement is set to be signed when EU Commission President Ursula von der Leyen visits Cairo at the end of June. The deal will include Israeli natural gas being liquefied in Egyptian processing plants with the final product being shipped to the EU. (https://www.bloomberg.com/news/articles/2022-06-03/eu-egypt-near-gas-supply-deal-in-shift-away-from-russia).

  • Finland Cuts Russian Power Link:  Finish utility company Fortum Oyj has disconnected the interconnector between Imatra in Finland and Svetogorsk in Russia until further notice, following the failure of the Finish company to pay RAO Nordic Oy, a subsidiary of Russian energy company Inter RAO, on May 14. (https://tass.com/economy/1460299).

UPDATE:

June 2, 2022

  • Hungary Blocks Sanctions Against the Head of the Russian Orthodox Church: After obtaining concessions on the Russian oil embargo, Hungary objected to the proposal to sanction the head of the Russian Orthodox Church Patriarch Kirill. The objection comes as a surprise as an agreement on sanctions was expected to be reached in Council after the EU Leaders’ summit agreed on the oil embargo. (https://www.politico.eu/article/hungary-throws-in-new-spanner-in-sanctions-discussions/).

  • Dutch National Coordinator on Sanctions Presents His Report: This week the Dutch Coordinator for the implementation of sanctions Stef Blok presented his report to the Dutch Parliament. The report calls for the sharing of information between Member States on ultimate beneficial owners and for a protocol on how to deal with operating companies in Europe. The report also calls on the Commission to share information ​​with authorities ahead of the publication of the official sanctions list to prevent the moving of funds before publication.  (https://www.government.nl/documents/reports/2022/06/02/report-by-the-national-coordinator-for-sanctions-compliance-and-enforcement).

  • Russian Lobbyists Banned from European Parliament:European Parliament President Roberta Metsola announced that Russian company representatives may not enter Parliament buildings “effective immediately.” The ban will apply to all entities that are established in the Russia Federation and that are listed in the EU transparency register as well as entities subject to EU sanctions. (https://www.politico.eu/article/european-parliament-bars-russia-backed-lobbyists/).

UPDATE:

June 1, 2022

  • EU Updated Russia Sanctions Guidance on Credit Rating, Deposits, Insurance and Reinsurance and State-Owned Enterprises and Customs: On June 1, 2022, the European Commission updated the Russian Sanctions Guidance on credit rating, deposits, insurance and reinsurance and state-owned enterprises and customs. The Commission added questions for credit rating relating to scoring services, credit rating on Russian entities, rating services for third parties, and the application of credit rating provisions to persons with a temporary residence permit outside of Russia. Other questions on insurance and reinsurance relate to exemptions for subsidiaries in Switzerland and EEA countries, reinsurance of export receivables on the basis of export/insurance contracts. For state-owned enterprises, the Commission provided an interpretation of the notion of “acting on behalf or at the direction of”, and of the exception provided in Article 5aa(2) of Council Regulation (EU) 833/2014. Finally, for customs, the Commission replied to questions on the return of cultural goods, daily crossing of Russian borders, and the definition of agricultural products. (https://ec.europa.eu/info/business-economy-euro/banking-and-finance/international-relations/restrictive-measures-sanctions/sanctions-adopted-following-russias-military-aggression-against-ukraine_en#customs).

  • Denmark Holds a Referendum on Participation to EU’s Common Defense Policy: On June 1, 2022, Danes voted on the participation of Denmark to EU’s common defense policy. Denmark currently benefits from an opt-out and does not participate in EU’s foreign policy where defense is concerned, and does not contribute troops to EU military missions. Polls suggest that a strong majority of Danes will vote in favor of joining EU’s common defense policy. (https://www.euronews.com/2022/06/01/denmark-to-vote-on-europe-common-defence-opt-out-in-wake-of-ukraine-war).

     

  • EU Opens Door to Billions in Aid to Poland: The New York Times reported Wednesday that the EU’s executive arm had endorsed a Polish plan to address the EU Commission’s concerns over the politicization of its judiciary which would in turn lead to the disbursement of $38 billion in assistance. If the plan is approved, Polish officials expect the first tranche to be paid by September. (https://www.nytimes.com/2022/06/01/world/europe/poland-eu-ukraine-coronavirus.html?).

     

UPDATE:

May 31, 2022

  • EU Leaders Agree on Russian Oil Embargo: European leaders agreed on a Russian oil embargo with a temporary exemption for pipeline imports to help landlocked states. EU officials reported that if Hungary did not commit to a cut-off date, tariffs on oil could be imposed without requiring unanimity in Council. The exemption could be a potential source of distortion to the single market with exempted-countries enjoying cheaper oil than others. Details of the embargo still need to be discussed and adopted by the Council. (https://www.ft.com/content/065d9946-b762-448b-9ab4-f1f213896d4a).

  • EU Summit Adopts Conclusions on Ukraine: The highly-awaited European Council conclusions mention (i) the need to gather evidence and to investigate crimes committed in Ukraine, (ii) the upcoming oil embargo, (iii) the need to continue to support Ukraine with a view to addressing humanitarian, liquidity and reconstruction needs (iv) the commitment of the EU to continue bolstering Ukraine’s ability to defend itself. The conclusions also address the question of the economic and political support and the impact on neighboring countries. (https://www.consilium.europa.eu/en/press/press-releases/2022/05/31/european-council-conclusions-on-ukraine-30-may-2022/).

  • Russia Cuts Gas Supply to the Netherlands, Denmark and Germany: Energy company Gazprom halted gas supply to the Dutch company GasTerra, Danish company Ørsted and Shell Energy for its contract to supply Germany. The decision follows the imposition of an oil embargo by the EU and the failure of Ørsted and Shell Energy to make payment in Rubles. GasTerra already found alternative supply sources while Ørsted said that a gas cut would not immediately put the country’s gas supplies at risk. (https://www.theguardian.com/world/2022/may/31/russia-cuts-gas-supplies-dutch-state-trader-sanctions-war).

  • EU Commission Replies to Parliamentary Question on Aid to Rail Transporters Supporting Humanitarian Work in Ukraine: On May 30, 2022, Commissioner Vălean provided a written reply to a question from a Member of the European Parliament. In its reply, the Commission notably recalls that it adopted the Temporary Crisis Framework which recognizes that the transport of refugees and humanitarian aid do not fall in principle under EU state aid rules. (https://www.europarl.europa.eu/doceo/document/P-9-2022-001120_EN.html).

  • EU Commission Replies to Parliamentary Question on Implementation and Enforcement of EU Sanctions Against Russia: On May 30, 2022, Commissioner McGuinness provided a written reply to a question from a Member of the European Parliament. In its reply, the Commission notably recalls that it has set up a Freeze and Seize Task Force to ensure coordination of Member States activities in enforcing EU sanctions. (https://www.europarl.europa.eu/doceo/document/P-9-2022-001348_EN.html).

  • EU Launches Platform for Registration of Individuals Fleeing Ukraine: The European Commission launched a platform to register individuals fleeing Ukraine so they can enjoy their rights in all Member States while addressing instances of double or multiple registrations and limiting possible abuse. (https://ec.europa.eu/commission/presscorner/detail/en/mex_22_3384).

  • Tourism-Heavy Countries Brace for Summer Without Russian Tourists: On Tuesday, Al Jazeera profiled the tourism industries in Greece, Cyprus, and Turkey, popular destinations for Russian tourists that are now more difficult to access due to Russian visa restrictions. Hoteliers in Greece saw a limited drop in bookings, saying that UK tourists have largely replaced Russian tourists. Turkish authorities were less optimistic, saying that reduced purchasing power by Russian tourists would lead to $3-4 billion in losses in tourism revenue. Cypriot representatives focused on secondary effects of lost tourism, noting heavy investment in the Cypriot economy by Russians. (https://www.aljazeera.com/news/2022/5/31/tourist-destinations-gear-up-for-summer-without-russian-visitors).

UPDATE:

May 30, 2022

  • Deal Reached on Russian Oil Embargo and Sixth Sanctions Package: On Monday night, European Council President Charles Michel tweeted that the Council had reached a deal to ban Russian oil imports to the EU. The move will immediately cover 2/3 of Russian oil imports to the EU. He added that the new package will include a de-Swifting of Sberbank, a ban on three Russian state owned broadcasters, and sanctions on individuals responsible for war crimes in Ukraine. Though full details of the deal are not clear, Michel’s tweet likely refers to a carveout from the ban on Russian oil imports for oil transported through pipelines, which represents 30% of EU imports. Hungarian Prime Minister Viktor Orban, said the idea was “not bad,” but wants insurance from the EU in case anything happens to the pipeline delivering oil to Hungary. It is unclear if EU leaders will adopt the text as proposed during the European summit (ending on Tuesday) or leave the issue entirely to the Council of Ministers.(https://twitter.com/eucopresident/status/1531391899218608133?cxt=HHwWioCwzbK0zMAqAAAA; https://www.politico.eu/article/eu-moves-step-closer-to-deal-on-russian-oil-embargo/).

  • Gazprom Suspends Shipments to Dutch Trader GasTerra: On Monday, GasTerra, which buys and trades energy products on behalf of the Dutch government, and Gazprom announced that the Russian gas company will no longer ship natural gas to GasTerra beginning on May 31, because the company refuses to pay for its shipments in rubles. The Dutch government stated that it had contracted elsewhere to make up for the gap in gas supply, and Gazprom stated that the suspension will continue until GasTerra pays in rubles. (https://www.reuters.com/business/energy/gazprom-suspends-gas-deliveries-dutch-trader-gasterra-2022-05-30/).

  • EU Sanctions Against Russia Challenged Before EU Court: An action for annulment against the Decision and Regulation imposing sanctions in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine was published in the Official Journal of the European Union by a complainant under the name “OT”. The sanctions are only challenged as far as they apply to the applicant. 7 pleas were raised before the General Court of the European Union. (https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:62022TN0193&from=EN).

UPDATE:

May 29, 2022

  • Deal Reached on Russian Oil Embargo and Sixth Sanctions Package: On Monday night, European Council President Charles Michel tweeted that the Council had reached a deal to ban Russian oil imports to the EU. The move will immediately cover 2/3 of Russian oil imports to the EU. He added that the new package will include a de-Swifting of Sberbank, a ban on three Russian state owned broadcasters, and sanctions on individuals responsible for war crimes in Ukraine. Though full details of the deal are not clear, Michel’s tweet likely refers to a carveout from the ban on Russian oil imports for oil transported through pipelines, which represents 30% of EU imports. Hungarian Prime Minister Viktor Orban, said the idea was “not bad,” but wants insurance from the EU in case anything happens to the pipeline delivering oil to Hungary. It is unclear if EU leaders will adopt the text as proposed during the European summit (ending on Tuesday) or leave the issue entirely to the Council of Ministers.(https://twitter.com/eucopresident/status/1531391899218608133?cxt=HHwWioCwzbK0zMAqAAAA; https://www.politico.eu/article/eu-moves-step-closer-to-deal-on-russian-oil-embargo/).

  • German Economy Minister Fears European Unity on Russia “Starting to Crumble”:Speaking at a news conference on Sunday, German Economy Minister Robert Habeck stated, “After Russia’s attack on Ukraine, we saw what can happen when Europe stands united. With a view to the summit tomorrow, let’s hope it continues like this. But it is already starting to crumble and crumble again.” The Minister’s remarks come as the sixth EU sanctions package has stalled over a proposed Russian oil embargo. (https://www.reuters.com/world/europe/eu-unity-russian-sanctions-starting-crumble-german-minister-says-2022-05-29/).

  • French, German Leaders Call Putin to Discuss Grain Exports: On Saturday, French President Emmanuel Macron and German Chancellor Olaf Scholz held a call with Russian President Vladimir Putin. Readouts from the call indicate that the Russian President proposed enabling access to the port of Odessa, including demining operations according to the French statement, for exports of grain if western sanctions on Russia were lifted. (https://www.politico.eu/article/vladimir-putin-we-could-reopen-odesa-but-we-want-sanctions-removed/).

UPDATE:

May 27, 2022

  • Treasury Sanctions Russian Banks for Facilitating Payments for North Korea: On Friday, the Treasury Department added new names to the Specially Designated Nationals list in connection with new missile activity in North Korea. Two of the new designations are for the Far Eastern Bank and Bank Sputnik, two Russian banks that facilitated payments on behalf of North Korean entities. (https://home.treasury.gov/news/press-releases/jy0801).

  • Secretary of State Blinken Calls Ukrainian Counterpart: On Friday, Secretary of State Antony Blinken called Ukrainian Foreign Minister Dmytro Kuleba for the second time this week. The pair discussed food security issues stemming from the conflict in Ukraine, and Secretary Blinken stated that the US and its allies will continue to support Ukraine through the crisis and its consequences. (https://www.state.gov/secretary-blinkens-call-with-ukrainian-foreign-minister-kuleba-24/).

  • House Foreign Affairs Committee Chairman in Europe to Discuss Black Sea Blockade: During meetings in Europe this week, House Foreign Affairs Committee Chairman Gregory Meeks (D-NY) spoke to various officials on the issue of food security emanating from the conflict in Ukraine. He stated that the blockade and restricted food exports are contributing to starvation and increases in food prices worldwide. (https://thegrio.com/2022/05/27/white-house-sanctions-russia-grains-food-shortages/).

UPDATE:

May 26, 2022

  • Politico Reports on Companies Paying for Gas in Rubles: Politico provides an overview of EU companies complying or refusing to comply with Russian request to pay for gas in Rubles. Among the companies rejecting payment in Rubles are Finland’s Gasum, Bulgaria’s Bulgargaz and Poland PGNiG, the latter may sue for supply reinstatement under contract. Guidance of the European Commission on whether payments in Rubles would breach EU Sanctions is still far from clear. (https://www.politico.eu/article/ruble-gas-paid-russia-eu/).  

  • Europe Suspends Drug Trafficking Data Sharing Arrangement with Russia: On Thursday, Russian Deputy Foreign Minister Oleg Syromolotov confirmed that the EU had suspended contact and data sharing arrangements with Russia as part of the European Monitoring Center for Drugs and Drug Addiction. He warned that such a withdrawal could lead to increased trafficking activity. (https://tass.com/politics/1456431).

UPDATE:

May 25, 2022

  • EU Commission Proposes to Add Violations of Union Sanctions to the List of EU Crimes:The Commission tabled a proposal to add the violation of Union sanctions to the list of EU crimes. Such a move would allow the Commission to propose a directive defining the scope and the criminal penalties for the violation of sanctions across Member States in a consistent manner. Today violations of EU sanctions is a matter of national law. The proposal needs unanimity in Council and the consent of the European Parliament to pass. (https://ec.europa.eu/commission/presscorner/detail/en/QANDA_22_3265).    

  • EU Commission Proposes a Directive on Asset Recovery and Confiscation: The Commission proposed a new directive on asset recovery and confiscation to allow for the tracing and identification of property derived from criminal activities on the most serious crimes in Europe. The directive would also expand the means to confiscate assets. Regarding EU Sanctions, the Commission would require Member States to trace any assets of sanctioned persons as soon as they are listed and promote cooperation in relation to the prevention, detection and investigation of attempts to evade restrictive measures. (https://ec.europa.eu/commission/presscorner/detail/en/QANDA_22_3265).

UPDATE:

May 24, 2022

  • Mixed Signals Within EU on Russian Oil Ban (Part 3): Hungarian Prime Minister Says Oil Embargo Will Not Be Discussed at EU Summit: Hungarian Prime Minister Viktor Orbán wrote to the President of the European Council stating that he considers it very unlikely for a comprehensive deal to be found before the next European Council on May 30 and 31. Orbánstated that discussions at the level of the European Council without consensus would be counterproductive. Orbán’s main concern remains the absence of funding for landlocked Member States as they transition away from Russian oil. (https://www.euractiv.com/section/europe-s-east/news/trashed-436/).

  • Baltics and Slovakia Call for Confiscation of EU Frozen Assets: Reinforcing a decision leaked yesterday, Estonia, Latvia, Lithuania and Slovakia called for the use of Russian frozen assets for the reconstruction of Ukraine. The text of their written statement calls for the confiscation of both assets of sanctioned individuals and state assets, including frozen Russian central bank assets as well as the property of state-owned enterprises. The text calls for the European Commission to come forward with a proposal. Commission Executive Vice President Dombrovskis is assessing the option of using Russian central bank assets but said that individuals’ assets confiscation needs to be done on the basis of Member States’ criminal law. (https://www.politico.eu/article/baltics-and-slovakia-lets-use-russian-frozen-assets-for-ukraine-reconstruction/).

  • Draft European Summit Conclusions Call for EU Countries to Prepare for Russian Gas Cut: The European Council is planned for May 30 and 31, but leaked draft conclusions – likely to change – say there needs to be a coordinated European contingency plan for gas cut-offs, bilateral solidarity agreements, and a quick filling of gas storage before next winter. The text also mentions the need to increase renewable energy capacity and energy efficiency. (https://www.euractiv.com/section/enlargement/opinion/the-brief-russias-hub-in-the-heart-of-europe/).

UPDATE:

May 23, 2022

  • EU Co-Legislators Strike Agreement on Mandatory Gas Storage: The EU Parliament and Council reached an agreement on the Commission proposal to impose mandatory gas storage for EU Member States to reinforce security of gas supply. Storage on member states’ territory should be filled to at least 80 percent of their capacity before the winter of 2022/2023 and to 90 percent before the following winter periods. As a reminder, the armed conflict in Ukraine is specifically mentioned in the Commission’s proposal as a reason that inspired the proposal. The agreement must now be confirmed by the two institutions. (https://www.consilium.europa.eu/en/press/press-releases/2022/05/19/gas-storage-council-and-parliament-reach-a-provisional-agreement/).

UPDATE:

May 22, 2022

  • Gazprom Confirms Gas Shutoff to Finland: On Saturday, Russian gas company Gazprom confirmed in a statement that it had cut off gas supplies to Finland as a result of the country’s refusal to pay for gas in rubles. The company stated it would not pay for gas in rubles earlier in the week and would seek arbitration. (https://tass.com/economy/1454141). 

  • Portugal Pledges €250 Million to Ukraine:During his visit to Ukraine on Saturday, Portuguese President Antonio Costa pledged €250 million to support Ukrainian reconstruction. €100 million of the funds will be transferred through the course of this year “through an account for Ukraine in the IMF or through other channels that the EU will open for direct financing.” The remaining €150 million will be transferred to the Ukrainian State over the next three years. (https://www.portugalresident.com/costa-in-ukraine-pm-pledges-portugals-help-for-a-much-better-future/).

UPDATE:

May 20, 2022

  • Germany, Italy Reportedly Receive Permission from EU to Open Ruble Accounts for Gas Payments: Reuters reported on Friday that the Italian and German governments instructed gas companies in their jurisdictions that opening a ruble account to purchase gas would not run afoul of EU sanctions. Russian requirements that obligate purchasers to pay for natural gas in rubles have caused confusion for European purchasers, and the EU has been slow to clarify how gas payments interact with the bloc’s sanctions on Russia. (https://www.reuters.com/markets/europe/germany-italy-approved-russian-gas-payments-after-nod-brussels-sources-2022-05-20/).

  • Finnish Gas Company Announces Russian Gas Shutoff on Saturday: Finnish state-owned natural gas company Gasum announced on Friday that Russia will cut off its flow of natural gas to Finland on Saturday. Gasum previously refused to pay for Russian gas in rubles, despite Russian decrees mandating payment in the currency. Finnish leaders said that the shutoff would not disrupt gas supply to the country, saying that it will still be able to get gas through the Balticconnector pipeline with Estonia. (https://www.aljazeera.com/news/2022/5/20/russia-to-cut-gas-flow-to-finland-saturday-gasum).

  • EU Disburses 600 Million Euros in Assistance to Ukraine: On Friday, the European Commission disbursed 600 million euros in macro-financial assistance to Ukraine. The funds will help Ukraine address its acute financing gap. The first 600 million euros of macro-financial assistance from the EU was already disbursed in two tranches on March 11 and 18. (https://ec.europa.eu/commission/presscorner/detail/en/ip_22_3183).

  • Former German Chancellor Schröder to Leave the Supervisory Board of Rosneft: On May 20, former German Chancellor Gerhard Schröder announced that he will leave his position as chairman and member of the supervisory board of Russian oil company Rosneft. This decision follows the adoption by the European Parliament of a resolution urging the EU to sanction Europeans still on the boards of prominent Russian firms and the decision of the Germany’s governing parties to strip him of his taxpayer-funded office space in Berlin. (https://www.politico.eu/article/gerhard-schroder-to-leave-rosneft/).

  • Bosnia States it Cannot Join EU Sanctions on Russia: After a meeting with European Council President Charles Michel on Friday, Bosnian Serb nationalist leader Milorad Dodik stated that Bosnia, a candidate for EU accession, could not join the EU’s sanctions program on Russia. He stated “I think it is of utmost importance for Bosnia to remain neutral. In conditions in which we exist, it would be a problem for us to impose any kind of sanctions and join the EU or global sanctions.https://www.reuters.com/world/europe/serb-leader-tells-eu-bosnia-cannot-join-sanctions-against-russia-2022-05-20/).

  • Hungary Seeks Compensation in Exchange for a Positive Vote on a Russian Oil Ban: TheHungarian foreign minister on Friday called the EU to finance the necessary investments to modernize Hungary’s energy grid and compensate the country for the price rise that would result from an oil ban. The foreign minister suggested that this would cost between 15 to 18 billion. The EU High-Representative stated that talks on the oil ban could drag out for a “week or two” (https://euobserver.com/world/154958).

UPDATE:

May 19, 2022

  • Former German Chancellor Draws Scrutiny for Russia Ties: On Thursday, the European Parliament introduced a non-binding resolution that promises to sanction “European members of the boards of major Russian companies and to politicians who continue to receive Russian money.” The resolution explicitly mentions former German Chancellor Gerhard Schroeder, who is on the board of Rosneft and appears to have close ties with Russian President Vladimir Putin. The German parliament also stripped Schroeder of his former Chancellor’s office, though he still will receive diplomatic security. The legislation does not state the reason for the removal, but it is believed he lost his office space due to his ties to Russia.  (https://www.reuters.com/world/europe/german-ex-chancellor-schroeder-under-eu-pressure-quit-rosneft-2022-05-19/).

UPDATE:

May 18, 2022

  • European Commission Releases Plan to Reduce European Dependence on Russian Energy: On Wednesday, the European Commission released its REPowerEU Plan, which is a set of policy proposals to reduce European dependence on Russian energy products. The plan contains platforms on reducing energy consumption through regulation and short term behavioral changes, diversifying suppliers, scaling up renewable energy sources, and reducing fossil fuel consumption. The plan requires an additional 210 billion euros of investment between now and 2027. (https://ec.europa.eu/commission/presscorner/detail/en/ip_22_3131).

UPDATE:

May 17, 2022

  • European Commission’s Updated Guidance on Ruble-for-Gas Scheme: The European Commission, in a guidance circulated to Member States, has indicated that to avoid breaching sanctions, companies would need to seek additional conditions on the transactions, to confirm that their contractual obligations are complete once they deposit euros with Gazprombank – as opposed to after Russia has converted the payment into rubles. Another option could be for EU companies themselves to declare that they consider their contractual obligations to be completed when they deposit euros or dollars with Gazprombank. EU companies are allowed to open accounts with Gazprombank and engage with the bank to attempt to seek a solution. Gazprombank is not subject to EU sanctions. (https://www.reuters.com/business/energy/what-is-eus-stance-russias-roubles-gas-payment-demand-2022-04-27/).

  • European Commission Spokesman Claims that Opening Account in Rubles Breaches EU Sanctions: A spokesman for the European Commission said that opening accounts in rubles at a Russian bank to pay for gas would breach sanctions, despite previous guidance that EU sanctions do not prevent companies from opening an account in Russia and that companies can pay for Russian gas, provided they do so in the currency agreed in their existing contracts and declare the transaction completed when that currency is paid. (https://www.reuters.com/markets/commodities/eu-clarifies-how-companies-can-legally-pay-russian-gas-2022-05-16/).

  • European Parliament Considers Suspension of Import Duties on Ukrainian Goods: On Tuesday, the European Parliament’s International Trade Committee considered a regulation that would suspend all duties on imports from Ukraine. The full plenary committee of the European Parliament will vote on the regulation later in the week once it is adopted by the Committee, which is expected to occur. (http://pr.euractiv.com/pr/sds-push-lifting-import-duties-ukrainian-products-act-solidarity-233386).

  • Italy’s Eni to Open Ruble Accounts for Gas Payments: Eni has confirmed it will open a ruble-denominated account at Gazprombank as a precaution to ensure the next payment for Russia gas goes through, despite the European Commission’s warning that this may breach EU sanctions. According to Eni, Gazprom Export and Russian authorities have confirmed that payment obligations will be considered complete with the initial deposit in euros, and that the currency conversion will occur within 48 hours without any involvement from the sanctioned Russian Central Bank (https://www.politico.eu/article/italys-eni-to-open-ruble-accounts-for-gas-payments/).

UPDATE:

May 16, 2022

  • EU Fails to Reach Deal on Sixth Sanctions Package: EU Foreign Ministers failed on Monday to secure an agreement on the sixth sanctions package. The issue still is the proposed embargo on Russian oil. Lithuanian representatives said that the bloc is being “held hostage by one member-state,” presumably a reference to Hungary, which has persistently objected to the embargo due to its dependence on Russian oil and stated earlier in the day that it had not received sufficient guarantees from the EU that it would provide financial assistance to countries transitioning away from Russian oil. (https://www.reuters.com/world/europe/one-country-holding-eu-hostage-russian-oil-embargo-lithuania-says-2022-05-16/).

  • Portugal Blocks Sale of Mansion Over Suspected Ties to Abramovich: Portuguese Foreign Minister Joao Cravinho announced that Portugal had blocked the sale of a 10 million euro mansion in the Quinta do Lago resort due to a “strong conviction” that it belonged to sanctioned Russian billionaire Roman Abramovich. The house was frozen, meaning it cannot be rented, sold, or mortgaged; the freeze was put in place on March 25. Abramovich has denied any connection to Millhouse Views LLC, the entity that owns the villa. (https://www.reuters.com/world/europe/portugal-blocks-sale-abramovich-mansion-publico-newspaper-says-2022-05-14/).

  • Renault Sells Stake in Russian Carmaker: On Monday, French carmaker Renault announced that it was selling its majority stake in Russian carmaker Avtovaz. Renault symbolically sold its stake for one ruble to the Central Research and Development Automobile and Engine Institute, but the sale reportedly came with conditions that gives Renault the right to buy back the stake under a six-year option. The sale also impacts its Russian subsidiary, Renault Russia, which was sold to the city of Moscow in another symbolic one-ruble transaction. (https://www.reuters.com/markets/deals/renault-sells-its-stake-russias-avtovaz-option-buy-it-back-2022-05-16/).

UPDATE:

May 15, 2022

  • EU Drafts Updated Guidance for Gas Payments:Bloomberg reported on Saturday that the EU has circulated a new draft guidance regarding natural gas payments to Russia. The draft guidance indicates that companies should “make a clear statement that they consider their obligations fulfilled once they pay [for gas] in euros or dollars, in line with existing contracts” once they complete payment, and that once the initial payment is made, Russia should impose no other obligation on the company. The guidance clarifies that companies are permitted to open accounts in Euros or dollars at Gazprombank, but reportedly does not discuss the legality of opening ruble accounts at Gazprombank. (https://www.bloomberg.com/news/articles/2022-05-14/eu-drafts-plan-for-buying-russian-gas-without-breaking-sanctions).

  • EU Committed to Unified Action on Sanctions:In interviews with The Financial Times, EU negotiators expressed their intent to move forward as a unified bloc on future sanctions against Russia, with European Commission Vice President Maroš Šefčovič saying “We are very much determined to work with Hungary and of course with the rest of the EU member states to have European unity . . . We definitely prefer the 27 going forward together.” Each EU nation in theory could impose their own sanctions against Russia except for objectors like Hungary, but such a move would undermine EU unity and the common market, as Hungary could likely purchase energy products at reduced prices. (https://www.ft.com/content/abba000b-992a-45a3-941a-3616e335ccc5).

  • Finland Confirms Russian Electricity Shutoff:After Friday’s announcement that Russian state-owned electricity provider Inter RAO would cut off electricity supply to Finland due to a lack of payment, Fingrid Senior Vice President of Power System Operations Reima Päivinen confirmed that electricity supply from Russia was effectively cut at 12 a.m. CET on Saturday. He added that the Finnish electric grid is stable, even without Russian electricity. (https://www.cnn.com/europe/live-news/russia-ukraine-war-news-05-14-22/h_262d0e26d1cc51988e0fd58db9d255b4).

UPDATE:

May 13, 2022

  • EU Considers Modifying Oil Ban: Reports from the EU negotiations indicate that the bloc is considering dropping the complete ban on imports of Russian oil due to persistent Hungarian and Slovakian resistance. Negotiators are also considering modifying the oil ban in a way that Hungary could support. Either way, negotiators state that this would be a bad signal for the future of European unity on sanctions. (https://www.politico.eu/article/eu-considers-shelving-ban-on-russia-oil-as-hungary-viktor-orban/).

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