Fourth Round of Sanctions Imposed on Russia
The European Union and the United States with other partner countries (namely G7 countries) have adopted an unprecedented set of sanctions in response to Russia’s further invasion of Ukraine and Belarus’ assistance and support in the war. The new round of sanctions covers especially Russian state-owned enterprises, prohibiting the import of steel and iron products from Russia while introducing a ban on exports of luxury goods to Russia.
Read our previous Legal Alerts on the topic for more information on the previous rounds of sanctions.
The European Union
The European Union has adopted further sectoral restrictions on 15 March 2022. In addition to new trade and financial sanctions, the EU added 15 individuals and nine entities to the sanctions list (cf. Council Implementing Regulation (EU) 2022/427).
New economic and financial restrictions include the following (cf. Council Regulation (EU) 2022/428):
- Export ban on goods and technology related to oil exploration and production;
- Ban on new investments in the Russian energy sector, with the exception of civil nuclear energy related activities;
- Import of iron and steel products from Russia is prohibited;
- Export of luxury goods is prohibited. This applies to goods with a value exceeding EUR 300;
- All transactions with entities with over 50% public ownership are prohibited. This also covers all subsidiaries of these entities established outside the EU. The prohibition does not apply to transactions that are strictly necessary for the purchase, import or transport of fossil fuels or certain metals; and
- Provision of credit rating services to Russian nationals or entities is prohibited.
The United States
The United States has adopted new measures in line with those adopted by the EU. On 4 March, the US imposed an export ban on goods and technology necessary in oil and gas exploration and oil refinement. On 11 March, the US authorities prohibited the export of luxury goods to Russia.
The US has also taken some measures going beyond those adopted by the EU. Notably, on 8 March, President Biden issued a new Executive Order 14066 that prohibits the importation of oil, petroleum products and natural gas of Russian origin to the United States and that introduces a comprehensive ban on investments in the energy sector of Russia.
In addition to the new trade and financial measures adopted, OFAC has added several Russian and Belarussian individuals and entities to the SDN list.
Overall picture and future challenges
The sanctions imposed against Russia are unprecedented both in terms of volume and the short timeframe in which the measures have been adopted. New sanctions are comprehensive and wide-ranging and will certainly also raise challenging questions in terms of interpretation. For example, the exportation of certain items under the EU rules falls now under two set of prohibitions. This applies, for instance, to certain consumer electronics devices the exportation of which to Russia is now governed by the restrictions applied to sensitive technologies and by the export ban on luxury goods.
Additional listings and expanded listing criteria of individuals and entities will also give rise to difficult compliance challenges – especially with regard to companies that are not listed but are controlled by sanctioned persons. It is evident that more guidance is required to achieve a uniform and effective implementation of these new measures. For now, the Commission’s recently published guidance on the application of new export-related measures is a good start.
We will continue to monitor the situation and provide timely updates on any further sanctions and how they could impact your business. Borenius lawyers are available to answer any questions you may have with regard to the situation in Ukraine.