The European Union has approved the 11th package of sanctions against Russia, aimed at strengthening the existing restrictions and stopping their circumvention. Despite Budapest’s “protests” about blocking the bank’s OTP, the sanctions package was agreed upon.
This article discusses how the EU will monitor compliance with the sanctions and who is on the EU’s blacklist.
Countering sanctions circumvention and export restrictions
As expected, the new package of restrictions is aimed at preventing the circumvention of existing sanctions. To this end, a new tool is being introduced to counteract sanctions circumvention. This will allow the EU to restrict the sale and export of sanctioned goods and services to third countries.
In the event of a systematic violation of these sanctions, the EU will take extreme measures to deprive Russia of the resources that allow it to continue its aggressive war against Ukraine.
In such a case, the European Council will unanimously decide to restrict the sale, supply, transfer or export of goods and technologies already banned from being supplied to Russia by third countries. The EU hopes to establish a constructive dialogue with third countries.
A new element to counter sanctions circumvention
A new element has been added to the toolkit for countering sanctions circumvention – the circumvention lists and the criteria for inclusion on the list. The EU has improved its tools to prosecute third-country operators in case of sanctions circumvention.
The new tool targets products and third countries. If all restrictions fail, another restriction is introduced, which will prevent the third country from exporting a specific product from the EU.
The EU will tighten up its checks on imported goods made from steel in third countries. Third countries will now have to prove that the raw materials do not originate in Russia.
“Today’s package increases our pressure on Russia and Putin’s military machine. By ending sanctions circumvention, we are maximising the pressure on Russia, depriving it of the resources it so desperately needs to allow it to continue its illegal war against Ukraine”.Josep Borrell, EU High Representative
The European Council has added 87 entities to the list of those who support Russia’s military-industrial complex. The EU will impose stricter export restrictions on them. In particular, the list includes four Iranian companies that produce drones and supply them to Russia.
The EU has also singled out other third-country companies involved in circumventing trade restrictions, as well as some Russian organisations involved in developing, producing and supplying electronic components for the Russian army.
The 11th package of sanctions has expanded the list of goods prohibited for export to Russia
In addition, the 11th package of sanctions provides for the expansion of the list of restricted goods that could help Russia wage war. The exports of electronic components, semiconductor materials, equipment for the production and testing of electronic integrated circuits and printed circuit boards, precursors of energy materials and precursors of chemical weapons, optical components, navigation devices, metals used in the defence sector and marine equipment are now subject to the ban.
The list includes companies from China, Uzbekistan, the United Arab Emirates, Syria and Armenia.
The EU will publish the list of goods subject to sanctions so that partner countries can ban the supply of these goods.
The sanctions have been effective, as Russia’s imports of high-tech goods from the EU and other coalition countries have almost entirely decreased.
In Russia, industrial production has declined, as has the production of transport equipment, electronics and optical devices, and hardware. The only growth was observed in Russia’s low-tech industries, such as steel production, aluminium production, textiles and clothing.
Ban on trade in military goods and luxury goods
The EU has added new export bans on military and industrial goods, as well as certain luxury goods.
In particular, the EU restricts the export of 15 technological units found on the battlefield in Ukraine or equipment necessary for producing such items.
According to a senior EU official, the restrictions on technological items mean that the EU is ensuring that all items found on the battlefield are subject to EU economic sanctions.
Companies are prohibited from selling or transferring intellectual property rights and trade secrets that could help manufacture sanctioned goods outside the EU. Previously, this was a loophole for circumventing sanctions.
In addition, under the 11th package of sanctions, Russians will not be able to import luxury cars, cars with an engine capacity of more than 1900 cc, and electric vehicles and hybrids from the EU.
Some types of car components are also now prohibited from being supplied to Russia. In particular, additional export bans apply to equipment and machinery for producing tyres and plastics for cars.
Prohibition of transit and access to ports
The European Union bans the transit of most goods and technologies through Russia that could strengthen Russia’s military and defence sector or be used in the aviation or space industry. This measure will also reduce the risk of sanctions circumvention.
In addition, the new sanctions package prohibits the transport of goods to the EU by trucks with Russian trailers and semi-trailers.
The EU is also blocking access to EU ports for vessels engaged in ship-to-ship transport suspected of violating the ban on Russian oil imports or the G7 coalition price cap.
More and more ships are trying to hide the origin of their oil. This happens either through transhipment from ship to ship or through manipulation of the tracking system.
If a vessel is suspected of violating sanctions or turning off its navigation tracking system while transporting Russian oil, authorities may deny access to EU ports.
Access to ports will also be blocked if the vessel fails to notify the competent authority at least 48 hours before a ship-to-ship transfer that takes place within the exclusive economic zone of a Member State or within 12 nautical miles of the baseline of that Member State’s coastline.