The EU Issues an Eleventh Package of Sanctions Against Russia

The European Union (EU) formally adopted an eleventh package of sanctions against Russia on June 23, 2023. This package focuses on preventing the circumvention of existing measures and includes a new anti-circumvention tool, new designations, additional import and export control bans and restrictions, new measures related to transport, tighter measures related to energy, clarification on existing measures, and additional media broadcasting bans. The package also aims to ensure that EU sanctions against Russia are better enforced, based on the lessons learned from implementation over the past year.

In more detail, below are the main features of the EU’s latest sanctions package:

• New exceptional, last resort, anti-circumvention measures. This new package addresses the involvement of third-country operators in facilitating circumvention. These measures include: (1) designating individuals; (2) adding entities to Annex IV to Regulation (EU) No 833/2014; (3) re-engaging in constructive dialogue with third countries to find remedial measures to deter other operators from engaging in similar conduct; and (4) restricting the sale, supply, transfer, or export of sensitive dual-use goods and technology, or goods and technology that might enhance Russia’s military, technological, industrial, defense, or security capacities, to countries who have demonstrated to be at continuing and particularly high risk of being used for circumvention.
• Additional designations. The EU imposed asset freezes on 33 entities and 71 individuals. This includes senior military officials, war decision makers, persons involved in the illegal deportation of Ukrainian children to Russia, judges who engaged in politically motivated decisions against Ukrainian citizens, persons responsible for the looting of cultural heritage, businesspersons, propagandists, as well as Russian IT companies for providing critical technology and software to the Russian intelligence, banks operating in the occupied territories and entities working with the Russian armed forces. Newly sanctioned Russian IT companies include: Vulkan LLC, Okenit JSC, JSC “Echelon Union for Science and Development,” Iteranet LLC, Positive Group PJSC, Poisk-IT LLC, Vektor JSC, and Akuta JSC, ZAO Mniti. Newly sanctioned banks include: MRB Bank and CMR Bank.
• Additional entities added to Annex IV. 87 entities have been added to the list of companies considered to be directly supporting Russia’s military and industrial complex. Consequently, these entities are subject to tighter export restrictions regarding dual-use goods and technology, as well as goods and technology that might contribute to technological enhancement of Russia’s defense and security sector. In addition to the Russian and Iranian entities already listed, for the first time, this measure also covers entities registered in other jurisdictions, e. Armenia, Hong Kong, Syria, the United Arab Emirates, and Uzbekistan.
• Additional import bans. The EU tightened restrictions on imports of iron and steel goods by requiring importers of iron and steel goods processed in a third country to prove non-Russian origin.
• Additional export restrictions. These include:
  • Export restrictions on 15 technological items found to be used in Russia’s war against Ukraine and equipment needed to produce these items. These items are related to electronic components, semiconductor materials, manufacturing, and testing equipment for electronic integrated and printed circuits, precursors to energetic materials and precursors to chemical weapons, optical components, navigational instruments, metals used in the defense sector, and marine equipment.
  • Prohibition on (1) the sale, license, or transfer of intellectual property rights or trade secrets and (2) on the grant of rights to access or re-use intellectual property material or trade secrets, that are used in connection with restricted goods to a person, entity, or body in Russia or for use in Russia.
  • Extended ban on firearms and ammunition.
  • Full ban on certain types of machinery components (g., electrical, magnetic) that can easily be redirected for use in the war against Ukraine.
• Extension of ban on luxury items. The newly added luxury items include all new and second-hand luxury cars above a certain engine size (> 1.900 cm³), and all electric and hybrid vehicles. There is also a full ban on yachts.
• Measures related to transport. These include:
  • Prohibition on the transport of goods by road in the EU by trailers and semi-trailers registered in Russia, including when hauled by trucks registered outside of Russia.
  • Prohibition on accessing EU ports for vessels that engage in ship-to-ship transfers suspected to be in breach of the Russian oil import ban or the G7 Coalition price cap.
  • Notification requirements to access EU ports for vessels involved in certain ship-to-ship transfers.
  • Prohibition on accessing EU ports for vessels which manipulate or turn off their navigation tracking system when transporting Russian oil subject to the oil import ban or G7 price cap.
  • Prohibition on transiting through Russia for (1) certain advanced technology goods that may contribute to Russia’s military or defense sector development, (2) goods and technology suited for the aviation or space industry, and (3) jet fuel and fuel additives exported from the EU to third countries.
• Additional measures related to energy.
  • Prohibition on importing Russian oil by pipeline for Germany and Poland.
  • Strict and targeted derogations to enable the maintenance of the CPC (Caspian Pipeline Consortium) pipeline which transports Kazakh oil to the EU through Russia.
  • Extension to March 31, 2024, for the exception to the oil price cap for Sakhalin oil for Japan.
• Additional clarifications and measures.
  • Derogations allowing:
    • the sale of proprietary rights in a Russian joint venture co-owned with a listed person.
    • the disposal of certain types of securities held with specified listed entities.
    • the provision of services required for the establishment of a firewall removing the control by a listed person over the assets of an EU entity.
  • Insertion of an exemption for the provision of pilot services in specific circumstances.
  • Insertion of certain clarifications in the provision on information sharing between competent authorities and regarding the respect of the confidentiality of the communications between lawyers and their clients in the context of reporting obligations.
  • Revision of the listing criterion for individuals/entities engaged in circumventing EU sanctions, including those significantly frustrating EU sanctions.
  • Addition of a new listing criterion to allow the designation of persons and entities operating in the Russian IT sector with a license from the Federal Security Service of the Russian Federation (FSB) or the Russian Ministry of Industry and Trade.
  • Extension of the media ban to 5 additional channels.
  • Simplification of the structure of the industrial goods annex, by listing products subject to restrictions in one single section and with broader product definitions, to better identify goods subject to export bans and reduce circumvention of sanctions by misclassification.

The EU has published Q&As on its latest package of restrictive measures, available here. The EU’s eleventh package of sanctions was issued almost four months after its tenth package of sanctions (see Winston’s post summarizing the EU’s tenth package of sanctions here). The EU is confident that sanctions against Russia are proving effective and hindering Russia's ability to continue the war against Ukraine. The EU also reiterated its solidarity with Ukraine and its commitment to continue to support Ukraine through political, financial, military, and humanitarian support.