Europe moves ahead with increased Russian sanctions

The European Sanctions blog by Maya Lester, Brick Court Chambers & Michael O’Kane, Peters & Peters Solicitors LLP

On 8 September 2014, new European sanctions were agreed against Russian interests. Despite their formal adoption, the sanctions are only due to take effect “in the next few days”, leaving sufficient time for the EU to assess the changing situation on the ground in Ukraine. EU Council President Herman Van Rompuy has noted that “the EU stands ready to review the agreed sanctions in whole or in part” depending on the perceived willingness of Russia to comply with the negotiated ceasefire between the parties that began in Ukraine on 5 September 2014. The ceasefire agreement has proved fragile over the last few days.

The new measures tighten the existing bar on Russian entry to EU capital markets to include a ban on syndicated loans by EU banks. The targets of these sanctions have also been expanded to include Russian defence and oil companies, rather than just nominated Russian banks. Russian oil giants Rosneft, Transneft and Gazprom have all fallen under the new regulations, as well as defence manufacturers Oboronprom, United Aircraft Corporation, and UralVagonZavod.

Further sanctions also include a ban on the export of ‘dual-use technologies’ (products that can be used for both civilian and military purposes), and a prohibition on the supply of European associated services (such as drilling and well-testing) to Russian oil exploration industries. The sanctions are also said to add to the current individual targeted sanctions, however the list of names has yet to be released.

The new sanctions follow the proposals put forward in the recently leaked Commission paper entitled ‘Outline of proposals for a second round of restrictive measures on Russia’. Notably, the options paper also makes reference to Russian sporting and cultural events as possible future targets for sanctions, including the 2018 FIFA World Cup, which is set to be hosted by Moscow.

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