More EU, US and UK sanctions relating to Russia
On 11 March 2022 the EU, US and G7 made a coordinated announcement of additional sanctions against Russia in response to Russia's military aggression against Ukraine.
The G7 statement is available here. We outline the main features of the specific US, EU and UK developments below. We also comment on the latest Russian countermeasures.
On 11 March 2022, President Biden issued a new Executive Order (the "EO") that imposes further trade and financial sector restrictions relating to Russia.
In respect of trade restrictions, the EO prohibits:
- Importation into the US of the following products of Russian Federation origin:
- fish, seafood, and preparations thereof;
- alcoholic beverages; and
- non-industrial diamonds.
- Exportation, reexportation, sale, or supply, directly or indirectly, from the US, or by a US person, of:
- luxury goods (described in this fact sheet to be goods such as high end-watches, luxury vehicles, high-end apparel, jewellery and other goods frequently purchased by Russian elites).
In respect of financial sector restrictions, the EO prohibits:
- New investment in any sector of the Russian Federation economy as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State, by a US person (note that the Secretaries of Treasury and State have not yet listed any sectors of the Russian economy blocked from investment under this EO);
- Exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a US person, of US dollar-denominated banknotes to the Government of the Russian Federation or any person located in the Russian Federation; and
- Any approval, financing, facilitation, or guarantee by a US person, of a transaction by a foreign person where the transaction by that foreign person would be prohibited by section 1 (a) of the EO (i.e. the above trade and financial restrictions) if performed by a US person or within the US.
In conjunction with the EO, OFAC issued several General Licenses (available here), which provide limited authorisations for activity that would otherwise be subject to sanctions pursuant to the EO.
In addition to the new EO, the US made new SDN designations of parties described to be Russian elites and their family members, as well as Duma members who sponsored legislation to recognize the non-government controlled Donetsk and Luhansk regions of Ukraine. Press statement from OFAC is available here.
Moreover, the White House announced (fact sheet is available here) that the US will, in coordination with G7 leaders:
- Work to deny Russia the benefits of its WTO membership and ensure that Russian imports do not receive most favoured nation treatment in the US economy; and
- Agree to deny Russia borrowing privileges at multilateral financial institutions, such as the International Monetary Fund and the World Bank, to ensure Russia cannot obtain financing from the leading multilateral financial institutions.
On 11 March 2022, the President of the Commission announced in a statement new EU sanctions similar to those implemented by the US, including:
- Banning the export of EU luxury goods from EU to Russia;
- Prohibiting the import of "key goods in the iron and steel sector" from Russia; and
- Proposing a "big ban on new European investments across Russia's energy sector". The ban will cover "all investments, technology transfers, financial services, etcetera, for energy exploration and production".
In addition, the EU announced, in line with the G7 statement, that the EU will:
- Deny Russia the status of most-favoured-nation in EU markets and revoke the important benefits that Russia enjoys as a WTO member, and work to suspend Russia's membership rights in leading multilateral financial institutions, including the International Monetary Fund and the World Bank.
- Continue to pressure Russian elites close to Putin as well as their families and enablers and make sure that the Russian state and its elites cannot use crypto assets to circumvent sanctions.
In addition to the measures above, the EU also announced that there will be proposals to sanction more individuals and more companies that are playing an active role or supporting the people who undermine Ukraine’s sovereignty by the Russian government (the statement from the High Representative of the EU is available here). The designations are described to target oligarchs, regime-affiliated elites, their families and prominent businesspeople who "are involved in economic sectors providing a substantial source of revenue to the regime. They are active in the steel industry, they provide military products and technology or they provide financial and investment services."
On 11 March 2022, the UK announced the designation of 386 members of the Russian State Duma, whom have been targeted for their support of the treaties that recognised the independence of the Luhansk and Donetsk regions. HM Treasury Notice is available here, and press release here.
Last week, Russia announced and implemented several countermeasures against states that have recently imposed sanctions against Russia, as further discussed in our alert of 9 March here and 10 March here.
On Monday afternoon, Russian media reported (in Russian) that United Russia (Russia's ruling party) is planning to propose legislation that would penalize managers of Russian companies that take steps to adhere to Western sanctions. If adopted, this could potentially expose the local management of Russian subsidiaries of Western companies that are shutting down business due to Western sanctions.