Ukraine conflict: EU sanctions against Russia

10 March 2022

Due to Russia’s invasion of Ukraine, geopolitical tensions are rising, while countries (especially EU, UK and US) are imposing sanctions on Russian entities and individuals.

Historically, the EU has been imposing measures on Russia since the latter annexed Crimea in 2014, with sanctions ranging from diplomatic measures to restrictions on economic cooperation. When the current conflict began, those measures only increased.

The EU agreed on a first package of sanctions on 23 February 2022, as a response to the recognition of the non-government controlled areas of Donetsk and Luhansk as independent entities by Russia. Sanctions were targeted against members of Duma as well as some Russian entities. Broad restrictions were imposed on economic relations with areas of Donetsk and Luhansk while Russia had restricted access to the EU’s capital and financial markets and services.

A second, larger package of sanctions, was agreed on 25 February 2022. In the economic sense, the EU sanctions are targeting 70% of the Russian banking market and key state-owned companies, amending existing restrictions on capital markets transactions and lending. In addition, a new restriction prohibits the acceptance of any deposits from Russian nationals, Russian residents or Russian entities if the total value of the deposits with one credit institution exceeds EUR 100k. Russian nationals, Russian residents and Russian entities will no longer be permitted to purchase EUR denominated transferable securities issued after 12 April 2022. And lastly, public financing or financial assistance for trade with, or investment in, Russia is prohibited, unless it is in relation to binding financing or financial assistance commitments established prior to 26 February 2022.

Additional restrictions have been introduced also in the energy sector. There is a prohibition to sale, supply, transfer or export (directly or indirectly) goods and technology used in oil refining, (whether or not originating in the Union), to any person or entity or body in Russia or for use in Russia. The provision of related technical assistance, brokering or other financial assistance or services relating to such goods and technology is also prohibited. For contracts concluded prior to 26 February 2022, these prohibitions do not take effect until 27 May 2022.

A very broad export ban has been imposed covering goods and technology in the aviation and space industry and related insurance, reinsurance and maintenance services and technology which is likely to have a serious impact on one of the key sectors of Russia’s economy and the country’s connectivity. The EU has also imposed restrictions on exports of certain goods and technology which might contribute to Russia’s technological enhancement of its defence and security sector (including for example electronics, computers, telecommunication ...).

The EU has withdrawn visa facilitation provisions that allow privileged access to the EU for Russian diplomats, other Russian officials and businesspeople; ordinary Russian citizens remain unaffected.

The third sanctions package, introduced on 28 February 2022, includes prohibition of transactions involving the assets and reserves of the Central Bank of Russia (including transactions with any legal person, entity or body, acting on behalf of the CBR). There is also a prohibition to land, take off or fly any Russian operated, owned, controlled or registered aircraft over EU territory while assets of 26 so-called 'oligarchs' were also frozen.

On 2 March 2022, the EU confirmed its commitment that certain Russian banks will be cut off from SWIFT as of 12 March 2022, making the process of conducting international transactions more difficult and costly for them while investments in projects co-financed by the Russian Direct Investment Fund will also be prohibited.

As the crisis deepens, more and more restrictions are announced to take effect in the future, not only against Russia but also in relation to Belarus's participation in the conflict.