UK, EU Announce Scope of Second Sanctions Wave Following Russian Invasion of Ukraine
The EU and the U.K. announced another round of sanctions following Russia's invasion of Ukraine. Building off a first wave of restrictions imposed on Russia following troop movement into the Donetsk and Luhansk regions, they either added or announced a series of individuals and entities that will be subject to greater restrictions. The EU said it plans to impose grand sectoral sanctions against Russia, while British Prime Minister Boris Johnson said that the U.K. will impose asset freezes on over 100 new entities and individuals.
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The U.K. Office of Financial Sanctions Implementation got the ball rolling, adding 11 entries to its Russia sanctions regime in a Feb. 24 notice. The restrictive measures, amounting to an asset freeze and travel ban, apply to Denis Alexandrovich Bortnikov, deputy president of VTB Bank; Petr Mikhailovich Fradkov, chairman of Promsvyazbank; Elena Alexandrovna Georgieva, chair of the board of Novikombank; Kirill Nikolaevich Shamalov, deputy chairman on the management board at PAO SIBUR Holding; and Yury Borisovich Slyusar, director general of United Aircraft Corporation.
The entities subject to the restrictions are JSC Research and Production Corporation Uralvagonzavod, a Russian state-owned military equipment manufacturer; Public Joint Stock Company "United Aircraft Corporation," a Russian state-owned enterprise that includes all of Russia's major aircraft manufacturers and is a major supplier to the Russian military; Public Joint Stock Company "United Shipbuilding Corporation," the largest shipbuilding corporation in Russia; State Corporation for the Promotion of the Development, Manufacture and Export of High Technology Products "Rostec," Russian state-owned defense conglomerate; Tacitcal Missiles Corporation Joint Stock Company, state-owned prominent manufacturer of missiles in Russia; and VTB Bank (Public Joint-Stock Company).
U.K. Foreign Secretary Liz Truss also announced the full scope of the second wave of restrictions to be implemented on Russia, which includes a ban on Russia's national airline Aeroflot from landing in the U.K. Further, the U.K. intends to impose new restrictions on trade and export controls on Russia's high-tech and strategic industries while also working to cut Russia off from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) electronic payment messaging system used in worldwide financial systems. The U.K. will use its "toughest" export controls against Russia, Truss said, outlining their use on electronics, telecom and aerospace companies.
OFSI's notice also amended the entries for IS Bank and Joint Stock Company Genbank. In another notice, the U.K. also amended the entries for the United Aircraft Corporation, Uralvagonzavod and VTB Bank. All three were originally listed in 2014 as "not subject to an asset freeze," but that information was deleted in the OFSI notice.
The European Council, meanwhile, published conclusions on the Russian invasion, announcing that it agreed to greater restrictive measures intended to "impose massive and severe consequences on Russia for its action." The measures will cover Russia's financial, energy and transport sectors along with the trade of dual-use goods. Greater sanctions will also concern the EU's export financing, visa policy and new criteria under which Russian sanctions will be made. "The Council will adopt without delay the proposals prepared by the Commission and the High Representative," the council said. Further, restrictions against Belarus are being entertained, the council said, as Belarus served as the launching point for Russian military aggression.
The EU officially imposed its first wave of Russia sanctions in a series of four European Council decisions Feb. 23 in response to Russia's troop movement into Ukraine's Donetsk and Luhansk regions. The first council decision, and subsequent implementing regulation, lists 22 designated individuals and four entities now subject to a travel ban and asset freeze.
The individuals include senior military personnel, government officials and employees of Russian state media and pro-state businesses, among them Russian Defense Minister Sergei Shoigu; Anton Vaino, Presidential Executive Office chief of staff; and Marat Khusnullin, deputy prime minister for construction and regional development. The four listed entities are the Internet Research Agency, Bank Rossiya, Promsvyazbank and VEB.RF. The council also listed 336 members of the Russian State Duma.
A second decision introduced a derogation mechanism for certain authorities of an EU member state, by which the operator can release the frozen funds of a listed entity. The derogation mechanism is meant to make funds available so that contracts may be terminated by Aug. 24.
A third council decision imposed a ban on the financing of Russia, the government of Russia, the Central Bank of Russia or any entity acting on behalf of the Central Bank. The prohibition won't apply to loans that have a specific and documented purpose to provide financing for "non-prohibited imports or exports of goods and non-financial services" between the EU and any third country.
Lastly, the Council imposed an import ban on goods from the non-government-controlled areas of Donetsk and Luhansk. This decision, and its implementing regulation, bars investments in the regions and exports of goods and technologies for the "sectors of transport, telecommunications, energy or the prospecting, exploration and production of oil, gas and mineral resources," and tourism. It also bans any technical assistance and engineering services to infrastructure in the regions and for any of the previously listed sectors.