It has been over two months since the start of the invasion by Russia into Ukraine on the 24th of February 2022. As the tensions began to build before the invasion, the Member States of the European Union and the United Kingdom had been threatening to impose sanctions on Russia in the event that they invade Ukraine. Both the European Union and the United Kingdom were quick to enforce the sanctions once military operations commenced.
We have seen that the Member States of the European Union reacted similarly once the invasion started, each taking the EU sanctions and applying them to their national regulations. For instance, the Netherlands stopped all shipments with a destination of Russia to validate if any of the goods would qualify for the sanctions. This brought a halt to any trade with Russia, regardless of commodity. As soon as the Sanctions were released, the reaction from the different agencies who control the export licenses for dual-use and military goods was to immediately begin retracting any export licenses provided to Traders in the European Union and the United Kingdom.
Over the past 30 days, we have seen four European sanction regulations packages and eight amendments to the United Kingdom Russian Sanctions regulations, with the latest on the 14th of April 2022.
The Sanctions cover a wide range of prohibitions covering the following areas:
Finance: There are prohibitions on public financing or financial assistance for trade with or investment in Russia, including investment and contribution to projects co-financed by the Russian Direct Investment Fund. The sanctions also include any new investments in the energy sector or the financing of the Russian government and Central Bank and a prohibition banning all those transactions related to the management of the Central Bank’s reserves and assets. In addition, there are prohibitions on a range of financial interactions, including financial rating services, the provision of euro-denominated banknotes, and the decoupling of certain Russian banks from the SWIFT messaging system.
Trade: A prohibition was put in place on trade in arms and on exports of all dual-use goods and technology items that can contribute to Russia’s defense and security capabilities. A prohibition is also placed on exports of goods for use in the oil industry, maritime navigation, and luxury goods. Lastly, there is also a prohibition on the imports of iron and steel from Russia.
Travel and Communications: There is a prohibition on the broadcast in the EU of certain Russian state-owned media outlets. There is a prohibition on certain operations in the aviation sector for travel.
Persons and entities: Individual restrictive measures consist of travel bans and financial measures (asset freezes and a prohibition to make funds or economic resources available) targeting over 900 persons and entities responsible for undermining Ukraine’s territorial integrity, sovereignty, and independence. Financial measures were also adopted against persons responsible for the misappropriation of Ukrainian State funds and persons responsible for human rights violations in Ukraine.
Ultimately, the European sanctions aim to encourage Russia to cease actions destabilizing Ukraine or undermining or threatening the territorial integrity, sovereignty, or independence of Ukraine. However, they can be complicated to understand and undoubtedly fluid in nature. In addition, many of these sanctions have been replicated by the United States, Canada, and others.
Tradewin will continue to monitor and keep up to date with the everchanging sanctions regulations toward Russia. Tradewin consultants also support clients with export license applications, dual-use product classifications, customer screening, and various Trade Compliance topics.
For more information, reach out to our Advisory Consultants at Tradewin today.