New sanctions imposed from 4 November 2022 to 31 January 2023

2 February 2023

#Oil/Energy In early November, G7 & EU adopted a price cap on Russian oil exported to 3rd countries at the level of $60 per barrel. Price cap was joined by Australia, Norway and Switzerland. Noticeably, Turkey unofficially joined price cap by banning oil tankers without insurance documents from passing through the Black Sea straits (#Transport). Later, on 20 January, Price Cap Coalition agreed to establish two distinct price caps on Russian refined products: one for products that generally trade at a premium to crude (diesel or gas oil), another one for products that trade at a discount to crude (fuel oil). So far, G7 & EU are discussing the level of price cap on Russian diesel – EU proposed a cap level of $100, while the G7 suggests a range of $100 to $110 per barrel. While the level of oil price cap is planned to be reviewed in March. In the same time Russian energy companies continue to lose assets located in EU and face new lawsuits: Poland withdrew Gazprom’s stake in EuRoPol GAZ, Italy introduced temporary administration at the Isab-Lukoil oil refinery in Sicily (owned by Lukoil), Germany transferred Securing Energy for Europe GmbH into federal ownership. Moldova accused Gazprom of provoking an energy crisis and going to sue. German RWE and Uniper already initiated arbitration proceedings against Gazprom due to the lack of gas supplies.

#Financial Sanction Coalition countries continued to respond to Russia-Iran military cooperation – USA, UK, EU, Australia, New Zealand, Switzerland sanctioned Iranian (and several Russian) entities for production & delivery of UAVs to Russia. Among other financial sanctions, the USA sanctioned 18 entities related to Russia’s financial services sector, inc. PJSC Rosbank & 17 subsidiaries of VTB Bank PJSC (Russia’s 2nd largest bank), Russian Central Election Commission for holding referendums on occupied territories, as well as Wagner Group and 26 entities linked to it. The UK expanded financial sanctions by prohibiting services related to trusts, dealing with transferable security and new restrictions on loans and credit arrangements to a person connected with Russia. Under the 9th package, the EU sanctioned 49 entities, inc. Credit Bank of Moscow and Dalnevostochniy Bank, imposed transaction ban on Russian Regional Development Bank (SOE), prohibited new investments in the Russian mining sector and extended the prohibition regarding transferable securities. While Switzerland has adopted financial sanctions in line with 8th & 9th EU sanction packages (inc. crypto ban and ban on new investments in Russian mining sector)

#Trade During the reporting period USA, UK, EU, Switzerland, New Zealand and Taiwan adopted new and extended previous trade sanctions. Among updates worth highlighting – USA revoked Russia’s status as a market economy and reclassified the country as a non-market economy in its antidumping proceedings; EU adopted new trade sanctions under 9th package (inc. restrictions affecting Russian MIC, service sector, aviation and space industry, iron and steel) and stopped applying autonomous trade preferences to goods from Belarus and Russia from 1 January 2023; Switzerland adopted trade sanctions under 8th and 9th EU packages (inc. complete armaments embargo on Russia, ban on import of Russian iron & steel products); Taiwan expanded the scope of export control on goods exported to Russia and Belarus; Japan prohibited exports of dual-use goods to Russia that could strengthen its military potential, effective from 3 February 2023. Besides, Serbia refused to supply goods to Russia in circumvention of sanctions.

#Terrorism During the reporting period Russia was recognised as a state sponsor of terrorism by the European Parliament, Netherlands, Poland (back in October Polish Senate passed a resolution to recognize the Russian authorities as a terrorist regime), NATO and Czech Republic. Previously Russia was recognised as SST by Lithuania, Latvia, Estonia and PACE.

#Reconstruction Canada became the 1st country who used new legislation to pursue seizure of sanctioned assets by starting the procces of seizure and forfeiture of $26 mln from Granite Capital Holdings (owned by Abramovich). White the USA became the 2nd country who adopted amendments allowing the confiscation and sale of frozen assets of Russian oligarchs for the benefit of Ukraine. Estonia in its turn took the initiative among EU members in transferring frozen Russian assets to Ukraine – the European Commission supported Estonia’s plan to start seizing Russian financial assets without waiting for other EU countries and criminalize the evasion of sanctions.

#Individual In response to Russia-Iran cooperation, USA, UK, EU, Australia, New Zealand and Switzerland sanctioned Iranian (and some Russian) individuals for production & delivery of UAVs to Russia. Among other important updates, USA sanctioned V.Potanin, 5 Members of BoD of Russian Railways and two RF Deputy PMs – A.Belousov and D.Chernyshenko, plus introduced visa restrictions on 531 Russian military official; EU denied to accept Russian passports issued in TOT of Ukraine and Georgia and sanctioned 141 individuals under the 9th sanction package, as well as Switzerland.

#Secondary Threat of US secondary sanctions continues to affect companies’ and countries’ decisions. Chinese UnionPay limited the ability of Russians to withdraw cash abroad, Kyrgyz banks became the next ones who stopped servicing Russian Mir, while Sberbank was forced to close its subsidiary in UAE because of the threat of sanctions on Sheikh.

#SOEs Under the 9th package the EU prohibited EU nationals to hold any posts on the governing bodies of all Russian SOEs or controlled legal persons, entities and bodies located in Russia with a few exceptions. Switzerland adopted the same measure. Bulgaria rejected Rosatom’s nuclear fuel from 2025 – agreements with Frasmatome (France) & Westinghouse (USA) for supplies were signed. The Czech Republic withdrew from United Institute of Nuclear Research (JINR), an international organization based in Russia which focuses on nuclear and particle physics research, on 31 December 2022.

Other important updates:

#SanctionEnforcement On 28 November 2022, the EC added the violation of EU sanctions to the list of ‘EU crimes’. Later, on 2 December 2022, the EC made the next step by proposing a Directive to harmonize the criminal definitions and types and levels of penalties for violations of sanctions across all Member States. The proposal needs to be discussed and adopted by the EU Council and the EU Parliament, after which it will be implemented into the national laws of the Member States.