Syed Rahman and Ruxandra Murariu outline its main points
The Council of the European Union has adopted additional measures contained in its 18th package of sanctions against Russia, as a response to the Russian 2022 invasion of Ukraine.
The main aims of the package, which was adopted on July 18, are:
- Cutting Russia’s energy revenues
- Attacking Russia’s banking sector
- Further weakening the Russian military-industrial complex
- Strengthening anti-circumvention measures
- Holding Russia to account for crimes against Ukraine’s children and cultural heritage
The package also includes similar measures against Belarus.
The measures
The package outlines how the European Union (EU) intends to achieve these aims.
Russia’s energy revenues
The EU will lower the G7 oil price cap for Russian crude from US$60 to US$47.60 per barrel in an attempt to both reduce Russia’s oil revenue and keep the global supply stable. The effectiveness of this will hinge on its monitoring and enforcement – especially in relation to third countries and shipping insurers – given that Russia has so far been able to sell much of its crude oil above the capped price, using its so-called “shadow fleet’’ of ships.
The EU will also ban imports of refined petroleum products made from Russian crude, even if these are processed in third countries (with the exception of Canada, Norway, Switzerland, the UK and the US). But as with the crude, the success of this will depend on its implementation and enforcement, as tracking products from source to market could be difficult.
A full transaction ban has been imposed on the Nord Stream 1 and 2 gas pipelines, in order to prevent them being completed and put into operation. Although some European countries have raised concerns about the possible implications for future energy supplies of doing this.
Russia’s banking sector
A full transaction ban has been imposed on 22 more Russian banks; additionally, the ban on the 23 already listed entities is transformed to a full transactions ban. There are now 45 Russian banks subject to restrictions, as is the Russian Direct Investment Fund (RDIF), its subsidiaries and its affiliates. The EU is aiming to prevent Russia from using the RDIF to access global financial markets, circumvent sanctions, obtain foreign currency and, as a result, boost its economy and war effort.
The provision of some banking software to the Russian government and companies has also been banned. This is an attempt to further isolate Russia financially, although Russia has moved to conducting most trade settlements in yuan.
The Russian military-industrial complex
The EU is imposing €2.5 billion-worth of new export bans on dual-use goods and technologies in an attempt to harm Russia’s ability to keep its war machine functioning effectively. Yet, so far at least, Russia has shown itself capable of ensuring procurement via states that are less regulated than those in the EU and by using subsidiary companies and front organisations to obscure its activity.
Anti-Circumvention Measures
A total of 105 more vessels have been added to the EU sanctions list in a bid to target tankers being used by Russia to bypass oil sanctions. There are now 444 EU-sanctioned vessels – a clear indicator of the EU’s determination to break Russia’s illicit trading and movement of oil. But, as mentioned earlier, the changing and secretive nature of the shadow fleet makes it difficult to attack Russia’s oil dealings. Anything short of total international cooperation against Russia will mean that it will continue to find ways to sell its oil.
The package also adds 14 individuals and 41 entities to the EU sanctions list, taking the total of individual listings to above 2,500. The captain of a shadow fleet vessel and the private operator of an international flag registry are among those now sanctioned – the first time action has been taken against such parties. Also included in the updated list are entities providing direct or indirect support to Russia’s military-industrial complex or engaging in sanctions circumvention – a move that indicates the EU is looking beyond Russian entities and putting a greater focus on those who help Russia evade sanctions.
Accountability for Crimes
The package lists individuals who are involved in Russia’s so-called “military education” of Ukrainian children. There are now more than 80 designations relating to the deportation and indoctrination of Ukrainian children.
The latest package also lists a Russian propagandist who is accused of manipulating Ukraine’s cultural heritage. This is really only a symbolic move, as the EU has no genuine power in terms of the extradition of such individuals. It follows the listing in the EU’s 17th sanctions package of a museum official said to have been involved in the looting of Crimean cultural sites under Russian occupation.
Effective
The 18th sanctions package has been devised in an attempt to make the EU’s stance on Russia as effective and all-encompassing as possible. It also includes measures to protect EU member states and EU companies from investor-state arbitral proceedings on the basis of bilateral investment treaties concluded with Russia.
This latest package is an acknowledgment that EU efforts until now have, to some degree, been hampered, both by those looking to evade sanctions and by notable gaps in enforcement. This problem may be reduced by this package. But it – like its predecessors – is dependent on maximum levels of international cooperation if it is to be as effective as is hoped.
