The EU’s set of mea­su­res against Rus­sia: what you need to know

The EU has main­tai­ned sanc­tions against Rus­sia sin­ce 2014, but tho­se sanc­tions have been expan­ded enorm­ously in recent weeks in respon­se to Rus­sia’s inva­si­on of Ukrai­ne, inclu­ding poli­ti­cal, per­so­nal and eco­no­mic sanc­tions. The legal basis for the sanc­tions is Coun­cil Regu­la­ti­on (EU) No. 833/2014 of 31 July 2014, which has been amen­ded e.g. by Regu­la­ti­on (EU) No. 2022/328 of 25 Febru­ary 2022.

Given the fast pace of deve­lo­p­ments and the con­se­quen­ces of vio­la­ting the sanc­tions, the­re is an acu­te need for affec­ted com­pa­nies to take action (details can be found in the fact sheet we have prepared).

The EU sanc­tions and their impact

The sanc­tions have had an impact and car­ry con­se­quen­ces not only for Rus­sia, but world­wi­de. Even pri­va­te indi­vi­du­als are fee­ling their impact, whe­ther in the form of hig­her ener­gy pri­ces in Euro­pe, grea­ter dif­fi­cul­ty in acces­sing funds in Rus­sia or rest­ric­tions on per­so­nal tra­vel, par­ti­cu­lar­ly air travel.

But the sanc­tions have fal­len har­dest on com­pa­nies, many of which are sus­pen­ding (recent­ly laun­ched) ope­ra­ti­ons in Rus­sia or with­dra­wing from joint ven­tures with Rus­si­an part­ners. This swee­ping respon­se was trig­ge­red by the need for near­ly every sec­tor to adapt to the new sanc­tions, due in part to the lar­ge num­ber of pro­ducts which fall into the cate­go­ries spe­ci­fied in Annex VII of the amen­ded Regu­la­ti­on (EU) 833/2014, and which are now sub­ject to sanc­tions. Among the­se cate­go­ries are e.g. “elec­tro­nics” and “tele­com­mu­ni­ca­ti­ons,” inclu­ding pro­ducts such as micro­pro­ces­sors, soft­ware and gate­ways, as well as came­ras. Unli­ke befo­re, it is no lon­ger neces­sa­ry for the pro­duct to have a mili­ta­ry purpose.

The ques­ti­on as to whe­ther and to what ext­ent a pro­duct falls under the sanc­tion­ed goods and tech­no­lo­gies will have to be deter­mi­ned on a case-by-case basis, and may depend on the cus­to­mer’s indi­vi­du­al specifications.

(No) escape in sight?

The pro­hi­bi­ti­ons reco­gni­ze few excep­ti­ons or grand­fa­ther clau­ses. In cer­tain cases, the dis­tri­bu­ti­on of goods may be aut­ho­ri­zed by the com­pe­tent aut­ho­ri­ty if the con­tract on who­se basis the affec­ted com­pa­ny is to “pro­vi­de” the pro­duct was con­cluded pri­or to 26 Febru­ary 2022. Com­pa­nies have until 1 May 2022 to request such aut­ho­riza­ti­on. Excep­ti­ons may also be made e.g. for goods and tech­no­lo­gies for huma­ni­ta­ri­an or medi­cal purposes.

Recom­men­ded actions and outlook

Vio­la­ti­ons of EU sanc­tions may repre­sent cri­mi­nal or admi­nis­tra­ti­ve offen­ses with seve­re pen­al­ties (e.g. §§ 18, 19 of the For­eign Trade Act). Each com­pa­ny is respon­si­ble for ensu­ring that its ope­ra­ti­ons con­form to the sanc­tions, but even if they do not face the risk of direct sanc­tions, com­pa­nies should still pay atten­ti­on to what their cus­to­mers are doing or tole­ra­ting within the sup­p­ly chain, as well as ana­ly­zing whe­ther they have con­trac­tu­al obli­ga­ti­ons towards Rus­si­an part­ners and how tho­se rela­ti­onships can be ended or (in cases cover­ed by the excep­tio­nal rules) continued.

Addi­tio­nal sanc­tions have alre­a­dy been announ­ced and are in the pipe­line accor­ding to state­ments made fol­lo­wing the infor­mal mee­ting of EU heads of sta­te and govern­ment on 10/11 March. One pos­si­bi­li­ty which has alar­med auto­mo­ti­ve manu­fac­tu­r­ers is a packa­ge of sanc­tions which would not only pro­hi­bit the impor­ta­ti­on of iron and steel but would also pro­hi­bit the export of luxu­ry goods to Rus­sia, a cate­go­ry which may include pas­sen­ger vehic­les pri­ced € 50,000 or hig­her. How things deve­lop in this area remains to be seen and is being wat­ched closely.

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