New EU sanctions following Russian offensive
The EU is adopting new sanctions against the Russian Federation following its entry into the Donetsk People's Republic og Luhansk People's Republic in Ukraine. Plesner is monitoring the development closely.
On 21 February, the Russian Federation declared that it recognizes the areas of Donetsk People's Republic (DNR) and Luhansk People's Republic (LNR) as independent entities, and Russian troops were sent to these areas, adding additional fuel to the fire regarding the conflict in Ukraine.
As a consequence, the EU is adopting new sanctions against Russia, which European companies with activities in or related to Russia and/or Ukraine should consider. The new sanctions are expected to include inter alia:
- Sanctions against all 351 members of the Duma who voted for the recognition of DNR and LNR.
- Sanctions against 27 individuals and entities, "who are playing a role in undermining or threatening Ukrainian territorial integrity, sovereignty and independence", including political, military, business and financial organizations, and numerous army chiefs.
- Sanctions against certain Russian banks with links to the Russian military.
- Sanctions aiming at limiting the Russian government's ability to raise capital on the EU's financial markets.
- Restriction on imports and exports to/from the DNR and LNR.
For now, the sanctions do not cover major issues such as Russian energy companies, presumably because of the varying dependency on Russian natural gas and oil in the EU member states.
The new sanctions may entail a requirement for European companies to discontinue their trade with certain Russian entities. Further to the above, it should be noted that the US has also introduced novel sanctions following the aggression from the Russian Federation, including the blocking of major Russian financial institutions (notably State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank and Promsvyazbank Public Joint Stock Company), the targeting of elites and families close to Putin, and sovereign debt restrictions.
Considering the far-reaching jurisdiction of US sanctions, EU companies with connections to the US (such as US personnel or a US parent company) should keep an eye on whether their operations are affected by the novel US sanctions in addition to the EU sanctions. Likewise, the UK has placed five Russian banks and three individuals on its sanctions list, which may be of relevance for European firms with ties to the UK, including employees from the UK.
Both the EU, US and UK have declared that they have prepared and stand ready to adopt additional measures at a later stage if needed in light of any further developments. Plesner's trade sanctions and export control team are monitoring the developments closely.