Yesterday, the European Union implemented its eighth round of sanctions on Russia in response to Russia’s claimed annexation of Ukrainian territory. This latest package includes expanded import and export restrictions, an initial implementation of an EU price cap on the transport of Russian seaborne oil, an expansion of restrictions on non-government controlled regions of Ukraine, a prohibition on the provision of certain services to Russia and Russian nationals, and sanctions on the Russian Maritime Register, among others.

Export Restrictions

The EU measures seek to further degrade Russian military and defense capabilities by expanding the category of items subject to export restrictions, including additional less sensitive industrial and technology items. The following categories of items were added to Annex XXIII, subjecting them to EU restrictions:

  • Items supporting Russian industry, including coke and semi-coke of coal;
  • Electrical components used in the manufacture of Russian weaponry;
  • Technical items used in Russia’s aviation sector;
  • Certain chemical items; and
  • Certain small arms and their essential components, and other goods that could be used for torture or capital punishment, as set out under the EU Anti-Torture regulation.

Import Restrictions

The EU expanded import bans on Russian goods to include a number of new items, subject to certain wind-down exceptions and other carve outs:

  • Finished and semi-finished steel products (subject to a transition period for certain products);
  • Machinery and appliances;
  • Plastics;
  • Vehicles;
  • Textiles;
  • Footwear
  • Leather;
  • Ceramics;
  • Certain chemical products; and
  • Non-gold jewelry

The ban extends to goods that originate in Russia or have been exported from Russia, as well as to certain steel products that have been further processed in third countries.

Price Cap on Russian Oil

In addition to the EU ban on Russian oil imports, today’s measure seeks to further curtail Russian energy revenues by introducing the beginning stages of a price cap on Russian oil to third countries. The price cap mechanism will function as an exemption to the prohibition on the provision of maritime transport services to third countries of crude oil and certain petroleum products that are purchased at or below a pre-established price agreed upon by a coalition of States.

The effective date for the price cap with respect to Russian crude oil is December 5, 2022, while the effective date with respect to refined petroleum products is February 5, 2023, after further decision from the Council.

Kherson, and Zaporizhzhia Oblasts

Yesterday’s measure expands the geographical scope of the EU restrictions on dealings with non-government controlled areas of Ukraine to include the non-government controlled areas of Ukraine in the oblasts of Kherson and Zaporizhzhia. These restrictions include a wide range of activities, including a ban on imports from the covered regions into the European Union, a ban on investment and acquisitions of real property, and a ban on the provision of tourism services, among other measures.

Service Ban

The European Union imposed restrictions on the direct and indirect provision of several types of services to the Government of Russia or legal persons, entities, and bodies established in Russia:

  • Non-contentious legal advisory services;
  • Information technology services; and
  • Architectural and engineering services.

The Regulations contain carve-outs for the provision of services provided for the exclusive use of companies owned or controlled by EU Member States, country members of the European Union Economic Area, Switzerland, or listed partner countries, including the United States. For contracts concluded before the effective date, the prohibition will not apply to the provision of services strictly necessary for the termination of non-compliant contracts by January 8, 2023. The EU also expanded the ban on crypto-wallet services, irrespective of the amount of the wallet, eliminating the previous €10,000 limit.

Asset Freeze & SOE Restrictions

Also included in yesterday’s package are restrictions targeting Russian officials and elites. Targets include:

  • Those involved in the illegal annexation of Ukraine territory;
  • Parties operating in, and companies supporting, Russia’s defense and security sector;
  • High ranking military officials; and
  • Those involved in disseminating misinformation.

All funds and economic resources belonging to designated individuals and entities shall be frozen under EU law, and those subject to EU jurisdiction are forbidden from making funds directly or indirectly available to designated targets.

The EU also expanded the ban on dealings with Russian state owned enterprises (SOEs) to include the Russian Maritime Register, subject to wind down and other exceptions. The expanded rules also prohibit EU nationals from holding posts in the governing bodies of sanctioned SOEs in Annex XIX.

Other Measures & Exceptions

Other restrictions imposed yesterday included a broadening of criteria to allow for the imposition of sanctions on those facilitating the circumvention of EU sanctions. This latest package also includes several exceptions, including those designed to facilitate the provision of humanitarian assistance, transactions necessary to promote nuclear safety and security, and certain wind down activities.