Members' Research Service By / October 19, 2022

Russia’s war on Ukraine: New EU sanctions under the eighth package

Outraged by Russia’s illegal and unjustified invasion of Ukraine, European Union countries, in cooperation with other international partners, have imposed unprecedentedly tough sanctions on Russia, in a succession of packages since 23 February 2022, adding to those adopted in 2014 in response to the illegal annexation of Crimea.

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Written by Anna Caprile.

Outraged by Russia’s illegal and unjustified invasion of Ukraine, European Union countries, in cooperation with other international partners, have imposed unprecedentedly tough sanctions on Russia, in a succession of packages since 23 February 2022, adding to those adopted in 2014 in response to the illegal annexation of Crimea. The EU has moved swiftly to approve an eighth package of EU sanctions, including the legal basis to cap Russian oil export prices, in retaliation for Russia’s illegal annexation of four regions of Ukraine, the first nation-wide mobilisation since World War Two, and its unequivocal nuclear threat.

Seven months of war: Devastation and escalation

Russia’s unprovoked attack on Ukraine was promptly condemned by the EU, North Atlantic Treaty Organization (NATO) allies, and the United Nations General Assembly, where 141 nations (with 5 voting against and 35 abstentions) adopted a resolution on 2 March 2022 rejecting the Russian Federation’s brutal invasion of Ukraine, and demanding that Russia immediately withdraw its forces and abide by international law. Over seven months later, the war has resulted in large-scale destruction of infrastructure, including residential areas, medical facilities and educational institutions, and has triggered a vast humanitarian, human rights and displacement crisis. According to the United Nations (UN) Human Rights Office, as of 3 October 2022, 6 114 civilians have been killed and 9 132 injured in Ukraine. As of 7 October 2022, the UN Refugee Agency reports that, nearly one-third of Ukrainians have been forced from their homes, compounding one of the largest human displacement crises in the world today. Europe is hosting over 7.6 million refugees from Ukraine, and 6.2 million people remain displaced by the war within Ukraine. The first statement of the UN-appointed Independent International Commission of Inquiry on Ukraine, delivered on 23 September, concluded that war crimes have been committed in Ukraine, including indiscriminate attacks with cluster munitions and multi-launch rocket systems in populated areas, summary executions of civilians, and sexual violence against Ukrainian communities, including children.

Ukraine’s September counter-offensive on its eastern (Kharkov) and southern (Kherson) fronts, left Russian forces in disarray, pressuring President Vladimir Putin to resort, on 21 September, to a further escalation of the conflict on three fronts:

  • formalising the annexation of four regions within Ukraine’s internationally recognised borders (Donetsk, Luhansk, Zaporizhzhia and Kherson), following referenda qualified by the UN as ‘not legal according to international law’;
  • declaring the mobilisation of the Russian population, initially targeted at 300 000 men, but which could affect up to 1 million people, according to independent reports;
  • renewing open threats to resort to the use of nuclear weapons to defend Russian territory, including the defence of the Ukrainian territories illegally annexed on 30 September, in application of the Russian military doctrine.

Eight packages of EU sanctions

The first round of EU sanctions was introduced on 23 February 2022, following Vladimir Putin’s decision to recognise the two ‘People’s Republics’ of Donetsk and Luhansk as independent states. As the military aggression escalated, this was followed by new packages of increasingly harsh measures, adopted on 25 February, 28 February, 15 March, 8 April, 3 June, and 21 to 22 July. The eighth package was adopted on 6 October 2022 in direct response to the illegal annexation by Russia of Ukraine’s Donetsk, Luhansk, Zaporizhzhia and Kherson regions. The cumulative effect of the sanctions is unprecedented in scale and nature, including sanctions on individuals and entities, drastic financial and trade restrictions, aimed at particularly sensitive sectors such as aviation, energy and high-technology, and restrictions on Russian media broadcasting.


Sanctions on Russia after the eighth package: New and extended measures

  • Legal basis for introducing the oil price cap: the text provides the legal basis to impose a price cap on Russian oil exports to third countries, agreed by the G7 on 2 September 2022. More specifically, it bans the facilitation by EU operators of all services relating to the maritime transport of Russian oil and petroleum products to third countries, unless these products are purchased at or below a pre-established price cap. The ban includes the provision of maritime transport, technical assistance, brokering services or financial assistance relating to the maritime transport of crude oil (as of 5 December 2022), or petroleum products (as of February 2023), which originate or are exported from Russia. To enter into force, this measure needs a further decision by the Council, laying down (among other things) the precise mechanism to establish the price cap. Meanwhile, the ban on EU imports of Russian crude oil and petroleum products, included in the sixth package of sanctions, remains untouched, and will enter into force in December 2022, and February 2023 (respectively), as originally agreed.
  • Addition of 30 individuals and 9 entities to the sanctions list: this move targets chiefly those involved in Russia’s occupation, illegal annexation and sham referendums in the four occupied territories, those working in the defence sector and well-known personalities spreading disinformation about the war. It brings the total to 1 262 people and 118 entities subject to an asset freeze and travel ban. The Council also decided to broaden the listing criteria on which specific designations can be based, to include the possibility to target those who facilitate the circumvention of EU sanctions.
  • New import restrictions: worth an estimated €7 billion, these cover steel products originating in or exported from Russia, machinery, wood pulp and paper, plastics, leather, cigarettes, cosmetics and non-gold jewellery.
  • New export restrictions: targeted at further reducing Russia’s access to military, industrial and technological items, these include a ban on coal (and coking coal) exports, and export of specific electronic components and certain chemicals, and prohibit the export of small arms and other goods listed under the Anti-torture Regulation.
  • Restrictions on state-owned enterprises: these ban EU nationals from holding posts in the governing bodies of certain state-owned enterprises, and all transactions with the Russian Maritime Register of Shipping (RMRS).
  • Financial, information technology (IT) consultancy and other business services: this places a full ban on providing any crypto-asset wallets, accounts or custody services for Russian persons or residents, regardless of the amount (previously up to €10 000 was allowed). The package also widened the scope of services that can no longer be provided for the Russian government or to legal entities established in Russia: IT consultancy, legal advice, architecture and engineering services.
  • Extension of the geographical scope of restrictive measures to cover all the non-government controlled areas of Ukraine in the territories of Donetsk, Luhansk, Zaporizhzhia and Kherson.

Sanctions coordination and impact

As with the san Sanctions coordination and impact ction packages adopted against Russia in 2014, the EU measures are coordinated with other countries, notably with G7 partners, the United States, United Kingdom, Canada, Australia and Japan. Among the EU enlargement countries, Serbia and Turkey have been to date the most reluctant to follow this alignment. The sanctions coalition has introduced travel bans and asset freezes against key political and business figures, frozen more than half of Russia’s central bank reserves, blocked over 70 % of Russia’s banking assets and restricted the export of technologies to hinder Russia’s long-term technological advancement. The World Bank’s October 2022 outlook forecasts a contraction of the Russian economy by 4.5 percent in 2022, less than initially expected thanks to the surge in energy prices, which has helped increase fiscal revenues. It predicts a deeper recession in 2023, owing to the sanctions and reduced fiscal expansion. In early October, OPEC+, of which Russia is a member, decided on a steep reduction of oil production, of 2 million barrels per day, a move the West has criticised as a way to neutralise the sanctions’ impact, in particular the planned oil price cap.

European Parliament position

On 6 October the European Parliament adopted a resolution on ‘Russia’s escalation of its war of aggression against Ukraine’, strongly condemning the massive violations of human rights and war crimes committed by the Russian armed forces, as well as the illegal and illegitimate sham referenda conducted in the oblasts of Donetsk, Luhansk, Zaporizhzhia and Kherson. The resolution welcomed the eighth package of sanctions against Russia, and called for the sanctions to be expanded to new areas, including cutting seven additional banks from the SWIFT system. It also called on the Commission and co-legislators to work swiftly to complete the legal regime for confiscation of assets frozen by the sanctions.

This paper updates previous ‘at a glance’ notes of 3 March 2022, 5 April 2022 and 13 April 2022.


Read this ‘at a glance’ note on ‘Russia’s war on Ukraine: New EU sanctions under the eighth package‘ in the Think Tank pages of the European Parliament.


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Comments
  • It seems to me that blocking crypto wallets is unlikely to affect anything. After all, there are anonymous exchangers such as the exchanger from Utopia P2P https://u.is/. This way no one can track you.

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