Import ban on steel products (article 3g)

The ninth sanctions package amends the import ban imposed against iron and steel products, to add a reference to 7224.90 products. As of 30 September 2023, it is prohibited to import or purchase iron and steel products listed in Annex XVII when processed in a third country incorporating iron and steel from Russia, as listed in the same Annex. However, for products listed in the Annex XVII processed in a third country incorporating steel products from Russia under CN codes 7207.11, 7207.12.10 or 7224.90 (newly added), the prohibition only applies as from 1 April 2024 (for CN 7207.11) and 1 October 2024 (for CN 7207.12.10 and 7224.90), instead of 30 September 2023.

In addition, the import ban does not apply to the import, purchase, transport, or related technical and financial assistance, for certain import volume quotas of goods falling under 7224.90 until 30 September 2024.

Restrictions on goods, which could contribute to the enhancement of Russian industrial capacities (article 3k)

The ninth sanctions package introduces further export restrictions against Annex XXIII items to include medium oils and preparation of petroleum or bituminous minerals (HS 2710.19), laptops, hard drives, IT components, night-vision and radio-navigation equipment, cameras and lenses, and toys incorporating a motor (of chapter 95) among others.

The direct exports of drone engines to Russia and the export to any third countries, such as Iran, where there is suspicion that they will be used in Russia is now restricted.

There is a wind-down period until 16 January 2023 for the execution of contracts concluded before 17 December 2022. An authorisation may be granted for products falling under CN codes 8417.20, 8419.81.80, and 8438.10.10, and the provision of related technical or financial assistance, if such goods or assistance is necessary for personal household use of natural persons.

Goods which generate significant revenues for Russia as listed in Annex XXI (article 3i)

The new sanctions package extends the wind-down period until 18 June 2023 for the execution of contracts concluded before 7 October 2022 for goods falling under CN 2905 11, as listed in Part B of Annex XXI.

Crude oil (article 3m)

According to article 3m, it is prohibited to purchase, import, or transfer, directly or indirectly, crude oil or petroleum products, as listed in Annex XXV, if they originate in Russia or are exported from Russia. However, and by way of derogation, Bulgarian competent authorities may authorise the execution until 31 December 2024 of contracts concluded before 4 June 2022 for the purchase, import, or transfer of seaborne crude oil and of petroleum products listed in Annex XXV originating in Russia or exported from Russia.

The ninth sanctions package specifies that, as from 5 February 2023, when the prohibitions laid out in article 3m become fully effective, it will be prohibited to transfer or transport petroleum products falling under HS 2710 which are obtained from crude oil imported on the basis of a derogation granted by the Bulgarian competent authorities, to other Member States or to third countries, or to sell such petroleum products to purchasers in other Member States or in third countries.

However, by way of derogation, the Bulgarian competent authorities may authorise the sale, supply, transfer, or export to Ukraine of diesel products obtained from crude oil imported on the basis of the derogation, including if such product is intended for the exclusive use of Ukraine. Such derogation is also granted to Hungary and Slovakia.

In addition, by way of derogation, Bulgaria may authorise the sale, supply, transfer or export to any third country of certain petroleum products as listed in Annex XXXII obtained from Russian crude oil if the product in question cannot be stored in Bulgaria and if the sale, supply, transfer or export is not meant to circumvent EU sanctions.

Natural gas (article 3m and article 3n)

The ninth sanctions package introduces a derogation, as of 5 February 2023 for the purchase, import, or transfer of natural gas condensate falling under CN 2709.00.10 from liquefied natural gas production plants if such transaction is necessary for ensuring the security of energy supplied, in particular of liquefied natural gas, of the Union. In addition, the new package introduces a reporting obligation (including on volumes) for the operators engaged in transactions concerning natural gas condensate from LNG production plants.

Financial restrictions

Mining and quarrying activities (article 3a)

Further to the already existing prohibition, targeting new investments in the Russian energy sector introduced with the fourth sanctions package in March 2022, the latest round of sanctions extends this prohibition to the Russian mining sector, with the exception of mining and quarrying activities involving certain critical raw materials. In particular, it is now prohibited to acquire any new interest or to extend any participation in any Russian or foreign legal person, entity, or body operating in the mining and quarrying sector in Russia. It is also prohibited to grant or be part of any arrangement to grant any new loan or credit or provide financing to these legal persons, entities, or bodies, or to create any new joint venture or provide investment services in relation to these prohibitions.

However, this new prohibition does not apply to mining and quarrying activities that yield their highest value from, or have as their primary objective, the production of the materials listed in Annex XXX (e.g., aluminium, including bauxite, chromium, cobalt, copper, iron ore, mineral fertilisers, including potash and phosphate rock, molybdenum, nickel, palladium, rhodium, scandium, titanium, vanadium, heavy rare earths such as dysprosium, erbium, europium, gadolinium, holmium, lutetium, terbium, thulium, ytterbium, yttrium, and light rare earths such as cerium, lanthanum, neodymium, praseodymium, and samarium).

Mining and quarrying sector means a sector covering the location, extraction, management, and processing activities relating to energy and non-energy producing materials.

Trading services (article 5)

The ninth sanctions package added the term ‘admit’ to the prohibition on listing and providing services on trading venues. As of 29 January 2023, it is also prohibited to ‘admit’ to trading on trading venues registered or recognised in the Union for the transferable securities of any legal person, entity, or body established in Russia and with over 50 per cent public ownership.

Post in governing bodies (article 5aa)

The new round of sanctions imposes a ban on Union nationals from holding any posts on the governing bodies of all Russian State-owned or controlled legal persons, entities, or bodies located in Russia, as of 16 January 2023.

Prior to this new round of sanctions, Union nationals were prohibited from holding posts in the governing bodies of legal persons, entities or bodies listed in Annex XIX. Therefore, the new package expands this prohibition to all Russian State-owned or controlled legal persons, entities or bodies. This covers in particular legal persons, entities or bodies in Russia, which are state-controlled or more than 50 per cent publically owned, or in which Russia, its government, or Central Bank have the right to participate in profits or with which they have other substantial economic relationship, as well as the legal persons, entities or bodies they own, or which act on their behalf or direction.

There is a wind-down period until 18 March 2023 for the execution of contracts concluded before 17 December 2022 with the Russian Regional Development Bank (newly listed under Annex XIX), as well as for the reception of payments due by the Russian Regional Development Bank pursuant to a contracts performed before 18 March 2023.

The ninth sanctions package also introduces derogation for joint ventures and legal person, entity or body established in Russia before the introduction of the package and which are owned or controlled by an EU person, entity or body. In addition, an EU person may be authorize to holding of a post if such post is necessary for ensuring critical energy supply or if the legal person, entity or body is involved in the transit through Russia of oil originating in a third country and is involved in operations which are not prohibited under Article 3m and 3n.

Reporting obligation (article 5g)

In addition to the already existing reporting obligations on credit institutions, those institutions must now supply to the national competent authority of the Member State where they are located or to the Commission by no later than 27 May 2023 a list of deposits exceeding €100,000 held by any legal person, entity, or body established outside of the Union and whose proprietary rights are directly or indirectly owned for more than 50 per cent by Russian nationals or natural persons residing in Russia.

Restrictions on services

Market research and public opinion polling services (article 5n)

In addition to the prohibition on providing accounting, auditing, bookkeeping, tax consulting, business and management consulting, or public relations services, architectural and engineering services, legal advisory, and IT consultancy services, the ninth sanctions package introduces a prohibition on providing market research and public opinion polling services, technical testing and analysis services, and advertising services to the government of Russia or legal persons, entities, or bodies established in Russia.

There is a wind-down period for the termination by 16 January 2023 of contracts concluded before 17 December 2022 for the provision of such services.

The term ‘technical testing and analysis services’ is understood to be the composition and purity testing and analysis services; testing and analysis services of physical properties; testing and analysis services of integrated mechanical and electrical systems; technical inspection services, as well as other technical testing and analysis services. ‘Advertising services’ covers the sale or leasing services of advertising space or time and the planning, creating, and placement services of advertising, as well as other advertising services.

Broadcasting (article 2f)

To further target the systematic, international campaign of media manipulation and distortion of facts, the ninth sanctions package extends the suspension of the broadcasting licences in the Union of Russian media outlets under the permanent control of Russian leadership. However, consistent with the fundamental rights and freedoms recognized in the Charter of Fundamental Rights of the European Union and, in particular, with the right to freedom of expression and information, the media outlets concerned are not prevented from carrying out activities in the Union other than broadcasting, such as research and interviews.

Divestment and withdrawal from certain Russian State-owned entities (article 12b)

In addition to the above, the new sanctions package introduces the possibility for national competent authorities to authorise transactions that are necessary for the divestment and complete withdrawal from certain Russian state-owned entities, including those subject to a transaction-ban (under Annex XIX, which now also includes the Russian Regional Development Bank).

EU operators may also be authorised to export articles 2 (dual-use), 2a (Annex VII), 3k (goods which could contribute to the enhancement of Russian industrial capacities as listed in Annex XXIII), and 3h (luxury goods as listed in Annex XVIII) products until 30 September 2023 if the sale, supply, or transfer is necessary for the divestment from Russia or the wind-down of business activities in Russia.

Similarly, EU operators may be authorised to import or transfer article 3g (iron and steel as listed in Annex XVII) and 3i (goods which generate significant revenues for Russia as listed in Annex XXI) products until 30 September 2023 for the same reasons.

To facilitate an expeditious exit from the Russian market, this derogation is temporary and applies only to those goods that were already physically located in Russia at the time when the relevant prohibitions entered into force. Additionally, national authorities should ensure that the prohibited goods remaining in Russia as a result of divestment do not benefit military end-users or have a military-end use.

Asset freezing measures

The ninth sanctions package also amended Council Regulation (EU) 269/2014 by adding 141 individuals and 49 entities to the asset freezing restrictions.

These new measures target in particular two additional Russian banks (Credit Bank of Moscow and JSC Dalnevostochniy Bank (‘JSC Far Eastern Bank’)) and key figure involved in Russia’s missile strikes against civilians, kidnapping of Ukrainian children and theft of Ukrainian agricultural products.

However, and by way of derogation to the asset freezing restrictions, the competent authorities may authorise, based on a specific and case-by-case assessment, and for each relevant transaction separately, the release of certain frozen funds or economic resources belonging to natural persons having a significant role in international trade in agricultural and food products, including wheat and fertilisers, prior to their listing. This also concerns certain entities, if the funds or economic resources are necessary for the purchase, import or transport of agricultural and food products, including wheat and fertilisers.

In addition, the competent authorities may authorise the release of certain frozen funds or economic resources belonging to the two newly designated banks if such funds or economic resources are necessary for the termination by 17 June 2023 of operation, contracts, or other agreements, including correspondent banking relations concluded with those entities before 16 December 2022.

In other developments, the EU appointed on 13 December David O’Sullivan, the EU’s former ambassador to the United States, as International Special Envoy for the Implementation of EU sanctions to ensure continuous, high-level discussions with third countries (including Türkiye, Serbia, and United Arab Emirates) to avoid the evasion or circumvention of sanctions. This designation comes as the Commission has put forward a proposal to add the violation of sanctions to the list of EU crimes, and to harmonise criminal offences and penalties for the violation of EU sanctions across Member States.

In-depth 2022-396