The Russia Embargo

Back in 2014, the Council of the European Union issued a decision against Russia’s actions destabilizing the situation in Ukraine. This was intended to peacefully resolve the crisis in Ukraine. Due to some foreign policy events, more sanctions have been added recently.

What sanctions were issued in 2014?

Arms embargo

  • Prohibition on sale, supply, transfer and export of arms and related materiel to Russia
  • Prohibition of import, purchase or transport of arms and related materiel from Russia

Trade restrictions on dual-use goods

  • Prohibition on selling, supplying, transferring, or exporting dual-use goods if they are or may be intended for military purposes or military end-users (Russian armed forces as end-users are automatically considered to have military purposes)

Licensing requirement in the energy sector

  • Goods that may be used in the oil industry for petroleum exploration and production underwater, such as pipes, drill pipe, or tools, may be sold, delivered, transferred, or exported to Russia (regardless of origin) only with permission

Prohibition of certain services in the oil sector

  • Prohibition on providing necessary services for oil exploration and production in Russia e.g. drilling, well testing, well logging and completion services
  • Trade restrictions on certain oil industry goods

Financial Sanctions

  • Prohibition to provide or trade in investment services or ancillary services.
  • Restrictions on access to the EU capital market
  • Ordering financial sanctions against certain persons, entities and bodies held responsible for acts threatening the territorial integrity, sovereignty and independence of Ukraine and held responsible for human rights violations and misappropriation of state assets in Ukraine

Fulfilment prohibition

  • Prohibition to defend claims (damages and similar claims) if concluded contracts and transactions may no longer be performed due to the sanction measures

How has Russia reacted to the sanctions?

As a countermeasure to the EU sanctions, Russian President Vladimir Putin signed the Decree on “Special Economic Measures to Protect the Security of the Russian Federation” on August 6, 2014. The content of the decree is a one-year ban on imports of agricultural products, raw materials and foodstuffs from the United Kingdom, the EU, Canada, Australia and Norway. This import ban was later extended to Albania, Montenegro, Iceland, Liechtenstein and Ukraine. The existing ban was relaxed somewhat, so that deliveries from Germany are now easier again. However, the embargo was additionally extended and is currently valid until December 31, 2021.

What sanctions were added in 2021?

Following the detention of Russian opposition figure Alexey Nawalny, the EU imposed new sanctions against Russia. These mainly concern seven Russian government members who are responsible in the case of Nawalny, such as Aleksandr Bortnikov (director of the Russian domestic intelligence service FSB) and Igor Krasnov (Prosecutor General).

For punitive measures, the EU uses a new sanctions instrument that can freeze assets of actors present in the EU if they commit or benefit from serious human rights violations. EU entry bans have also been imposed.

What is the role of Nord Stream 2?

The Nord Stream 2 pipeline will transport Russian natural gas to the German Baltic Sea coast in the future. It runs parallel to the Nord-Stream-1 pipeline, which was completed in 2012. Like Nord-Stream-1, Nord-Stream-2 is to have an annual capacity of 55 bcm.

There has long been opposition to the project from the U.S., but also from countries within the EU, such as Poland, the Baltic states and Ukraine. Geopolitical fears about increasing dependence on Russian pipelines are mixed with fears about transit revenues. Critics of the project fear that the two Nord Stream pipelines in the north and the “Turk Stream” pipeline in the south, could be used to partially bypass Ukraine and its important transit pipelines. This would deprive Ukraine of important transit revenues and thus give Russia leverage against them. Ukraine fears that once the pipeline is completed, billions in payments from Russia for the transit of natural gas will be eliminated completely or greatly reduced.

The USA also wants to prevent the gas from being used as leverage against Western Europe and is using sanctions and threats of sanctions to do so. At the end of 2019, laying work was blocked in this way for a year. Several companies were specifically sanctioned with the help of tighter sanctions and thus significantly deterred from working or even completely turned away from the project.

Currently, Europe gets about a third of its natural gas from Russia, just under half of which is transported through Ukraine. This transport makes Russian natural gas more expensive and results in about $2 billion in transit fees per year, at least part of which could be lost to Ukraine when Nord Stream 2 comes on stream. EU countries, above all Slovakia, would also lose transit revenues.

So far, the U.S. has at least been able to delay the project with its action against Nord Stream-2. As long as no gas flows through the pipeline, Moscow will also be forced to hold on to an important gas contract with Kiev.

Sanctions against Belarus

The EU had already imposed sanctions against Belarus in recent months because of the violent suppression of protests. Now new sanctions have been added.

After the forced landing of a passenger plane in Minsk on May 23, 2021, journalist Roman Protasevich and his partner Sofia Sapega were arrested by Belarusian authorities. The EU responded by closing Belarus’ airspace, and European aircraft are no longer to fly over Belarus. Belarusian aircraft are also no longer allowed to fly over EU airspace or take off or land in EU airports. In addition, targeted economic sanctions have been imposed and an expansion of the list of individuals and companies subject to asset freezes and EU entry bans has been initiated. The EU is thus putting investments of around three million on hold. According to EU Commission President Ursula von der Leyen, the money will not flow until Belarus returns to a democratic course.

It remains to be seen how political relations will continue to change and how the situation will develop. It remains to be seen whether the sanctions will be extended or whether some sanctions may even be defused in the future.

Sources:

https://www.zoll.de/DE/Fachthemen/Aussenwirtschaft-Bargeldverkehr/Embargomassnahmen/Laenderembargos/Russland/russland_node.html

https://www.stuttgart.ihk24.de/fuer-unternehmen/international/import-export/exportkontrolle/eu-sanktionen-gegen-russland-beschlossen-675356

https://www.fr.de/politik/alexel-nawalny-eu-russland-sanktionen-wladimir-putin-kreml-elite-kinder-usa-90213936.html

https://www.ihk-wiesbaden.de/international/import/eu-sanktionen-gegen-russland-beschlossen-1255244

https://www.bafa.de/DE/Aussenwirtschaft/Ausfuhrkontrolle/Embargos/Russland_Ukraine/russland_ukraine_node

https://www.zeit.de/politik/ausland/2021-05/eu-beschliesst-sanktionen-gegen-belarus

https://www.nzz.ch/wirtschaft/pipeline-projekt-nord-stream-2-die-neusten-entwicklungen-ld.1483495#subtitle-was-ist-nord-stream-2-genau-second

Pauline Wörner

Seit Oktober 2020 bin ich Werkstudentin bei der BEX und unterstütze hauptsächlich das Marketing- und Vertriebsteam. Ich studiere Technical Content Creation (Technische Redaktion) an der Hochschule Aalen.