On Friday 18 July, the European Affairs ministers adopted the 18th package of sanctions against Russia. Initially, they were only due to give an update on the issue at their EU Council meeting. But after the Slovakian veto was lifted on the evening of Thursday 17 July by the Slovakian Prime Minister, Robert Fico, the Member States’ ambassadors met early in the morning of the 18th to give their agreement, so that the ministers could formally adopt the text a few minutes later.
Energy. While oil exports still account for a third of Russian government revenue, the EU has lowered the ceiling price for crude oil from $60 to $47.6 a barrel. It also puts in place an automatic and dynamic mechanism to modify this price and guarantee its effectiveness. The new system will ensure that the cap is always 15% below the average market price for Urals crude over the previous six-month period. The mechanism will therefore be reviewed every six months and existing contracts have 45 days to comply.
The EU also bans imports of refined petroleum products made from Russian crude oil from any third country - with the exception of Canada, Norway, Switzerland, the United Kingdom and the United States - in order to prevent Russian crude oil from reaching the Single Market by indirect means.
The EU is also imposing a total ban on transactions on the Nord Stream 1 and 2 pipelines, including for the supply of goods or services, “preventing the completion, maintenance, operation and any future use of the Nord Stream 1 and 2 pipelines”, according to the EU Council.
The exemption for imports of Russian oil into the Czech Republic is terminated.
In addition, 105 new vessels from the Russian ‘shadow fleet’ have been banned from entering ports and from providing a wide range of shipping-related services, bringing the total number of vessels in the sanctioned fleet to 444. At the same time, three LNG carriers have been removed from the list of sanctioned vessels following “firm commitments” that they will no longer be involved in transporting Russian energy to the Yamal and Arctic 2 projects, according to the European Commission.
Russian and international companies managing vessels in the ‘shadow fleet’ Russian crude oil traders and an Indian refinery - Nayara Energy - in which Rosneft is the main shareholder and which is a major customer of the fleet, are subject to sanctions, as are the captain of a vessel in the fleet, a private operator registered under an international flag and an entity in the Russian LNG sector.
Banking sector. The EU has also decided to transform the ban on the provision of specialised financial messaging services based in the EU to certain Russian banks into a total ban on transactions. This ban will apply to a further 22 Russian banks, in addition to the 23 already subject to the ban.
In addition, the ban on transactions for financial and credit institutions and crypto-asset service providers from third countries that help circumvent sanctions, support Russia's war of aggression against Ukraine or are connected to Russia’s System for Transfer of Financial Messages (SPFS), has been extended.
All transactions with the Russian Direct Investment Fund (RDIF), its sub-funds and companies are prohibited, and the EU Council has introduced an instrument to extend this prohibition to certain companies in which the RDIF has invested and to entities providing investment or other financial services to the RDIF. The 18th package targets four companies in which the RDIF has invested.
Military industry. The EU Council decided as well to impose further full-fledged sanctions on suppliers of the Russian military industrial complex, including three entities based in China that sell goods used on the battlefield and eight companies operating in the Belarusian military-industrial complex.
In addition, 26 new entities are subject to stricter export restrictions on dual-use goods and technologies, including seven located in China and Hong Kong and four in Turkey that, according to the EU Council, have “been involved in circumventing export restrictions, including for unmanned aerial vehicles (UAVs)”.
The EU has also agreed new export bans worth more than €2.5 billion, including items intended for the development and production of Russian military systems, such as computer numerical control (CNC) machines and chemical components for propellants. In addition, the existing transit ban via the territory of Russia has been expanded to cover selected economically critical goods used for construction and transport.
Belarus. The 18th package also mirrors the measures imposed on trade with Belarus with those imposed on Russia.
Furthermore, the ban on specialised financial messaging services has been transformed into a total ban on transactions, and an embargo on arms imports from Belarus is introduced.
International law. The EU is also introducing measures to protect Member States from “illegitimate Bilateral Investment Treaty (BIT)” arbitration proceedings launched by Russian companies and individuals, including oligarchs and their proxies.
Targeted sanctions. Finally, the EU Council is imposing sanctions on another individual actively involved in the “military education” of Ukrainian children by Russia, bringing the total number of listings of those involved to 90. Several Russian intermediaries in the occupied territories, including a person responsible for manipulating Ukraine’s cultural heritage, an “influential” Russian businessman and a “leading” Russian propagandist, have also been sanctioned.
A total of 14 individuals and 41 entities “responsible for actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine” have been sanctioned, bringing the total number of individual listings to over 2,500.
The legal acts relating to these decisions, including the names of the persons and entities penalised, will be published this Saturday in the Official Journal of the EU: https://aeur.eu/f/hy8 (Original version in French by Camille-Cerise Gessant)