New EU sanctions against Russia (11th package)

On 23 June 2023, the EU adopted its 11^th sanctions package against Russia. After weeks of internal negotiations EU Member States agreed on a set of additional measures which tackle circumvention and extend and fine-tune the existing sanctions. The entirety of the measures imposed on Russia (updated "Handling the new EU sanctions against Russia" page) are the toughest and most complex sanctions ever introduced by the European Union.

The 11^th sanctions package has the following five main elements:

• It introduces a circumvention tool;
• It widens the export and import restrictions;
• It extends the transit ban;
• It widens the transport measures; and
• It submits additional individuals and entities to financial sanctions.

The new circumvention tool allows the EU to restrict the sale, supply, transfer or export of goods and technology whose export to Russia is already prohibited (e.g. battlefield products and technologies) to third countries that are suspected of being used for circumvention. The respective Annex XXXIII, which will list goods according to CN codes and indicate the affected third country separately for each good, is currently empty. Since the EU intends to use the circumvention tool only as a measure of last resort, it remains to be seen how quickly high-risk countries will be added to this list.

The EU extended the existing export bans by a variety of measures. The additional goods and technology that have been listed include the following:

• certain firearms and other arms;
• electronic components, semiconductor materials, manufacturing and testing equipment for electronic integrated circuits and printed circuit boards;
• precursors to energetic materials and precursors to chemical weapons;
• optical components;
• navigational instruments;
• metals used in the defence sector; and
• marine equipment.

The ban on the export of luxury cars was extended to all new and second-hand cars with an engine size greater than 1,900 cm³ and all electric and hybrid vehicles.

Furthermore, Annex XXIII (i.e. the list of industrial goods subject to export restrictions) was reorganised and now more often than before applies customs code at a higher level (i.e. 4-digit instead of 6-digit customs codes), thereby de facto substantially expanding the scope of products blocked by the restrictions while at the same time making enforcement by customs offices easier.

The existing prohibitions to provide technical assistance in relation to restricted goods now are typically complemented by a prohibition to sell, license, transfer or refer intellectual property rights and trade secrets used in connection with restricted goods.

In addition, another 87 entities became subject to restrictions for dual-use items and high-tech items, bringing that list to 593 entities. Already as part of the 10th sanctions package the EU had taken the novel approach of listing third-country entities, notably from Iran. Under the 11th sanctions package also entities from Armenia, Hong Kong, Syria, the United Arab Emirates and Uzbekistan became listed mainly because these entities have supplied Russia with drones.

The existing import restrictions have been tightened, particularly regarding iron and steel products. Importers of such products now are required to prove that iron and steel items processed in a third country do not include listed iron or steel from Russia.

The transit ban, which previously only covered dual-use items and firearms, has been extended to advanced technology products, aviation goods, jet fuel and fuel additives. These goods may no longer transit through Russia, even if the final destination is a third country.

The transport restrictions now include a full ban on trucks with Russian trailers and semi-trailers from transporting goods to the EU. Additional prohibitions have been created regarding the access of vessels to EU ports. These prohibitions include any manipulation of the navigation tracking system when transporting Russian oil, engaging in ship-to-ship transfers in breach of the Russian oil import ban or the G7 Coalition price cap, or not notifying competent EU authorities of ship-to ship transfers at least 48 hours in advance.

The EU designated another 71 individuals and 33 legal entities for financial sanctions. These sanctions, which include asset freezes and prohibitions on making funds and economic resources available, are now in place for almost 1,800 individuals and entities. The additions include two banks:

• MRB Bank (Mezhdunarodnyi Raschetnyi Bank or International Settlement Bank); and
• CMR Bank (TSMR Bank or Centre for International Settlements).

The EU has also widened the catalogue of the grounds for designation. Now "facilitating infringements of the prohibition against circumvention" of EU sanctions has been supplemented by the ground of "otherwise significantly frustrating those provisions", thereby making this ground increasingly similar to what the US refers to as "secondary sanctions".

The 11^th package includes various additional measures, clarifications and derogations, including the following:

• Prohibition to sell, supply, transfer or export banknotes denominated in any official currency of a Member State to Russia or for use in Russia;
• Prohibition to sell transferable securities or UCITS providing exposure to such securities to Russian persons;
• Extension of the media ban to five additional channels (RT Balkan, Oriental Review, Tsargrad, New Eastern Outlook, and Katehon);
• The end of the possibility by German and Poland to import Russian oil by pipeline;
• Extension (until 31 March 2024) of the exception to the oil price cap for Sakhalin oil for Japan;
• Temporary derogation to allow for the provision of prohibited services, which are legally required for the divestment of Russian operators from the EU;
• Derogation allowing the sale of proprietary rights in a Russian joint venture co-owned with a listed person;
• Additional provisions on information exchange and reporting.

For some of the newly introduced restrictions, grace-periods apply.

For more information on sanctions against Russia, see our updated "Handling the new EU sanctions against Russia" page and contact your usual CMS contacts or local sanctions experts.