Major Sanctions Developments
EU Bans Investments in Russian Energy Sector, Exports of Luxury Goods, and Imports of Steel. The European Union formally approved a new barrage of sanctions on Russia on Tuesday, including bans on investments in the Russian energy sector, luxury goods exports to, and imports of steel products from, Russia. In addition, Roman Abramovich, owner of Chelsea Football Club; Alfa Group shareholders German Khan and Alexey Kuzmichev; and other business leaders who support the Russian state will have their assets frozen.
- The sanctions include “a far-reaching ban on new investment across the Russian energy sector,” which will reportedly affect Russia’s Rosneft, Transneft, and Gazprom Neft, but EU members will still be able to buy oil and gas from them, an EU source told Reuters. An EU executive added there will be a total ban on transactions with some Russian state-owned enterprises linked to the Kremlin’s military-industrial complex.
- A draft of the sanctions obtained by Bloomberg outlined the items banned for export, which include luxury cars, boats, and planes amounting to more than EUR 54,857 (USD 60,236.83). The ban also covers motorcycles worth more than EUR 5,485 (USD 6,022.91) and parts and accessories. Many European carmakers, such as BMW, Ferrari, Mercedes-Benz, and others have already voluntarily suspended sales to Russia.
- Additionally, European credit rating agencies will be banned from rating Russian sovereign debt and Russian companies, and Russia will also be stripped of its “most-favored nation” trade status.
Japan Sanctions More Russian Individuals Over Ukraine Invasion. Japan has frozen the assets of numerous Russian individuals including:
- Russian billionaire Viktor Vekselberg, who has also been designated by the United States;
- 11 members of Russia’s lower house of parliament; and
- Five family members of the chairman and largest shareholder of Bank Rossiya, Yuri Kovalchuk, who is also the alleged “personal banker” for President Vlaidimir Putin who was named in the 2016 Panama Papers leak.
According to the Japanese Ministry of Finance, there are now 61 entities that have been targeted by sanctions following Russia’s invasion of Ukraine. Hirokazu Matsuno, the top spokesman for the Japanese government, said Japan is acting in line with other Group of Seven nations when imposing sanctions on Russia. Japan announced that it will also ban the exportation of semiconductors, communications equipment, sensors and radar, and other items to Russia.
UK Announces Denial of “Most-Favoured Nation” Status for Russia, Belarus. The UK government announced it would deny Russia and Belarus access to “Most-Favoured Nation” tariff status for hundreds of their exports. An initial list of goods worth GBP 900 million (USD 1,175 million), including vodka, will now face an additional 35 percent tariff. The UK will also ban exports of high-end luxury goods to Russia.
Sanctions Effects and Enforcement
Japan Urges Crypto Institutions to Stop Trading with Russia, Belarus. The Japanese government called on domestic cryptocurrency exchanges to stop transacting with sanctioned Russian and Belarusian entities. The request follows moves from several countries to isolate Russian banks from the international financial system and after Group of Seven leaders confirmed that Russia and Belarus should not be able to use cryptocurrency to evade sanctions. The government is calling on crypto institutions to cease transferring assets to 44 Russians worldwide, including President Vladimir Putin and 10 groups.
ESMA Launches Transnational Regulatory Coordination Amid Ukrainian Crisis. The European Securities and Markets Authority (ESMA) is coordinating with national regulators to monitor the effects of the Russian invasion of Ukraine on financial markets and noted that it is prepared to use relevant tools to ensure the orderly functioning of the sector. In a press release, ESMA urged financial market participants to ensure they comply with the relevant sanctions imposed by the European Union and monitor any further restrictions. The European Commission will answer queries on the scope and implementation of the restrictive measures.
Sanctions Outlook
Finance Minister Says Germany Open to Issuing More Sanctions Against Russia. German Finance Minister Christian Lindner said the country is open to imposing more European Union sanctions against Russia in response to Moscow’s invasion of Ukraine. According to Lindner, the German government seeks to apply “maximum pressure on Putin . . . to isolate Russia politically, financially, and economically.” In addition to the application of penalties, Germany will also strengthen efforts to prevent Russia from evading sanctions.
Korean Air Reroutes Flights. Korean Air announced that it will temporarily suspend all passenger and cargo services to and from Moscow and Vladivostok until the end of April. The airline will reroute commercial flights to avoid Russian airspace from North America and Europe, adding as much as 2 hours 45 minutes to flight times.
