Sanctions Weekly Update – Ukraine/Russia Conflict – February 27, 2023

US Sanctions | EU Sanctions | UK Sanctions | Russia/Ukraine Sanctions | Other Notable Developments

Week of February 27, 2023

I. US SANCTIONS

• OFAC Imposes Further Sanctions on 1^st Year Anniversary of Invasion of Ukraine: On February 24, OFAC imposed sanctions on 22 individuals and 83 entities pursuant to E.O. 14024, including Russian banks, Russian wealth-management related activities, Russian and Belarusian arms dealers, manufacturers supplying the Russian war machine, and actors in and out of Russia who have assisted in sanctions evasion. Read more>>, Read more>> and Read more>>
• OFAC Issues Determination Targeting Russian Metals: On February 24, the Treasury’s Office of Foreign Assets Control (OFAC) announced a new determination targeting the metals and mining sector of the Russian economy under Executive Order (E.O.) 14024. This determination allows for sanctions to be imposed on any individual or entity determined to operate or have operated in that sector and expands the US’ ability to swiftly impose additional economic costs on Russia. Read more>>
• OFAC Issues New General Licenses and FAQ Clarifications: Along with the new determination targeting Russian metals and further sanctions on February 24, OFAC also issued a number of General Licenses. 
  • General License 8F which authorizes certain transactions related to energy through May 16, 2023. Read more>>
  • General License 13D which authorizes certain administrative transactions prohibited by Directive 4 under E.O. 14024 through June 6, 2023. Read more>>
  • General License 60 which authorizes the wind down and rejection of transactions involving certain entities that are blocked on February 24, 2023 through May 25, 2023 Read more>>
  • General License 61, which authorizes certain transactions related to debt or equity of, or derivative contracts involving, certain entities blocked on February 24, 2023 through May 25, 2023. Read more>>
  • OFAC also issued five associated Frequently Asked Questions (1114-1118) in relation to the above General Licenses. Read more>>
• BIS Expands and Refines Existing Measures to Better Align with Allies: On February 24, the DOC’s Bureau of Industry and Security (“BIS”) announced revisions to the Export Administration Regulations (“EAR”) to enhance the existing sanctions against Russia and Belarus by expanding the scope of the Russian and Belarusian industry sector restrictions (oil and gas production; commercial and industrial items; chemical and biological precursors) and the ‘luxury goods’ sanctions to better align them with the controls that have been implemented by US allies and partners imposing substantially similar controls on Russia and Belarus. The action also revises certain definitions and terms to clarify the scope of the regulations. Read more>>
• BIS Imposes New Export Controls on Iran for Providing UAVs to Russia: On February 24, BIS imposed new export control measures on Iran in order to address the use of Iranian UAVs by Russia in its ongoing war against Ukraine, following recent investigations indicate that pieces of Iranian UAVs have been found on the battlefield in Ukraine, in some cases with US-branded “parts” and “components.” These controls are in addition to BIS’s action on January 31, 2023, which added seven Iranian entities involved in the manufacture of UAVs to the Entity List as Russian ‘Military End Users,’ thereby subjecting them to some of the most comprehensive export restrictions under the EAR, including on foreign-produced items under the Russia/Belarus Military End User FDP rule. Read more>>
• BIS Adds to Entities List through 2 Actions: Through two separate actions, BIS also added 86 entities under 89 entries (due to some entities operating in multiple countries) to the Entity List for a variety of reasons related to their activities in support of Russia’s defense-industrial sector and war effort. These listings prohibit purchase of certain items made in the US or with certain US technology or software abroad by targeted companies (e.g. semiconductors); and are also being designated as “Russian/Belarusian Military End Users,” which imposes some of the Department’s most severe export restrictions on these entities, effectively cutting them off from obtaining items subject to the EAR, including certain foreign-produced items. Read more>> and Read more>>
• BIS Takes Action against Sending of Controlled Counterintelligence Items to Russia and North Korea: On February 24, BIS issued a Temporary Denial Order (TDO) suspending the export privileges of Russian company Radiotester OOO a/k/a Radiotester LLC, as well as Russian individual Ilya Balakaev, for the unauthorized export of controlled counterintelligence items to Russia and North Korea. In a related action, the US Department of Justice unsealed a five count indictment in the Eastern District of New York charging Balakaev for smuggling devices commonly used in foreign counterintelligence and military operations out of the US to Russia for the benefit of the Federal Security Service of the Russian Federation (FSB) and North Korea in violation of US export control laws. Read more>>
• Department of State Sanctions Further Entities and Adds Visa Restrictions: On February 24, the Department of State designated over 60 individuals and entities complicit in the administration of Russia’s government-wide operations and policies of aggression toward Ukraine. Additionally, the Department of State announced steps to impose visa restrictions on 1,219 members of the Russian military, including officers, for actions that threaten or violate the sovereignty, territorial integrity, or political independence of Ukraine, pursuant to a policy under Section 212(a)(3)(C) of the Immigration and Nationality Act. Read more>> and Read more>>
• USTR, Commerce Announce Additional Tariffs Increase on Russian Goods: On February 24, the United States Trade Representative (USTR) and the US Department of Commerce announced additional tariff increases on a variety of goods from Russia, designed to target key Russian commodities generating revenue for the Kremlin while reducing US reliance on Russia. These measures will result in increased tariffs on Russian metals, minerals, and chemical products, all of which is worth approximately $2.8 billion to Russia. These measures will also significantly increase costs for aluminum that was smelted or cast in Russia to enter the US market in order to counter harm to the domestic aluminum industry, which is being squeezed by energy costs as a result of Russia’s invasion of Ukraine. Read more>>, Read more>>, Read more>> and Read more>>
• US Consults with Allies on China Sanctions If Beijing Assists Moscow: On March 1, Reuters reported that the US has begun preliminary stage talks with allied countries to impose new sanctions on China if the country provides Russia with military support for its war in Ukraine. Details on any specific sanctions are unknown, and the consultations have focused on “the core group of countries that were most supportive of sanctions imposed on Russia.”Read more>>
• Departments of Justice, Commerce, and Treasury Issue Joint Compliance Note on Russia Sanctions and Export Controls: On March 2, BIS, OFAC, and the Department of Justice issued a joint compliance note on the use of third-party intermediaries or transshipment points to evade Russian- and Belarussian-related sanctions and export controls. This is the first note of its kind to inform the private sector on enforcement trends. The note contains sample red flags that would raise compliance concerns, and use real-world examples of civil and criminal penalties of sanctions enforcement actions to warn the private sector of the consequences of sanctions evasion. Read more>>
• Justice Department Expands Sanctions Enforcement Staff: In a Thursday announcement, Assistant Attorney General Matt Olsen confirmed that the Department will be adding 25 new prosecutors to its counterintelligence and export controls section. The new prosecutors will work with corporations to investigate sanctions and export control evasion, and also bring criminal charges against companies when they commit violations, he said. Some of the additional prosecutors are new hires, while some are being reallocated from different sections, according to officials. Read more>>
• President Biden Continues National Emergency with Respect to Ukraine: On March 1, President Biden sent a letter to Congress extending the national emergency declared in Executive Order 13660 with respect to Ukraine. The designation will allow sanctions programs implemented and expanded under this executive order to continue past March 6, 2023. Read more>>
• Biden Administration Announces Additional Security Assistance for Ukraine: On February 24, the Department of Defense (“DoD”) provided an additional security assistance package for Ukraine under the Ukraine Security Assistance Initiative (“USAI”), following the Biden Administration’s 32^nd security assistance package using Presidential Drawdown Authorities (“PDA”) for Ukraine the week prior. Specifically, the United States is committing additional Unmanned Aerial Systems (UAS) and counter-UAS and electronic warfare detection equipment, as well as critical ammunition stocks for artillery and precision fires capabilities that will bolster Ukraine's ability to repel Russian aggression. Read more>>
• USAID, State Disburse Funds for Ukraine: On February 24, the State Department announced the first disbursements from the World Bank’s Public Expenditures for Administrative Capacity Endurance (“PEACE”) mechanism. The $9.9 billion grant program, executed on a reimbursement basis once expenses have been verified, will provide additional budgetary support to the Government of Ukraine. The State Department noted that “continued US economic assistance has helped rally other international donors, including 2023 commitments from the European Commission, Japan, Canada, and the United Kingdom, to provide Ukraine with needed economic assistance.” Read more>> and Read more>>
• US Plans to Provide Ukraine and Moldova to Address Energy Impacts: The US, through USAID, plans to work with Congress to provide $250 million to the Government of Ukraine to address immediate needs created by the war, enabling Ukrainian citizens’ continued access to basic necessities like electricity, heat, and water. These funds will strengthen Ukraine’s energy system ahead of the next heating season and beyond. It was also announced by the White House that the Department of Energy’s third shipment of critical electrical transmission grid equipment to Ukraine by early March 2023. Further, the US will also plan through USAID to work with Congress to provide $300 million to help Moldova address the severe energy crisis exacerbated by the Russia’s invasion of Ukraine and attacks on the Ukrainian energy grid. This funding will strengthen Moldova’s energy security in the face of the Kremlin’s longstanding attempts to weaponize energy to undermine Moldova’s independence and sovereignty. Read more>>, Read more>> and Read more>>
• Commerce and Energy Department Officials Meet with Ukrainian Minister of Energy: On March 2, Deputy Secretary of Commerce Don Graves and Energy Secretary Jennifer Granholm met with the Ukrainian Minister of Energy German Galuschenko to discuss US efforts to help the private sector rebuild Ukrainian infrastructure. Read more>>
• USAID Deputy Administrator Meets with Ukrainian Minister of Social Policy: On February 24, USAID Deputy Administrator Isobel Coleman met with Ukrainian Minister of Social Policy Oksana Zholnovych. During the meeting, Deputy Administrator Coleman expressed USAID’s commitment to working with the Minister and other key stakeholders in the humanitarian community to strengthen collaboration between relief actors delivering assistance and the Ukrainian Government’s social protection programs. Both officials reflected on the importance of working together to provide for Ukrainians during times of crisis, including through ensuring operations remain transparent and accountable. Read more>>
• Secretary Yellen Visits Kyiv: On February 27, the US Secretary of the Treasury Janet Yellen met with Ukrainian President Volodymyr Zelensky. Secretary Yellen discussed the ongoing US economic support that helps Ukraine continue to be able to provide vital basic services to its people, including the first transfer of $1.25 billion out of $9.9 billion in US budget support to be provided over the first three quarters of 2023. Secretary Yellen also highlighted the efforts of the US and its global coalition to impose severe sanctions on Russia and continued stance to support Ukraine as long as it takes. She also met with the Ukrainian Prime Minister Denys Shmyhal and Ukrainian Finance Minister Sehiy Marchenko, where she highlighted the US participation in the Multi-agency Donor Coordination Platform for Ukraine, and the importance of economic reforms to strengthen the foundation for Ukraine’s swift recovery and reconstruction after the war. Read more>>, Read more>>, Read more>>, Read more>>, Read more>>, Read more>> and Read more>>
• Secretary Blinken Attends C5+1 Ministerial; Commends Kazakhstan’s Actions in Russian-Ukraine War: On February 28, Secretary of State Antony Blinken attended the C5+1 Ministerial in Astana, Kazakhstan and met with Central Asian leaders on the margins of the event. During the joint press availability with Kazakh Foreign Minister Mukhtar Tileuberdi, Secretary Blinken applauded Kazakhstan for continuing to host more than 200,000 Russian citizens who fled their country after the launch of the war on Ukraine and the Kazakh people’s generously in providing food, clothing, medicine, other humanitarian supplies to Ukraine, including setting up “those yurts of invincibility” in Kyiv and Bucha, where Ukrainians can find warmth and respite from the war. Read more>>

II. EU SANCTIONS

• EU Adopts 10^th Sanction Package – Mayer Brown Analysis: On February 25, 2023, the EU adopted its 10^th Sanctions Package against Russia, thereby further expanding the scope of the existing sanctions and restrictive measures, as well as adding to the list of sanctioned individuals and entities. (See our detailed analysis at: Read more>>)
• Commission Updates Guidance on Specialised Financial Messaging Services: On 28 February 2023, the Commission updated its guidance on specialised financial messaging services notably regarding the scope of application (subsidiaries and branches). Read more>>
• The Commission Updates Guidance on Oil Price Cap: On 27 February 2023, the Commission updated its guidance on the oil price cap adding one question on when the price cap starts and stops applying. Read more>>
• EU Prolongs Sanctions against Belarus for a Year: On 24 February 2023, the EU prolonged its restrictive measures against Belarus for a year, until 28 February 2024. Read more>> and Read more>>
• Poland, Ukraine Call for Nuclear Energy Sanctions against Russia: Poland and Ukraine called for international sanctions against Russia's nuclear energy sector, saying they feared their neighbour may hurt energy security and economies in Europe if attacks on Ukrainian power facilities continue. Read more>>
• Belgium Worried About Jobs If EU Blacklists Russian Steel Baron: Belgium is weighing concern for lost jobs at home with lost lives in Ukraine as it ponders relations with Russia's royal-friendly richest man. Read more>>
• EU’s New Sanctions Envoy Shifts Focus to Enforcement: The EU's new special envoy on sanctions, David O’Sullivan, is set to "focus on implementation and tackling circumvention". Read more>>
• Europe’s Top Prosecutor Sets Sights on Russia Sanctions-Busters: Europe’s chief prosecutor Laura Codruta Kovesi is already investigating frauds that allegedly cost EU taxpayers 14 billion euros — now she wants to go after the smugglers undermining sanctions against Russia. Read more>>
• RT More Impacted by Asset Freeze Measures than by Broadcast Ban: December asset freezes did more to curb Kremlin-backed RT France's operations than the EU's broadcast ban according to Politico. Read more>>
• Commission Approves EUR 12 Million Belgian Scheme to Support Companies in the Context of Russia's War against Ukraine: The European Commission has approved a EUR 12 million Belgian scheme to support companies in the context of Russia's war against Ukraine. The scheme was approved under the State Aid Temporary Crisis Framework. Read more>>
• Commission Approves EUR 1.5 Million Slovenian Scheme to Support Small and Medium-Sized Enterprises in the Context of Russia's War against Ukraine: The European Commission has approved a EUR 1.5 million Slovenian scheme to support small and medium-sized enterprises (‘SMEs') in the context of Russia's war against Ukraine. The scheme was approved under the State Aid Temporary Crisis Framework. Read more>>
• Commission Approves EUR 2 Billion French Guarantee Scheme to Support Energy-Consuming Companies in the Context of Russia's War against Ukraine: The European Commission has approved a EUR 2 billion French guarantee scheme to support energy-consuming companies in the context of Russia's war against Ukraine. The scheme was approved under EU State aid rules, based on Article 107(3)(b) of the Treaty on the Functioning of the European Union, recognising that the EU economy is experiencing a serious disturbance. Read more>>
• Commission Approves EUR 95 Million Finnish Scheme to Support the Primary Agricultural and Aquaculture Sectors in the Context of Russia's War against Ukraine: The European Commission has approved a EUR 95 million Finnish scheme to support the primary agricultural and aquaculture production sector in the context of Russia's war of aggression against Ukraine. The scheme was approved under the State Aid Temporary Crisis Framework. Read more>>
• Commission Approves EUR 1.5 Million Italian Scheme to Support the Artistic Ceramics and Glass Sector in Murano in the Context of Russia's War against Ukraine: The European Commission has approved a EUR 1.5 million Italian scheme to support the artistic ceramics and glass sector in Murano (Venice) in the context of Russia's war against Ukraine. The scheme was approved under the State Aid Temporary Crisis Framework. Read more>>

III. UK SANCTIONS

• UK’s New Package of Sanctions: On February 24, 2023, the UK announced a new package of internationally co-ordinated sanctions and trade measures, including export bans on every item Russia has been found using on the battlefield to date. Included in the hundreds of goods are aircraft parts, radio equipment, and electronic components that can be used by the Russian military industrial complex, including in the production of UAVs. Also sanctioned are senior executives at Russian state-owned nuclear power company Rosatom, plus executives from Russia’s 2 largest defence companies, 4 banks, and other Russian elites who are at the heart of Putin’s military-industrial complex. The UK also announced new major trade measures, undermining Russia’s military machine and cutting at Putin’s finances. Alongside banning exports of products found used by Russia on the battlefield, the UK will also ban the import of 140 goods including iron and steel products processed in third countries. Read more>>, Read more>> and Read more>>
• UK Government Objects to Bill Seizing Frozen Russian Assets: On February 28, 2023, it was reported that the government objected to the Seizure of Russian State Assets and Support for Ukraine Bill in the House of Commons, a bill proposed by a backbench MP. It is not yet clear whether the Bill will progress further; there is a second reading on 3 March 2023. The Bill provided that the government should make proposals for a Bill to provide for the seizure of Russian state assets to support Ukraine, including as to the type of Russian state assets to be seized, who determines which assets should be seized, for what purposes, who should hold and manage those assets etc. Read more>> and Read more>>
• OFSI Oil Price Cap Seminars: On February 28, 2023, OFSI has announced that it will be holding teach-ins on the Russian oil services ban and related oil price caps. The sessions will be tailored to specific sectors, including the oil, shipping, insurance and financial sectors, and will cover: (i) attestation and reporting processes; (ii) due diligence requirements; and (iii) OFSI’s enforcement approach.
  
  If you are interested in attending one of these sessions, contact oilpricecap.OFSI@hmtreasury.gov.uk for additional details, stating the sector of interest to you. Read more>>
• OFSI Extends General Licences: On February 25, 2023, OFSI extended the expiry dates for three of its General Licenses (GLs): 
  • INT/2022/1280976, ‘Russia: Regulatory Authorities – Prudential Supervision or Financial Stability’ relates to VTB Capital and any of its subsidiaries incorporated in the UK. It allows anything to be done by, or on behalf of a Relevant Authority in respect of a UK subsidiary of VTB Capital for the purposes of the statutory functions of that authority as they relate to prudential supervision or protecting, maintaining or enhancing the stability of the financial system of the UK. The expiry date of the GL has been extended to 3 April 2025. Read more>>
  • INT/2022/1280876, ‘Russian Banks – UK subsidiaries – Guernsey subsidiary – EU subsidiaries – Basic needs, routine holding and maintenance, the payment of legal fees and insolvency related payments’ relates to permitting any payments in connection with the Insolvency Proceedings of VTB Capital plc and Sberbank CIB (UK) and their respective UK subsidiaries. This has been further amended to permit payments involving the Guernsey subsidiary of VTB (VTBC Asset Management International Limited), and VTB Bank (Europe) SE based in Germany along with its German subsidiaries and includes payments related to Insolvency Proceedings under the German Banking Act. The expiry date of the GL has been extended to 3 April 2025. Read more>>
  • INT/2022/2300292, ‘Payment to Energy Companies for Gas and/or Electricity’ allows for payments to utility companies for gas and electricity by UK designated persons who own or rent properties in the UK. The expiry date of the GL has been extended to 16 October 2023. Read more>>

IV. RUSSIA/UKRAINE SANCTIONS

• Ukraine Adds 277 Individuals and 92 Legal Entities to the Sanctions List: On 26 February Ukraine extended sanctions to 277 new individuals and 92 legal entities. The new sanction lists include individuals allegedly involved in the kidnapping of Ukrainian children, those who help support mercenaries fighting against Ukraine, and Russian athletes and other sporting representatives who have shown public support for the war. Among the Russian individuals newly sanctioned are former pole vaulter and a two-time Olympic gold medalist Yelena Isinbayeva, President of the Russian Tennis Federation Shamil Tarpishchev, and the President of the Russian Olympic Committee Vitalii Smirnov. The Russian Red Cross and several other non-profit organizations were also sanctioned. Read more>>
• Russian Internet Speeds Drop on Hardware Shortage: On March 1, 2023, it was reported that Russian mobile internet speeds dropped in regions outside Moscow in February as the departure of foreign equipment makers limited operators' access to hardware. Senior telecoms executives and other industry sources reported that the departure of telecoms gear makers Nokia and Ericsson may cripple the country's mobile networks over the long term and lead to a deterioration in communication for Russians. Read more>>
• Billionaire Ackman Donates $3.25 million for Ambulances in Ukraine: On February 26, 2023, it was reported that Billionaire hedge fund manager Bill Ackman has pledged $3.25 million to help buy more than a dozen ambulances for Ukraine as it defends itself against Russia's invasion, according to a fellow investor who cited a conversation with him. Ackman's hedge fund Pershing Square Capital Management oversees roughly $16 billion in assets. Read more>>
• Russian Plans to Tighten Rules for Importing Goods from the EU: The Russian government plans to revise the already small list of goods that can be imported from the EU to Russia by trucks without restrictions. Currently, there are exceptions to the ban on the import of goods from EU countries for approximately 40 product groups. Some representatives of the food manufacturers industry reported that the Government plans to reduce the list. According to one of them, the reduction can be significant - by 50%. Read more>>
• The Ministry of Foreign Affairs of Russia Announces the Preparation of Retaliatory Sanctions against Canada and the United States: Russia is preparing countermeasures to US and Canadian sanctions, according to the statement of the official representative of the Russian Ministry of Foreign Affairs. The Ministry of Foreign Affairs did not provide the details on the types of sanctions. Read more>>
• Russian Civil Aircraft Remain Functional, Despite Sanctions: On March 1, Bloomberg reported that Russian carriers are still operating 467 Airbus and Boeing jets, versus 544 a year ago, a much more moderate decline than expected after the US and allies imposed harsh sanctions on Russia. Industry experts suggest that Russia has been using parts from leased planes it refuses to return to their home countries, shuttling working parts between aircraft, and foregoing software updates. Though both Boeing and Airbus say they have not sold parts to Russia, Airbus reported that it is receiving more reports of planes being unable to function in Russia due to foregone maintenance. Read more>>
• Russian Diesel Stuck at Sea as Mild Temps Fend Off Energy Crisis: A pile-up of Russian diesel stored on ships suggests buyers are shunning the sanctioned fuel as an exceptionally warm winter saps demand. As many as 1.9 million barrels of Russian diesel fuel is currently in floating storage, the most since October 2020. The build-up, three weeks after EU sanctions took effect, indicates some cargoes have been loaded from Russian ports without buyers. Read more>>
• Russian Oil Production may Shrink by 20% by 2030 Due to a Lack of Equipment: Sanction restrictions may lead to a reduction of Russian oil production by 20% by 2030, if Russian companies fail to replace critical technologies in the oil service market. Strengthening restrictions may further complicate Russian access to critical pieces of equipment, and the possibilities of replacing them with supplies from "friendly" countries are limited. Russian oil production may decrease by 20% if companies do not find a way to compensate for the lack of Western equipment and technologies. Read more>>
• Western Weapons Components Still Used in Russian Weapons: Western-made components have been found in Russian weapons in its war against Ukraine, according to a report from the International Partnership for Human Rights (IPHR) and the Independent Anti-Corruption Commission (an organization within Transparency International). Trade data indicates that components manufactured by Harting, Trimble and TE Connectivity continue to be imported into Russia through official distributors or through third countries such as Hong Kong and Turkey. Read more>>
• Russia's UN Diplomat Accuses West of Arm Twisting in Vote Isolating Moscow: On February 26, 2023, it was reported that Russia's senior diplomat to the United Nations accused the West of "cowboy" methods and "arm twisting" of some countries during last week's United Nations General Assembly vote that demanding Moscow withdraw its troops from Ukraine. The 193-member General Assembly of the U.N. overwhelmingly isolated Russia, calling on the eve of the one-year anniversary of Moscow's invasion for a "comprehensive, just and lasting peace" in line with the founding U.N. Charter. Read more>>
• Russia Stops Supplying Oil to Poland through the Druzhba Pipeline: The largest Polish oil company PKN Orlen SA stopped receiving oil through the Druzhba oil pipeline from Russia. The company plans to replace the Russian oil with oil from other suppliers. Orlen previously said it would not renew its contract for Russian oil, which expires in January 2023. Read more>>
• Russia's Membership in the FATF Has Been Fully Suspended: According to the results of the meeting, which lasted from February 22 to 24, the FATF stated that the ongoing and intensifying aggressive war of the Russian Federation against Ukraine is contrary to the principles of the FATF regarding the promotion of the safety and integrity of the global financial system and the obligations regarding international cooperation and mutual respect. As a result, on 24 February the Plenary meeting of the FATF suspended the membership of the Russian Federation. The FATF reiterated that all jurisdictions must be alert to current and emerging risks of circumvention of measures taken against the Russian Federation to protect the international financial system. Read more>>
• Rouble Slides to 10-month Low as Falling Energy Prices Bite: On March 1, 2023, it was reported that the Russian rouble has fallen to its weakest level in 10 months, losing about 20 per cent of its value since the start of December, as western sanctions, Moscow’s waning energy revenues and high military spending exert pressure on the currency. With capital controls in place and foreign trading in the currency largely moribund, analysts said the value of the currency no longer reflected a forward-looking assessment of the state of the economy but more of a short-term snapshot. The currency’s decline this year is being driven by lower energy revenues, a result of western sanctions on Russian oil exports including a $60-a-barrel price cap imposed by the EU in December. Moscow is now selling much of its oil to China and India, which can demand a discount on the price, particularly since February 5 when G7 sanctions were extended from Russian crude to oil products. Read more>>
• Lithuanian Energy Group to Consider Donating Share of Profits to Ukraine: On February 28, 2023, it was reported that energy companies such as ExxonMobil, Shell and BP should donate one-tenth of their windfall profits directly to Ukraine because they earned them as a result of Russia’s war, according to a proposal from Lithuania’s largest utility. Darius Maikštėnas, chief executive of Ignitis Group, launched a public appeal to more than 50 energy groups in the US and Europe to follow its lead after the listed Lithuanian company said it would ask its annual meeting for approval to pay about 10 per cent of its extra profits from 2022, or €12mn, to help rebuild Ukraine’s energy infrastructure. The appeal was sent to companies including Chevron, ConocoPhillips, Equinor and TotalEnergies, saying that oil and gas groups as well as utilities had earned hundreds of billions of dollars in extra profits following Russia’s full-scale invasion of Ukraine a year ago. The war has led to a spike in both natural gas and electricity prices. Read more>>
• Ukrainian President and OECD Secretary-General Meet to Discuss Accession: On 28 February the President of Ukraine Volodymyr Zelenskyy met with Secretary-General of the Organization for Economic Cooperation and Development Mathias Cormann, who was on a visit to Ukraine. The Head of State praised the news of the opening of the OECD Office in Ukraine, which will be an important step in cooperation. The parties discussed the prospects of Ukraine's accession to the OECD. Read more>>
• Tinkoff Sanctions Squeeze Booming Forex Trading: On February 27, 2023, it was reported that with the EU’s 10^th sanctions package against Russia included three more lenders being excluded from the SWIFT payments messaging system, including Tinkoff Bank – further reducing financial conduits between Russia and the west. The impact of sanctions has been more limited than western governments had hoped, reflecting the ability of Russia to continue selling oil and gas. However, financial restrictions are trapping growing sums of Russian capital uselessly abroad. Tinkoff has suspended trading in euros. Currency dealing has become hugely lucrative for Russian banks. With about half of its reserve assets frozen, Russia’s central bank has adopted measures to support the rouble, which now lingers at a 10-month low. These include mandatory conversion of a portion of incoming euros and dollars at steep charges, typically about one-tenth of the value of the transaction. Fewer unsanctioned banks converting euros to roubles means more money trapped offshore. Some $100bn of additional assets from the Russian private sector were present in western banks in the first half of 2022, say researchers at the CEPR. Most was in liquid deposits and currency. The bulk of the increase, some $60bn, was stuck in Belgium. Read more>>
• Deripaska Says Russia Could Run Out of Money Next Year: On March 2, 2023, the oligarch Oleg Deripaska has said Russia could run out of money by next year unless the country secures investment from “friendly” countries as western sanctions bite. Deripaska, an energy and metals tycoon who was once Russia’s richest person, told an investment conference in Siberia on Thursday: “There will be no money already next year. We will need foreign investors.” Deripaska, who is subject to UK, US and EU sanctions over Russia’s invasion of Ukraine, said funds are running low and “that’s why they’ve [the Russian government] already begun to shake us down”. He said that Russia was suffering from “serious” pressure from western sanctions, and that the country and its businesses would have to look to other countries with “serious resources” to invest. Read more>>
• Russia Says West is 'Burying' Black Sea Grain Deal: On March 2, 2023, Russian Foreign Minister Sergei Lavrov accused the West of "shamelessly burying" the Black Sea grain initiative that facilitates the export of Ukraine's agricultural products from its southern ports. While remaining in the agreement, Russia has repeatedly railed against the West's approach to the deal, struck last July, saying countries that have imposed sanctions on Moscow are not doing enough to ease restrictions on Russia's own exports, in particular of fertilisers. The current phase of the agreement, brokered by Turkey and the U.N., ends on March 18. It will be extended if no party raises a formal objection. Ahead of a previous deadline to extend the deal in November, Russia also escalated its criticism of the deal in a bid to get more concessions from the West, but ultimately let it roll over for another 120 days. Read more>>
• Putin Preparing for Meeting with Xi and Chinese Delegation in Moscow: On March 2, 2023, President Vladimir Putin said he is readying for an upcoming visit by Chinese leader Xi Jinping in Moscow, according to the Kremlin. Putin said he plans to meet with his counterpart and the Chinese delegation. As Russia continues to be hit with Western sanctions, China has declared “no limits” to its friendship with its northern neighbor and has thrown the Kremlin an economic lifeline. Russia has repeatedly requested drones and ammunition from China, sources familiar with US intelligence said, and the Chinese leadership has been actively debating over the past several months whether or not to send the lethal aid, the sources added. Read more>>
• Ukrainian President Meets with Saudi Foreign Minister: This is the first official visit of the head of the Saudi Arabian Foreign Ministry to Ukraine since the establishment of diplomatic relations between the two countries. President Zelenskyy thanked the government of Saudi Arabia for tangible support of Ukraine in the face of Russia's military aggression. Ukraine plans to involve Saudi Arabia in its initiative to supply grain to African countries suffering from hunger as well as to promising projects in the investment, agro-industrial and energy spheres. Read more>>

V. OTHER NOTABLE DEVELOPMENTS

• Canada to Send Ukraine 4 More Leopard Tanks, Lays Further Russian Sanctions: On February 27, Canadian Prime Minister Justin Trudeau announced that it will send four more Leopard 2 battle tanks to Ukraine and sanction over 100 Russian individuals and entities to mark the one-year anniversary of Russia’s invasion. The tanks are on top of the four Leopard 2s already sent to Ukraine last month. In addition, Canada will send another 5,000 rounds of ammunition to Ukraine’s military. Trudeau’s announcement came hours after Ottawa pledged more than $32 million in security support to Ukraine, the latest in a wave of fresh announcements from western nations meant to show continued support a year into Russia’s invasion of the country. Read more>> 
• Australia Sending Drones to Ukraine, Imposes More Sanctions on Russia: On February 24, the Australian government said it would send more drones to Ukraine to aid its fight against Russia on the anniversary of the invasion, and imposed new targeted financial sanctions against 90 Russian individuals and 40 entities. The latest targets include Russian ministers overseeing energy, resources and industry sectors, and key players in defence including arms manufacturer Kalashnikov Concern, aviation firm Tupolev and submarine developer Admiralty Shipyards. Read more>> 
• Japan Imposes Further Sanctions on Russia: On February 24, Japanese Prime Minister Fumio Kishida, as this year’s G-7 president, announced Japan will impose additional sanctions on Russia, including freezing the assets of some 120 individuals and organizations and banning the export of drones and other materials that can be used for military purposes. “In order to absolutely not allow one-sided changes to the status quo, we must firmly carry out support for Ukraine and sanctions against Russia to regain peace and international order based on the rule of law," Kishida stated during a news conference. The final announcement on February 28 covered 143 targets, including the Wagener Group. Read more>> and Read more>> 
• Gazprombank Employees to Stand Trial in Zurich for 2014 Sanctions Violations: On March 1, Retuers reported that four former employees of Gazprombank will stand trial in a Zurich court for failing “to exercise due diligence to ascertain the identity of the beneficial owner” when they helped Sergey Roldugin, a Putin ally, deposit $50 million Swiss francs in a bank account in violation of sanctions in 2014. Read more>>
• Singaporean Minister Says Singapore Companies Should Manage Own Risks in Russian Oil Trade: On February 24, when responding to a question in parliament on how the EU bans would affect the import, trading, storage, blending and handling of Russian oil products in Singapore, Singapore’s Minister of State for Trade and Industry Low Yen Ling stated the need for companies to consider and manage any potential impact on their business activities, transactions, and customer relationships when dealing with Russian crude oil and refined products. “While Singapore is not a participant of the EU ban, companies and financial institutions in Singapore have been informed of the ban imposed by the EU and other countries, via circulars issued by relevant government agencies,” he noted. Read more>>
• West Presses UAE to Clamp Down on Suspected Russia Sanctions Busting: Western allies are pushing the United Arab Emirates to halt exports of critical goods to Russia as they seek to starve Vladimir Putin’s military of components to sustain its war against Ukraine. The US government is worried the UAE is becoming a hub for the shipment of items such as electronics that can be repurposed to help Russia’s war effort. One particular concern, according to people familiar with the discussions, is so-called “re-exporting”, where goods are routed through the UAE to sidestep restrictions. Exports of electronic parts from the UAE to Russia jumped more than seven-fold last year to almost $283mn. Read more>>
• Western Firms Say They’re Quitting Russia. Where’s the Proof?: Company statements and databases are flawed measures of what is going on in Russia’s murky business world — and academics are clashing over how to use these methodologies. Read more>>
• North African Countries Snap Up Russian Oil Products Shunned by West: On February 25, the Wall Street Journal reported that North African countries have stepped forward to become voracious buyers of Russia’s diesel and other refined oil products. Morocco’s imports of Russian diesel, which stood at around 600,000 barrels for the whole of 2021, surged to 2 million barrels in January, with at least a further 1.2 million barrels expected to arrive in the country in February, according to data from Kpler. Algeria and Egypt have also seen an uptick. Tunisia, which similarly imported almost no Russian oil products in 2021, took 2.8 million barrels of Russian oil products in January and is expected to import another 3.1 million barrels this month. Read more>>
• Russian Oil to Be Stashed in Ghana as Pool of Buyers Shrinks: On February 27, Bloomberg reported that a cargo of Russian oil is heading for storage tanks in Ghana, a nation that exports crude itself and is on the doorstep of two regional supply powerhouses. The development suggests that traders could be scouring the market for new buyers of Russian barrels after the European Union stopped almost all seaborne imports from the country in December. Read more>>
• Sanctions Headache Threatens to Dent India’s Russian Oil Imports: On February 28, Bloomberg reports that Indian buyers of Russian oil, a crucial lifeline for the Kremlin over the past months, are struggling under the weight of increasingly onerous demands from financiers wary of breaching Western sanctions, a headache that is slowing transactions and threatening to at least temporarily dent record flows to the Asian nation. Refinery and banking executives report that this is a result of the need to prove Russian imports comply with a $60-a-barrel cap imposed by G7+ nations now requiring additional steps and verification of official invoices, contract documents, plus shipping and insurance information — details not previously demanded. Read more>>