Sanctions Weekly Update – Ukraine/Russia Conflict – February 20, 2023

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

Week of February 20, 2023

I. US SANCTIONS

• Deputy Treasury Secretary Previews Coming Sanctions Actions: In a February 21 speech at the Council on Foreign Relations, Deputy Treasury Secretary Wally Adeyemo discussed the future of US sanctions programs. After discussing the history of the war in Ukraine, Adeyemo said the US “and our allies are planning to launch a renewed effort to rigorously enforce the sanctions and export controls we’ve already put in place.” The effort will focus on coordination with allies, identifying and shutting down sanctions evasion channels, and pressuring companies that engage in sanctions evasion. He closed by noting the US and its allies “are also engaging with companies and banks… to tell them directly that if they do not enforce our sanctions and export controls, we will cut them off from access to our markets and financial systems.” Read more>>
• President Biden Visits Kyiv: On February 20, President Biden traveled to Kyiv, a departure from his previously announced travel plans to Poland. The visit, intended to “reaffirm our unwavering and unflagging commitment to Ukraine’s democracy, sovereignty, and territorial integrity,” featured an announcement of additional artillery ammunition, anti-armor systems, and air surveillance systems to support Ukraine. Read more>> and Read more>>
• OFAC Investigating Raiffeisen Bank: On February 17, leadership at Raiffeisen Bank International confirmed to Reuters that the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) had launched an inquiry into the bank’s business related to Russia. The request, received in January, asks the bank to “clarify payments business and related processes maintained by RBI in light of the recent developments related to Russia and Ukraine” and for details on its transactions with restricted territories in Ukraine and certain clients. Raiffeisen said it was cooperating with OFAC, and plans to answer OFAC’s request in three tranches, one each in April, May, and June. Read more>>
• US Planning to Add 200 to Sanctions List to Commemorate Anniversary of Invasion: On February 21, The Wall Street Journal reported that the Biden administration is planning to impose fresh sanctions on 200 Russian individuals and entities this week, according to sources within the administration. The State and Treasury Departments will coordinate the release, which is intended to commemorate the one-year anniversary of Russia’s invasion of Ukraine. Read more>>
• Treasury Secretary Praises Efficacy of Sanctions Program: In prepared remarks at the G20 summit in India on February 23, Treasury Secretary Janet Yellen commemorated the anniversary of Russia’s invasion of Ukraine and praised the efficacy of US and allied sanctions programs on Russia. She stated “our sanctions have significantly negatively affected Russia. While by some measures the Russian economy has held up better than might initially have been expected, Russia is now running a significant budget deficit.” She added that export controls are making it difficult for Russia to repair and replenish its weapons. Like others in the administration, she also noted the importance of sanctions enforcement, saying, “we have made clear that providing material support to Russia or assistance with any type of systemic sanctions evasion would be a very serious concern to us. And, we will certainly continue to make clear to the Chinese government and to companies and banks in their jurisdiction about what the rules are regarding our sanctions and the serious consequences they would face for violating them.” Read more>>
• US Government Urges Musk to Maintain Starlink Service in Ukraine: On February 18, Reuters reported that Secretary of State Antony Blinken had confirmed that US government representatives had urged Elon Musk to maintain Starlink internet service in Ukraine, so that the Ukrainian military can use the service. Musk’s company SpaceX has said that it has taken steps to restrict the Ukrainian military’s ability to use drones on the Starlink service. Read more>>
• Secretary of State Meets with Ukrainian Counterpart: On February 18, Secretary of State Antony Blinken met with Ukrainian Foreign Minister Dmytro Kuleba on the sidelines of the Munich Security Conference. The pair discussed “enduring US support for Ukraine” and planning efforts related to the one-year anniversary of the Russian invasion of Ukraine. Read more>>
• Biden Administration Considers Releasing Information on China’s Possible Military Support for Russia: On February 22, The Wall Street Journal reported that the Biden administration is considering releasing intelligence it believes shows that China is weighing whether to supply weapons to support Russia’s war in Ukraine. The report comes after Secretary of State Antony Blinken expressed concern that China would provide Russia with lethal military assistance at the Munich Security Conference over the weekend. The Chinese government has denied these allegations. Read more>>
• Secretary of State Continues to Comment on Chinese Support to Russia: In a February 23 interview with Jeffrey Goldberg of The Atlantic, Secretary of State Antony Blinken continued his recent comments discussing China’s support of Russia. He stated that the State Department hasn’t “seen to date systematic sanctions evasion,” but noted that he told his Chinese counterpart that such sanctions evasion “would be a serious problem for the relationship between the United States and China.” The interview also praises the efficacy of the US and allied export control program on Russia. Read more>>
• President Biden Delivers Remarks on Anniversary of Ukraine Invasion in Poland: On February 21, President Biden delivered prepared remarks in Warsaw, Poland to mark the anniversary of Russia’s invasion of Ukraine. The speech highlighted the strength of the international coalition to support Ukraine and sanction Russia, and noted “we’re going to announce more sanctions this week together with our partners.” Read more>>
• White House Issues Fact Sheet of Assistance to Ukraine: On February 21, the White House released a fact sheet summarizing US assistance delivered to Ukraine. The fact sheet discusses military, humanitarian, anti-corruption, and economic assistance delivered to Ukraine, and also discusses coordinated efforts to hold Russia accountable for its invasion of Ukraine, from strategic litigation to sanctions designations. Read more>>
• House Foreign Affairs Committee Chairman Says Support Building for Deliveries of Fighter Jets and Missiles to Ukraine: During a Congressional delegation on February 21, House Foreign Affairs Committee Chairman Michael McCaul (R-TX) stated that there is “increasing momentum” in Washington to send long-range missiles and fighter jets to Ukraine. He stated that the White House and Congress are still split on “how fast and what weapons” to send to Ukraine. To date, the US has not included fighter jets and long-range missiles in its assistance packages, despite requests from Kyiv. Read more>>
• Exxon Warns of Russia Risks to Its $2.5 Billion Kazakhstan Income: On February 22, 2023, Exxon Mobil Corp (XOM.N) warned in a securities filing of potential risks to its Kazakhstan oil operations, which provided $2.5 billion in earnings last year. Threats to Kazakhstan oil exports have been in the spotlight since Moscow invaded Ukraine a year ago. Exxon and Chevron are major holders in the Central Asia country's oil production and related export pipeline. Kazakhstan shares a 4,750 mile (7,644 km) border with Russia and its oil exports travel mainly through a Caspian Pipeline Consortium (CPC) line through Russia and lands at a Russian Black Sea export terminal. Any closure of the CPC pipeline or terminal would shut in more than 1% of global oil supply and cost its producers billions of dollars in lost income. Exxon said its stake in Kazak oil fields produced 246,000 barrels of oil and gas per day last year. That oil provided after-tax earnings of about $2.5 billion, the filing said. However, Exxon "could experience a loss of cash flows of uncertain duration from its operations in Kazakhstan," the filing said, if oil exports through the CPC pipeline are "disrupted, curtailed, temporarily suspended." London-based Shell PLC and Italy's Eni also have stakes in the CPC. Read more>>
• State Department Announces $7 Million for Ukraine Cultural Heritage Response Initiative: On February 23, the State Department announced that its Ukraine Cultural Heritage Response Initiative will invest $7 million to support Ukrainian efforts to protect its cultural heritage. The Initiative was developed to support Ukraine’s efforts to protect and repair damage to Ukrainian cultural heritage sites and collections, as well as expand and strengthen public-private partnerships with civil society in Ukraine. Read more>>

II. EU SANCTIONS

• EU Members Struggling to Agree on 10^th Sanctions Package: Despite a push by the EU to agree to a new 10^th EU sanctions package on Russia prior to the one year anniversary of the Russian invasion of Ukraine on Friday, February 24, members failed to reach an agreement in time, primarily due to Poland’s objection that proposed quota restrictions on imports of synthetic rubber were too high. Discussions are expected to resume on Friday. Read more>> and Read more>>
• EU Countries Push Back against Fines for Russian Frozen Assets: Over a dozen EU countries led a pushback against proposed fines for failing to meet reporting obligations on the whereabouts of Russian state assets, forcing the European Commission to drop its plan for the penalties. Read more>>
• EU Commission Scratches Russia Nuclear Sanctions Plans: The European Commission has abandoned plans to sanction Russia's nuclear sector or its representatives in its next sanctions package. Read more>>
• Commission Proposes to Renew Trade Benefits for Ukraine for a Year: The Commission has proposed today to renew the suspension of import duties, quotas and trade defence measures on Ukrainian exports to the European Union – known as the Autonomous Trade Measures (ATMs) – for another year. Read more>>
• Baltics and Poland Push to Make Sanctioning Oligarchs’ Associates Easier: The Baltic states and Poland want to make it easier to sanction the family members and entourage of Russia's richest men and women but are facing resistance from Hungary, several EU diplomats told. Read more>>
• Netherlands Publish Non-paper on Strengthening EU Sanctions Capacity and Countering Sanctions Circumvention: The Dutch government published a non-paper on EU sanctions capacity and countering circumvention, proposing to (i) strengthen the feedback loop between enforcement practice at national level and sanctions policy at EU-level, (ii) strengthen the EU point of contact for sanctions circumvention, (iii) identify concrete steps for diplomatic outreach and potential further measures, (iv) expand the EU-toolbox, (v) Expand listing capacities. Read more>>
• EU Top Diplomat Says China Will Cross ‘Red Line’ If It Sends Arms to Russia: It would be a “red line” for the European Union if China sends arms to Russia, the EU’s foreign policy chief said. Read more>>
• Netherlands Orders Expulsion of Russian Diplomats: The Dutch government ordered the expulsion of several Russian diplomats over Russia’s “continued attempts to place intelligence officers into the Netherlands under diplomatic cover”. Read more>>
• EU Citizens Remain Strongly in Favor of Ukraine and of Ensuring Energy Security: The latest Standard Eurobarometer survey published almost one year after Russia's full-scale invasion of Ukraine, shows continued strong solidarity of Europeans with Ukraine and their support for the actions undertaken to support the country and its people. Read more>>
• Finland’s Defense Ministry has Blocked an Attempt By Russian Citizens to Buy Property on National Security Grounds: The Finnish defense ministry announced it had blocked the purchase of property by Russian citizens, citing national security concerns to justify the move — the first time such reasoning had been used during the war on Ukraine. Read more>>
• Spain Refuses Entry to Tanker Carrying Oil from a Formerly Russia-Flagged Vessel: Spain’s Ministry of Transport, Mobility and Urban Agenda has announced that the Maersk Magellan, a Singapore-flagged vessel, was refused entry to the Port of Tarragona because it carried diesel that originated from another vessel, the Nobel, which had sailed under a Russian flag until 1 July 2022. Read more>>
• Belgian Justice Minister Warns of Sabotage Following Reports of Russian ‘Spy Ship’ in North Sea: Belgium's Justice Minister Vincent Van Quickenborne said European countries should not be "naive" about the presence of a Russian "spy ship" in the North Sea, amid growing concerns that Moscow could carry out acts of sabotage on infrastructure. Read more>>
• Spain and Finland to Send Leopard Tanks to Ukraine: Spain and Finland will send Leopard 2 battle tanks to Ukraine, the countries’ governments said. Read more>>

III. UK SANCTIONS

• Joint Declaration on the One-Year Anniversary of the Russian Invasion of Ukraine: On February 23, 2023, the UK published a joint declaration by the G7 diplomatic mission representatives to mark one year since Russia’s invasion of Ukraine. The nations wished to affirm that Russia’s war of aggression threatens not only Ukraine, but also the United Nations Charter and its principles. They added that a failure to address this fact would condone illegal aggression and increase the risk of other countries facing similar aggression. The members of the G7 reaffirmed their full support for Ukraine’s independence, territorial integrity and sovereignty within its internationally recognised borders. They noted that G7 members have imposed, and will continue to impose, economic sanctions against the Russian Federation targeting individuals and entities inside and outside Russia that provide political or economic support for Russia’s illegal attempts to alter the status of Ukrainian territory. Read more>>
• Chancellor Attends G20 Meeting to Reaffirm Support for Ukraine: On February 23, 2023, Chancellor Jeremy Hunt arrived in in India for G20 meetings, one year after Putin’s illegal invasion of Ukraine. He is set to attend the meeting of G20 Finance Ministers and Central Bank Governors alongside Bank of England Governor Andrew Bailey, showing a shared focus on tackling global economic issues. He will also attend a meeting of the G7. The Chancellor will reaffirm the UK’s unwavering support for Ukraine and discuss with other G20 members ways to address issues such as elevated global inflationary pressures and the instability in energy and food prices that are being exacerbated by the war. Read more>>
• UK Court to Decide Fate of Russian Securities 'Trapped' in London: On February 20, 2023, it was reported that administrators of Sova Capital, a collapsed London broker formerly controlled by Russian banker Roman Avdeev, sought UK court approval to sell Russian securities to Avdeev in a complex and novel attempt to shift illiquid Russian assets. Lawyers for Teneo, Sova's administrators, told the High Court that Avdeev, the broker's former controlling shareholder, plans to swap a £233 million ($280.30 million) creditor claim he has against Sova in return for a discounted purchase of its portfolio of Russian securities, valued in court filings at a notional 274 million pounds. Teneo lawyer Mark Phillips told the court that the portfolio of Russian stocks had become "trapped" inside Sova, which had offered foreign investors access to Russian markets. It went into special administration as a barrage of sanctions hit businesses with Russian ties last year. The case illustrates how Russian and offshore owners of assets rendered almost impossible to trade by war-related sanctions are testing exit routes, a year on from the start of the conflict. Read more>>
• Wagner Leader Passed UK Money Laundering Checks with Mother’s Utility Bill: On February 23, 2023, it was reported that Yevgeny Prigozhin accused of human rights abuses globally was able to pass UK anti-money laundering checks by submitting a utility bill in the name of his 81 year-old mother. Leaked emails show that London-based law firm Discreet Law in 2021 requested identification documents from the founder of the Wagner mercenary group, as part of anti-money laundering checks, before taking him on as a client. In response, Prigozhin’s Russian lawyers forwarded the law firm a copy of his passport and a gas bill in the name of the Wagner boss’s then 81-year-old mother for an address in St Petersburg. At the time the Wagner boss, whose fighters have been accused of crimes including mass executions and rape, was under sanctions by the US, EU and UK and had been placed on the FBI’s most wanted list of international fugitives. Revelations about the ease with which Prigozhin hired UK lawyers come at a time when the role of London as a hub for money laundering and economic crime has come under mounting scrutiny. Read more>>
• West Probes Potential Sanction Dodging as Exports to Russia’s Neighbours Surge: On February 23, 2023, it was reported that the UK, EU and US are set to share intelligence on possible sanctions dodging as they seek to push for tighter controls. EU, US and UK exports to Russia slumped by more than half in the May to July period last year when adjusted for inflation, compared with the average in 2017-19, according to EBRD data that lays bare the impact of sanctions. However, that drop coincides with a jump of more than 80 per cent in sales from Europe and the US to Armenia and Kyrgyzstan. Those two countries, in turn, more than doubled their exports to Russia during the same period, indicating a possible diversion of trade via new routes. Exports of products including vehicles, electronics, agricultural machinery and pumps from the EU to Central Asia increased, mainly driven by Kazakhstan. One of the possible drivers behind the shifting trade patterns is that western companies are voluntarily withdrawing from direct sales to Russia even when products are not subject to sanctions. Read more>> 
• UK and Other Countries Vow Support for Ban on Russian & Belarusian Athletes: On February 20, 2023, it was reported that more than 30 countries, including the UK, the US and France, pledged their support for banning Russian and Belarusian athletes from competing in international sporting events. The move increases the pressure on the International Olympic Committee (IOC), which is desperate to avoid the 2024 Paris Olympics being divided or overshadowed by Russia's invasion of Ukraine. "There are serious concerns about how feasible it is for Russian and Belarusian athletes to compete on a neutral basis given they are directly funded and supported by their states," added a British government statement. Ukraine has threatened to boycott the Games if Russian and Belarusian athletes compete. Read more>>
• UK House of Commons Research Briefings on Russia Sanctions: The House of Commons Library has published research briefings on ‘Sanctions against Russia’ and ‘Post-conflict reconstruction assistance to Ukraine’. ‘Sanctions against Russia’ covers: (i) the UK sanctions regime prior to 2022; (ii) sanctions imposed by the UK in response to Russia’s aggression against Ukraine; (iii) the coordination of sanctions with allies, including the US, EU, G7 and other countries; and (iv) the imposition of third country sanctions (including on Belarus, Iran and Syria). ‘Post-conflict reconstruction assistance to Ukraine’ covers: (i) the conflict; (ii) reconstruction assistance; and (iii) whether sanctioned assets could be used for the reconstruction of Ukraine, including domestic (UK) legal issues, international legal questions and international initiatives for seizing sanctioned assets. Read more>> and Read more>>
• Liz Truss Says UK Should Have ‘Done More Earlier’ to Counter Putin: On February 20, 2023, speaking in a House of Commons debate about Ukraine, former British Prime Minister Liz Truss argued the U.K. should have “done more earlier” to counter Vladimir Putin’s rhetoric before he invaded Ukraine, and said the West depended on Russian oil for too long. The former prime minister, who served as foreign secretary for Boris Johnson before succeeding him as Prime Minister, recalled receiving a phone call at 3.30 a.m. on the morning of the invasion, and told MPs: “This was devastating news. But as well as being devastating, it was not unexpected.” Truss praised the “sheer bravery” of Ukrainians defending their country, as well as Ukrainian President Volodymyr Zelenskyy and his Cabinet for not fleeing the country in the aftermath. While Truss argued Western sanctions had imposed an economic toll on Putin’s Russia, said urged reflection. “The reason that Putin took the action he took is because he didn’t believe we would follow through,” she argued, and said the West should “hold ourselves to high standards.” Read more>>

IV. RUSSIA/UKRAINE SANCTIONS

• Ukraine Imposes 50-Year Sanctions on Russian Financial Sector: On February 23, 2023, it was reported that Ukraine's parliament imposed sweeping 50-year sanctions on Russian financial institutions including the central bank, all commercial banks, investment funds, insurers and other enterprises. The sanctions are part of moves by Kyiv to maintain financial pressure on Russia over its full-scale invasion of Ukraine last year. "It is a complete block on financial institutions of the Russian Federation accessing markets and assets in Ukraine. A complete block," Andriy Pyshniy, governor of the National Bank of Ukraine, said on Facebook. Economy Minister Yulia Svyrydenko said the sectoral sanctions would affect hundreds of banks and tens of thousands of financial institutions registered in Russia. The measures include a ban on transactions with assets owned by the Russian Federation's financial institutions, a ban on establishing business relations and a ban on transactions and investments in Russian financial institutions. Read more>>
• Ukraine Adds 333 individuals and 1 Legal Entity to Sanctions List: On 19 February, Ukraine extended sanctions to 333 new individuals and 1 legal entity (Moscow Stock Exchange MMVB-RTS). The list of sanctioned individuals includes multiple representatives of the Russian banks and financial sector. Read more>>
• EU and UK Extend Duty-Free Trade with Ukraine for 1 Year: The Government of the United Kingdom extended temporary liberalization of all tariffs for imports from Ukraine until early 2024. Similar step was proposed by the European Commission on 23 February. The steps are aimed at renewal of the existing suspension of import duties, quotas and trade defense measures on Ukrainian exports. Read more>> and Read more>>
• Ukraine Labels Auchan a Sponsor of the War: The National Agency for Prevention of Corruption included the French corporation "Auchan" in its list of international war sponsors. The announcement followed the publication of a joint investigation by French daily Le Monde and investigative websites Bellingcat and The Insider, which revealed that Auchan sent free goods to the Russian army on the frontlines. Read more>> and Read more>>
• Putin Permits Subsidiary of Gazprom Neft to Buy Half of Shell’s Business in Salym Joint Venture: President Vladimir Putin signed an executive order that permitted a Gazprom Neft subsidiary to buy half of Shell's stake in the Salym Petroleum Development joint venture. On February 28, 2022, after the start of Russia's military operation in Ukraine, Shell announced its intention to withdraw from all joint ventures with Gazprom. Read more>>
• Ukraine Wants Grain Deal Extension to Include New Ports: On February 22, 2023, it was reported that Ukraine will ask Turkey and the United Nations this week to start talks to continue the Black Sea grain deal, seeking an extension of at least one year that would include the ports of Mykolaiv. The Black Sea Grain Initiative brokered by the UN and Turkey last July allowed grain to be exported from three Ukrainian ports. The agreement was extended in November and will expire on March 18, unless an extension is agreed. Ukraine will insist on an increase in the number of inspection teams "in order to eliminate the accumulation of vessels waiting for inspections". Ukraine has repeatedly accused Russia of delaying inspections of ships carrying Ukrainian agricultural goods, leading to reduced shipments and losses for traders. Russia has denied those accusations, saying it is meeting all its obligations under the grain export deal. Read more>>
• Russian Economy Holding Up but Long Road to Prosperity: On February 23, 2023, it was reported that Russia's economy which proved unexpectedly resilient in the face of tough Western sanctions last year, will struggle to return to pre-conflict levels of prosperity as more government spending is directed towards the military. Even internal forecasts made soon after Moscow sent troops into Ukraine a year ago had predicted the economy would shrink by more than 10% in 2022, exceeding the slumps seen after the Soviet Union collapsed and during the 1998 financial crisis. However, statistics agency Rosstat's first estimate shows a more modest contraction of 2.1% last year. High prices for its energy exports helped cushion the blow from sanctions aimed at isolating Russia economically, while capital controls saw the rouble strengthen to a seven-year high. A collapse in imports led to a record current account surplus. Read more>>
• Investment Houses Increasingly Pessimistic about Ability to Recover Funds Frozen in Russia: On February 23, 2023, it was reported that stock dividends, interest payments on bonds and anything else that Western investors didn’t sell before the war has all been trapped by sanctions. As Russia’s invasion of Ukraine begins a second year and anti-war demonstrations took place this week, questions remain about what will happen to the cash stuck in Moscow. Legally, the money belongs to some of the biggest investment houses, like JPMorgan Asset Management and Schroders Plc, but privately most acknowledge there’s no hope of recovery. For instance, JPMorgan Asset Management’s Emerging EMEA investment trust told clients that the Russian companies it held continued to pay dividends, with approximately £6.3 million ($7.6 million) frozen in C-accounts as of Jan. 4, though it stressed the money was not accessible. Read more>>
• Zelenskyy Plans to Attend July NATO Summit in Vilnius: On February 22, 2023, it was reported that Ukraine's President Volodymyr Zelenskyy plans to attend in person a NATO summit taking place in Vilnius in July. Zelenskyy has made only two foreign trips since Russia invaded Ukraine almost a year ago – one to Washington in December and another to London, Paris and Brussels in February. The Vilnius summit on July 11-12 will be attended by most leaders of the Atlantic alliance. That includes U.S. President Joe Biden, who unexpectedly visited Kyiv this week. Ukraine hopes attendees at the summit would agree "very clearly that as soon as the war is over, Ukraine becomes a member of NATO", the Ukraine ambassador said. Read more>>
• Russia Says Lavrov and Wang Yi Did Not Discuss 'Chinese Peace Plan': On February 22, 2023, it was reported that Russian Foreign Minister Sergei Lavrov and China's top diplomat Wang Yi did not discuss a reported Chinese plan to resolve the conflict in Ukraine when they met on Wednesday. Wang, the highest-ranking Chinese official to visit Russia since it invaded Ukraine almost a year ago, met President Vladimir Putin and Lavrov separately amid speculation the two sides would discuss a possible Chinese peace plan for Ukraine. Russia said it welcomed China taking a more active role in efforts to resolve the conflict in Ukraine and said it valued China's "balanced approach", with Beijing signalling it was ready to take a "constructive role". While China has taken a nuanced stance on the conflict, criticising Western sanctions against Russia but stopping short of endorsing the war, both countries share a vision of limiting what they see as Western dominance over global affairs. Read more>>
• Survey: 87% of Ukrainians Oppose Territorial Concessions: Eighty-seven percent of Ukrainians oppose territorial concessions, according to the results of a survey the Kyiv International Institute of Sociology conducted between Feb. 14-22. Only 9% of Ukrainians surveyed believe that some territories can be given up in order to achieve peace and preserve independence. The survey also notes that these results are more or less standard across all regions of Ukraine. Read more>>
• Russia Suspends Participation in Nuclear Treaty with US: Russia has suspended its participation in the New START treaty. The nuclear arms reduction treaty between the U.S. and Russia was signed in 2010 in Prague. The treaty limits the size and composition of the U.S. and Russian nuclear arsenals. It was the only remaining arms control agreement between both countries. Read more>>
• Tobacco Group Admits It May Never Sell Its Russian Business: On February 22, 2023, it was reported that Philip Morris International has admitted it would “rather keep” its business in Russia than sell on stringent Kremlin terms, highlighting the challenges for companies trying to leave the country without taking a huge financial hit. Chief executive Jacek Olczak of the tobacco group, which sells Marlboro cigarettes outside the US, had been in discussions with at least three “serious” potential buyers but “the talks have stalled because nobody knows how [to] can make it work”. Many western companies vowed to exit Russia immediately after last year’s invasion of Ukraine, but less than 9% of EU and G7 groups in the country had left by the end of December. Olczak’s comments underscore the bureaucratic difficulties for companies now seeking to divest their Russian assets and the potential cost of giving up on the country’s market. Read more>>

V. OTHER NOTABLE DEVELOPMENTS

• G7 to Establish Mechanism to Coordinate Enforcement of Russia Sanctions: On February 23, 2023, it was reported that the G7 is planning on establishing an ‘Enforcement Coordination Mechanism’ for coordinating the enforcement of Russia sanctions. It seeks to improve information sharing and sanctions enforcement directed at countries and firms suspected of helping Russia in Ukraine through circumvention of sanctions. Read more>> and Read more>> 
• Australia Announces Additional Sanctions on Russia, Drones for Ukraine: On February 23, Australian Prime Minister Anthony Albanese announced that the country would impose sanctions, including travel bans and asset freezes, on 90 Russian individuals and 40 Russian entities, including Russian news outlet Sputnik and the head of the Russian Orthodox Church Patriarch Kiril. Prime Minister Albanese also announced that the country would provide $33 million in unarmed drones to Ukraine. The announcement was done in commemoration of the first anniversary of the start of the war in Ukraine. Read more>> 
• New Zealand Announces Additional Sanctions on Russia: On February 23, New Zealand Foreign Minister Nanaia Mahuta stated that the country had imposed sanctions on 87 individuals, including members of the Central Election Commission of the Russian Federation, who Mahuta said “sought to legitimise the attack on Ukraine’s sovereignty through sham referenda in the illegally annexed regions of Ukraine”. The move is intended to commemorate the first anniversary of the start of the Russian invasion of Ukraine. Read more>> 
• Japan Announces $5.5 Billion in Financial Assistance for Ukraine: On February 20, Japanese Prime Minister Fumio Kishida announced that the country would provide Ukraine with an additional $5.5 billion in financial aid for Ukraine. The commitment comes shortly before the one-year anniversary of Russia’s invasion of Ukraine, and an online G7 summit, hosted by Japan, where Ukrainian President Volodymyr Zelenskyy is expected to appear. Read more>>
• Switzerland Prepares Aid Package for Ukraine, Moldova: On February 22, the Swiss government sought parliamentary approval for a new $151 million aid package for Ukraine. Most of the funds will be destined for Ukraine, where they will be used for de-mining operations, mental health support, and infrastructure repairs. Read more>>
• China Pushes Back on US Comments Regarding Assistance to Russia: In prepared remarks on February 21, China’s new Foreign Minister Quin Gang stated that he was “deeply concerned” about the war in Ukraine “spiralling out of control”. He added, “We urge certain countries to immediately stop fuelling the fire, stop shifting blame to China, and stop hyping up Ukraine today, Taiwan tomorrow.” The comments come days after US Secretary of State Antony Blinken confirmed China was supplying Russia with non-lethal assistance, and warned the country to not provide Russia with lethal assistance. Read more>>
• Host India Does Not Want G20 to Discuss Further Russia Sanctions: On February 22, 2023, it was reported that India does not want the G20 to discuss additional sanctions on Russia for its invasion of Ukraine during New Delhi's one-year presidency of the bloc, six senior Indian officials said, amid debate over how even to describe the conflict. The officials, who are directly involved in this week's G20 meeting of finance ministers and central bank chiefs, said the economic impact of the conflict would be discussed but India did not want to consider additional actions against Russia. Indian Prime Minister Narendra Modi's government has not openly criticised Moscow for the invasion and instead called for dialogue and diplomacy to end the war. India has also sharply raised purchases of oil from Russia, its biggest supplier of defence hardware. Read more>>
• Xi Jinping Planning Visit to Russia: On February 21, The Wall Street Journal reported that Chinese President Xi Jinping is planning to visit Moscow in the coming months. Though timing has not yet been finalized, sources expect the visit to occur in April or May. The announcement comes after top diplomat Wang Yi visited high ranking officials in Moscow, where the two discussed the strength of Russia-China relations. Read more>>
• US, France, Others Oppose Russian Participation in 2024 Olympics: On February 20, representatives from 34 nations, including the US, Canada, the UK, and France (the 2024 Olympics host country), sent a letter to the International Olympic Committee calling on the Committee to reconsider its decision to allow Russian and Belarussian athletes to participate in the coming 2024 summer Olympics. Read more>>
• Russia Offers Weapons for Sale at Abu Dhabi Conference: On February 20, Russian representatives offered weapons for sale at the biennial International Defense Exhibition and Conference held in Abu Dhabi. The AP reported that the Russian Minister of Trade and Industry Denis Manturov, who is subject to US and UK sanctions, was present at the Russian exhibition table. Read more>>
• Moldova Calls for Increased EU Sanctions: In a February 20 interview with DW, Moldovan Foreign Minister Nicu Popescu called on the EU to impose sanctions on the “oligarchs… who are working shoulder to shoulder with Russia to destabilize” Moldova. Moldova’s pro-western government resigned earlier in the month and the country is experiencing unrest as the new government takes power. Read more>>
• Swiss Imports from Russia Rise in January: According to customs data, Swiss imports from Russia rose by almost a fifth of a percent in January, as compared to December 2022. The increase in imports included imports of Russian gold, imported to Switzerland through the UK. Switzerland currently has a ban on Russian origin gold imports exported after August 4, 2022, but, since the gold was imported through the UK and exported from Russia at an earlier date, the restrictions were not implicated. Read more>>
• Investigation Reveals Only 18 Swiss Companies Have Left Russia Entirely: On February 19, Swiss newspaper SonntagsZeitung reported that 53 Swiss entities had left Russia in some capacity, with major companies like ABB, Holcim, Vitol, Lindt, and Geberit planning to leave the country entirely. Companies that had not yet completed their withdrawal from Russia indicated that they were experiencing administrative difficulties in leaving the country entirely. Ems-Chemie, Liebherr, Krono, and Zepter had not modified their operations in Russia at all, citing a desire to not let Russians take control of their operations. Read more>>
• Defense Industry Shares Soar on Western Backing for Ukraine: On February 23, 2023, it was reported that shares in defense companies have surged in recent months, eclipsing gains for wider stock markets, as investors bet on the promises of increased military spending by western governments to help Ukraine’s war effort against Russia. An MSCI global benchmark for the sector is up almost 30% in dollar terms since the start of October, 15 percentage points more than the broader gauge of worldwide equities. Europe’s Stoxx aerospace and defence index has risen just over a third over the same period. The gains reflect a growing conviction among investors that the conflict is unlikely to end quickly. Defence contractors are now waiting for governments to follow through and place new orders. The biggest investors in European defence stocks with exposure to events in Ukraine are mostly US companies. Eight of Rheinmetall’s top 10 shareholders are based in the US, as are seven of Italian defence group Leonardo’s and eight of BAE’s. European investors with a greater focus on environmental, social and governance issues were more lukewarm, one analyst said. Read more>>