juin 09 2023

Sanctions Weekly Update – Ukraine/Russia Conflict – June 5, 2023

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

Week of June 5, 2023

I. US SANCTIONS

OFAC Sanctions Russian Intelligence-Linked Malign Influence Actors Targeting Moldova: On June 5, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced that it is imposing sanctions on seven leading members of a Russian intelligence-linked malign influence group, who had contributed to the Russian government’s destabilization campaign and continued malign influence campaigns in Moldova. An entity owned or controlled by one of these individuals was also designated. According to the OFAC, the sanctioned actors are part of a large global information operation that targets Ukraine, the Balkans, EU, the UK and the U.S., having roles in provoking and training of groups in democratic countries that conduct anti-government protests and rallies. Some of these actors maintain ties with Russian intelligence services on matters such as planning and budgeting for these activities. Read more>> and Read more>>
U.S. Reaffirms Support to Ukraine’s Cyber Defense in Annual Cyber Dialogue: On June 1, the delegations of the U.S. and Ukraine met in Tallinn, Estonia to re-convene the U.S.-Ukraine Cyber Dialogue, an annual discussion on cyber policy issues. During the dialogue, the U.S. delegation reiterated its commitment to support Ukraine’s cyber defense in the face of Russia’s invasion, and highlighted its current ongoing work with Congress to deliver an additional $37 million in cyber assistance to Ukraine, strengthening the country’s capacity to detect, deter, and respond to cyber threats, as well as protect critical networks and digital infrastructure. Both sides also shared their perspectives on the role of cybersecurity in Ukraine’s long-term digital development, and how the two nations can collaborate in the future on cyber issues. Read more>>
U.S. Takes Russian Oligarch’s Abandoned Yacht Off of Sanctions List: On June 1, the Wall Street Journal reported that an abandoned yacht linked to sanctioned Russian oligarch Andrey Grigoryevich Guryev has been taken off U.S. sanctions lists, allowing the Caribbean nation of Antigua and Barbuda to remove the derelict vessel from its waters. The vessel, called the Alfa Nero, was said to be purchased by Guryev in 2014, and was later seized by Antigua and Barbuda after it was reportedly abandoned. The present removal of sanctions on the vessel would allow the Caribbean nation to execute its plan to sell the ship and retain the proceeds. Read more>>
Secretary of State Calls Ukrainian Counterpart: On June 8, Secretary of State Antony Blinken spoke with Ukrainian Foreign Minister Dmytro Kuleba. The two discussed efforts to combat Russian attacks on Ukrainian infrastructure, and the Foreign Minister’s recent trip to Africa. Read more>>
USAID Rolls Out Collaboration to Support Ukrainian Farmers: On June 5, the U.S. Agency for International Development (USAID), through the Agriculture Resilience Initiative – Ukraine (AGRI-Ukraine), announced a new collaboration with Corteva Agriscience (Corteva) to help meet Ukrainian farmers’ immediate and long-term needs for sunflower and corn seeds, crop protection, and financing. This will be done by increasing production in the region over the next 5 years, as well as increasing Ukrainian farmers’ access to the latest crop protection technologies, agronomic support, and financing tools. Read more>>
Secretary Blinken Delivers Speech on Russia’s Strategic Failure and Ukraine’s Secure Future: On June 2, during his trip to Helsinki, Finland, Secretary of State Antony Blinken delivered a speech at an event addressing Russia’s strategic failure and Ukraine’s secure future. Among other things, Secretary Blinken highlighted the U.S.’s response in Russia’s invasion of Ukraine, including the continuous provision of assistance to Ukraine, the imposition of economic costs on Russia, and the strengthening of cooperation with allies and partners. He also discussed how these efforts have greatly diminished Russia’s power, interests and influence in the long run, rendering the country’s war of aggression against Ukraine a “strategic failure.” Read more>>
18th Brussels Forum Discusses Public-Private Partnership and Ukraine Reconstruction: On June 5, Department of State reported that on May 23-24, 2023, Special Representative for Global Partnerships Dorothy McAuliffe travelled to Brussels, Belgium to join the German Marshall Fund of the United States’ 18th Brussels Forum, A New Atlanticism: Building a Marshall Plan for Ukraine, to discuss the role of public-private partnerships in Ukraine reconstruction. During the forum, Special Representative McAuliffe discussed opportunities in Ukraine’s infrastructure, energy, technology, agriculture, and small business sectors, and highlighted ongoing U.S. efforts to mobilize private sector investment in Ukraine’s economy, including political and war risk insurance and equity and debt financing. Read more>>

II. EU SANCTIONS

EU Commission Updates its Guidance on Media Related Sanctions: On 8 June 2023, the EU Commission updated its FAQ on Media related sanctions with a question on internet subdomains and newly created domains. Read more>>
EU Extends Trade Benefits for Ukraine: The suspension of import duties, quotas and trade defense measures on Ukrainian exports to the European Union are in place for another year. Read more>>
EU Extends Ukraine-Related Sanctions to Family Members of Businesspersons: The EU has extended the scope of the Russia-Ukraine sanctions regime to family members of businesspersons. Through this extension, the Council sought to reduce the circumvention of restrictive measures by allowing the direct designation of family members and other natural persons benefitting from Russian businesspersons, preventing those businesspersons from “hiding their assets”. Read more>>
Political Agreement on New Anti-Coercion Instrument to Better Defend EU Interests on Global Stage: The European Parliament and the Council have today reached a final political agreement on the Anti-Coercion Instrument (ACI). This new tool will enable the EU to respond to economic coercion, and therefore to better defend its interests and those of its Member States on the global stage. Read more>>
Russian Opposition Slams Sanctions Loopholes: Russian opposition figures called on lawmakers to close sanctions loopholes and set up an ad hoc body modeled on the U.S. Office of Foreign Assets Control. Read more>>
EU Lists Individuals Responsible for Vladimir Kara-Murza’s Sentencing and Degrading Treatment: The Council imposed restrictive measures against nine individuals, under the Global Human Rights Sanctions Regime, for sentencing the Russian opposition politician, democracy activist and outspoken Kremlin critic Vladimir Kara-Murza to 25 years in prison on politically motivated charges and false allegations. Read more>>
New Attempt to Reach Sanctions Deal Next Week: The Commission presented another version of the sanctions’ proposal ahead of the meeting on Wednesday, but this didn’t lead to a deal. EU ambassadors will now discuss the proposal again at their meeting next Wednesday June 14, hoping to come to an agreement then. Read more>>
Russian Wineries Maintain Production Despite EU Sanctions: Russian wine suppliers have been facing difficulties due to EU sanctions. But Putin's favorite vintners have been trying to import material from Portugal and France through third-party countries. Read more>>
EU Could Ban Russian Gas Imports This Year, Austrian Government Advisor Says: Russian pipeline gas exports to Europe could be banned as early as the end of this year if a number of preliminary measures are put in place. Read more>>
Russian Oil Supplies to EU Via Southern Druzhba to Rise 16% in June: Russia's piped supply of Urals crude to the European Union via the southern Druzhba pipeline in June is set to increase by 16% compared to May as EU refiners seek to secure more oil amid fears of disruptions in transit via Ukraine, two sources said. Read more>>
EU Extends Import Curbs on Ukrainian Grain, Diplomats Say: The EU executive is set to announce the extension until mid-September of temporary import curbs on Ukrainian grain and oilseeds that were due to expire Monday. Read more>>
The General Court Dismisses the Action Brought by Mr. Aleksandr Vasilevich Shakutin Against the Restrictive Measures Imposed on Him: In today’s judgment, the General Court dismisses Mr. Shakutin’s action and therefore upholds the restrictive measures imposed on him. According to the General Court, the Council has established to the requisite legal standard that Mr. Shakutin was one of the leading businessmen operating in Belarus, one of the individuals who most benefited from privatization during Lukashenko’s tenure as President, and a member (or former member) of the CDE, and, as such, benefited from and supported the Lukashenko regime. Read more>>
Irish High Court Order Winds Up Two Russian Aircraft Leasing Firms Worth Estimated €4.1bn: On May 31, 2023: it was reported that the Ireland's High Court ordered the winding up of two sanctions-hit state-owned Russian leasing firms based in Ireland after a group of creditors said the companies had no prospect of clawing back an almost $1.6 billion net deficit. GTLK Europe DAC and GTLK Europe Capital DAC, whose main business is aircraft leasing, had sought to prevent the appointment of liquidators by applying for court protection from creditors, citing a decree by Russian President Vladimir Putin to relieve $1.5 billion of debt. The court rejected this request, noting that the possible appearance of certain assets in the future did not amount to the creation of a reasonable chance of survival for the firm. Read more>>
EU Imposes Sanctions Against Russian Judges in Kara-Murza Case: The EU has imposed sanctions over Kara-Murza case against investigators, judges and the head of Vodnik pre-trial detention center. The EU strongly condemned the decision of a Moscow court to sentence the opposition politician, democratic activist and outspoken Kremlin critic Vladimir Kara-Murza to 25 years in prison on politically motivated charges. Read more>>

III. UK SANCTIONS

New UK Belarus Regulations: On June 8, 2023, the Foreign, Commonwealth & Development Office introduced new Belarus sanctions regulations, the Republic of Belarus (Sanctions) (EU Exit) (Amendment) Regulations 2023, which come into force on June 9, 2023. The new measures give the government grounds to prevent designated Belarusian media organisations from spreading propaganda in the UK, including over the internet, as the regime continues to actively facilitate Russia’s invasion of Ukraine and spread false narratives. These regulations amend the Republic of Belarus (Sanctions) (EU Exit) Regulations 2019 by:
- Changing the designation criteria, which allows the FCDO to more effectively target those persons that are involved in supporting Russia’s invasion of Ukraine. This includes persons with the ability to nominate, appoint or remove a director or members of management and supervisory bodies of relevant entities and persons that work for, or are affiliated to, Belarusian authorities;
- Amending the dealing with transferable securities or money market instruments measure;
- Introducing new measures relating to internet services and online media;
- Introducing new exports prohibitions on machinery; banknotes; and precursor materials for chemical and biological weapons and technology;
- Introducing new import prohibitions on cement, rubber, wood and gold; and
- A ban on ancillary services for all prohibited goods, including technical assistance and financial and brokering services. Read more>>, Read more>>, Read more>> and Read more>>
OFSI Updates LCIA General Licence INT/2022/1552576: On June 5, 2023, the Office of Financial Sanctions Implementation updated the General Licence (GL) INT/2022/1552576 “London Court of International Arbitration (LCIA) Payments” under Regulation 32 of the Republic of Belarus (Sanctions) (EU Exit) Regulations 2019 and under Regulation 64 of the Russia (Sanctions) (EU Exit) Regulations 2019. The GL allows Designated Persons (DP), companies owned and controlled by DPs or their legal representatives to make payments to the London Court of International Arbitration to cover their arbitration costs. The GL was updated to:
- edit the definition of a DP so that it includes individuals or bodies controlled by the DP and adds definitions of DP representatives and non-DP Arbitral Parties;
- allow DP Representatives to pay funds to the LCIA to cover Arbitration Costs;
- allow DPs or DP Representatives to transfer funds to their Legal Representatives for onward payment to the LCIA to cover Arbitration Costs; and
- allow Non-DP Arbitral Parties to pay Substitute Deposit(s) to the LCIA. Read more>>
OFSI Updates Agricultural Commodities General Licence INT/2022/2349952: On June 6, 2023, the Office of Financial Sanctions Implementation updated the General Licence (GL) INT/2022/2349952 “Transactions Related to Agricultural Commodities Including the Provision of Insurance and Other Services” under regulation 64 of The Russia (Sanctions) (EU Exit) Regulations 2019. The GL was updated to allow the Grain and Feed Trade Association (GAFTA) to receive funds from any person in connection with the direct and indirect provision of services related to contracts for the trade in agricultural commodities, by or on behalf of GAFTA. Read more>>
Financial Sanctions Update: ISIL (Da'esh) and Al-Qaida: On June 5 and 6, 2023, the Foreign, Commonwealth and Development Office updated the UK Sanctions List. Under the ISIL (Da'esh) and Al-Qaida sanctions regime, the list was updated to (i) amend the details of individual Merai Abdefattah Khalil Zoghbi; and (ii) remove individuals Abd Al-Aziz Aday Zimin Al-Fadhil and Hamad Awad Dahi Sarhan Al-Shammari from the designation. Read more>> and Read more>>

IV. RUSSIA/UKRAINE SANCTIONS

Russia & Oman Sign Agreement to Avoid Double Taxation: On June 8, 2023, it was reported Oman and the Russian Federation signed an agreement on the avoidance of double taxation and the prevention of tax evasion for income taxes. The agreement aims to legally protect investors from imposing double taxes and regulate the imposition of tax between the two countries, which will contribute to enhancing investments and trade exchanges between them. The agreement with Oman sets out a general 15% withholding tax on dividend income and a reduced rate of 10% for companies holding at least a 20% stake in the dividend payer. Read more>>
World Bank Decreases Ukraine's GDP Growth Forecast For 2023: On June 7, 2023, it was reported that the World Bank published its June 2023 report setting set Ukraine's GDP forecast for 2024 at 2%, compared to 3.3% in January 2023. The forecast reportedly worsened due to Russia's attacks against Ukraine's energy infrastructure at the end of 2022 and the departure of a significant part of the country's working demographic abroad. The World Bank estimates Ukraine's reconstruction and restoration costs to be 2.6 times the level of its GDP for 2022. The data used by the World Bank went up to May 30 2023, not taking into account the impact of the Kakhovka dam flood. The National Bank of Ukraine (NBU) increased its GDP growth forecast on March 29 from 0.3% to 1%. The NBU highlighted the influx of international aid and stabilisation in Ukraine's energy sector. Read more>>
Ukraine, OECD Sign 4-Year Reconstruction, Reform Agreement: On June 7, 2023, the Organization for Economic Co-operation and Development (OECD) announced that it had signed a four-year partnership agreement with the Ukrainian government to support reform, recovery, and reconstruction in Ukraine. General Mathias Cormann, head of the OECD announced that the Country Program has been developed in close co-operation with and reflects the priorities of the government of Ukraine. With a focus on stronger institutions and governance, continuing the fight against corruption, attracting private sector investment, and laying the foundations for long-term well-being and opportunities for the people of Ukraine. Read more>>
World Bank Lifts Russia Growth Forecast on Resilient Energy Exports: On June 6, 2023, it was reported the World Bank has improved its outlook for the Russian economy for 2023 due to stronger-than-expected revenues from energy exports to countries including India and China. The Russian economy is now forecasted to contract only slightly in 2023, marking a sharp change from its previous prediction of a more pronounced economic contraction. Read more>>
Russian Oilfield Service Sees Record Revenue in 2022: On June 2, 2023, it was reported that Russian oilfield service companies earned record revenues in 2022 after major foreign players exited the market. Russian oilfield services earned 1.79 trillion rubles ($22.2 billion) in 2022, the highest figure since 2018. The international presence in the Russian oilfield services sector has shrunk from 15% to 9%, primarily due to exits by U.S. companies Baker Hughes and Halliburton. Read more>>
Putin Proposed to Use Only Cars from Russia in Taxis and Car Sharing: On June 6, 2023, it was reported that President Vladimir Putin announced instructions that the Russian government will consider the development of requirements for the use of Russian-made cars in taxis and car sharing. The list of instructions published on the Kremlin’s website, are to consider the development and application of requirements for the localisation of the production of cars used in the provision of passenger transportation services by passenger taxi and car-sharing services, taking into account the possible volumes of their production by the Russian automotive industry. Read more>>
Polymetal Considers Divestment of Russian Business: On June 5, 2023, it was reported that gold and silver producer Polymetal International is considering divesting its Russian operations and senior managers have resigned from Russia-related duties after the imposition of U.S. sanctions. Polymetal published a statement outlining that in light of recent developments, and in the interests of preserving shareholder value, the board and the special committee have decided to consider all possible options available for divestment of JSC Polymetal and its subsidiaries. Read more>>
Russia Plans to Increase Oil Supplies to EU by Pipelines by 16% in June: Deliveries of Russian Urals oil to the EU via the southern branch of the Druzhba pipeline in June will increase by 16% compared to May, as EU refineries seek more oil amid fears of disruptions in transit through Ukraine. The southern branch of the Druzhba oil pipeline supplies oil to Hungary, Slovakia and the Czech Republic. Hungary's MOL, the main buyer of Urals crude in Hungary and Slovakia, is expected to buy about 900,000 tonnes of Urals through Druzhba in June, up from 750,000 tonnes in May. Read more>>
Sanctioned Shareholder of Ukrainian Sens Bank Asks the Ukrainian Authorities to Allow its Sale to an Investor: The nominal owner of the shares of "Sens Bank" (until December 2022 - "Alfa-Bank") ABH Holdings SA asked the Council of National Security and Defense to allow an agreement under which the bank's shares will be sold to a European investor. The company claims that the funds from the sale will not go to the sanctioned owners. It is reported that Ukrainian authorities have firm plans to nationalize Sens Bank. Read more>>
Ukraine Sends a Note to the European Commission on Russia's Construction of a Nuclear Power Plant in Hungary: Ukrainian Prime Minister Denys Shmyhal announced that Ukraine sent a note to the European Commission regarding possible intensification of cooperation in atomic energy between the EU and Russia. According to him, sanctions against Russia should be extended to the nuclear industry, while the construction of a nuclear power plant by Rosatom in Hungary, against the background of the disaster at the Kakhovskaya HPP and the occupation of the Zaporizhzhya NPP, looks "surreal". Read more>>
Wheat Prices Rise after Kakhovka Dam Explosion: Wheat prices rose by 3% after the explosion of the Kakhovka dam in southern Ukraine on June 6, according to the market data tracking service Barchart Trader. Read more>>
Russian Government Extends Simplified Import of Medicines to Russia: The decision will be valid until the end of 2024 and “will help maintain the stability of the medicines market, which has been affected by the consequences of external sanctions,” the government said in a statement. Medicines that can be registered under the simplified procedure are determined by a governmental commission. Read more>>
Russia Declares a 19-fold Increase in Oil Supplies to India Last Year: Russia has become the leading supplier of oil to India, with fuel exports to that country growing 19-fold last year. Deliveries of oil products to India have also doubled and coal supplies have tripled. This ranks Russia first among the leading fuel suppliers to the country, said Russian Deputy Prime Minister Alexander Novak. Read more>>

V. OTHER NOTABLE DEVELOPMENTS

Japan Stresses Importance to Maintain Russia Sanctions Over Ukraine: On June 2, Japan’s foreign minister Yoshimasa Hayashi said that the G7 and like-minded countries must be united and maintain sanctions on Russia until it ends its aggression in Ukraine, according to reports. He also expressed his hope that sanctions would encourage Russia to end its aggression as soon as possible, so that countries can reach the phase of using dialogues and peace talks. Read more>>
Australia Considers Sending Retired Fighter Jets to Ukraine: On June 6, reports emerged that Australia may send its 41 retired F/A-18 Hornet fighter jets to Ukraine, and is discussing this possibility with its American and Ukrainian partners. The transfer would require permission from the U.S. as the latter owns intellectual property on the fighter jets, but although Washington is reportedly “favorably disposed to the idea,” a specific deal is yet to be finalized. Read more>> and Read more>>
Arms Contract Shows Iran has Sold Russia Ammunition for Ukraine War, Says Security Source: A purported arms contract seen by Sky News offers the first hard evidence that Iran has sold ammunition to Russia for its war in Ukraine, an informed security source has claimed. If authentic, the 16-page document, dated 14 September 2022, appears to be for samples of varying sizes of artillery and tank shells and rockets worth just over $1m. Read more>>
Swiss Parliament Allows Re-Export of Arms to Ukraine: On June 7, Switzerland’s Council of States, the upper house of parliament, allowed the re-exporting of arms to Ukraine with 22-17 votes amid oppositions that it may contradict the country’s neutrality, according to reports. In a statement published by the council, the new provision that “countries purchasing Swiss war materiel should be allowed, subject to conditions, to re-export it to countries involved in armed conflicts” would be retroactive, but re-exports would only be permitted to “destination countries that do not violate human rights and do not use arms against the civilian population.” Read more>>
Acer Continues to Ship Hardware to Russia: Reuters reported on June 8 that Taiwan-based computer manufacturer Acer had supplied $70.4 million in computer hardware to Russia between April 2022 and March 2023, despite promises from the company to cut off business ties with Russia. The shipments were organized through a wholly owned subsidiary in Switzerland, according to customs data seen by the news agency. Read more>>
China Sees Largest Trade Increase with Russia in 2023, Chinese Customs Data Shows: On June 7, 2023, it was reported that data from the China’s General Administration of Customs showed that Bilateral trade between Russia and China totalled more than $93.8 billion from January to May in 2023, a 40.7% increase compared to the same period in 2023. The data is reported to have shown that China’s exports to Russia have reached $42.96 billion since January 2023, a 75.6% increase compared to 2022. The numbers of total trade values and total exports have seen their biggest jumps since the start of Russia’s invasion of Ukraine, with Russia becoming China’s fastest-growing trade partner in the world. Read more>>
Some NATO Members May Consider Sending Troops to Ukraine: Some NATO countries may decide to put troops on the ground in Ukraine if its member states fail to provide Kyiv with meaningful security guarantees at the alliance's summit in Vilnius, former NATO security general Anders Rasmussen said on June 7. "We know that Poland is very engaged in providing concrete assistance to Ukraine. And I wouldn’t exclude the possibility that Poland would engage even stronger in this context on a national basis and be followed by the Baltic states,” said Rasmussen. Read more>>