SANCTIONS AGAINST RUSSIA: AN OVERVIEW
US Sanctions against Russia
The United States has passed a series of sanctions against individuals, companies and economic sectors since Russia annexed Crimea in March of this year.
While Washington - and the White House - was criticized for the perceived weakness of the first round of sanctions, the restrictions have become steadily stronger and wide-ranging.
Today, the US sanctions target both individuals involved in the destabilization of Ukraine, as well as specific businesses and commercial entities in Russia.
The US Treasury Department defines the latest wave of sanctions, passed on July 16, as "a broad-based package of sanctions on entities in the financial services, energy, and arms or related materiel sectors of Russia, and on those undermining Ukraine's sovereignty or misappropriating Ukrainian property."
The list, as published on the US Treasury website:
- Treasury imposed sanctions that prohibit U.S. persons from providing new financing to two major Russian financial institutions (Gazprombank OAO and VEB) and two Russian energy firms (OAO Novatek and Rosneft), limiting their access to U.S. capital markets;
- Treasury designated eight Russian arms firms, which are responsible for the production of a range of materiel that includes small arms, mortar shells, and tanks;
- Treasury designated the "Luhansk People's Republic" and the "Donetsk People's Republic," which have asserted governmental authority over parts of Ukraine without the authorization of the Government of Ukraine; and AleksandrBorodai, the self-declared "prime minister" of the Donetsk People's Republic, for threatening the peace, security, stability, sovereignty, and territorial integrity of Ukraine;
- Treasury designated Feodosiya Enterprises, a key shipping facility in the Crimean peninsula, because it is complicit in the misappropriation of state assets of Ukraine; and
- Treasury designated four Russian government officials, including Sergey Beseda, a senior Russian Federal Security Service official.
"These actions do more than build upon previous steps to impose costs on separatists and the Russian government," the statement on the US Treasury website reads.
"By imposing sanctions on entities within the financial services and energy sectors, Treasury has increased the cost of economic isolation for key Russian firms that value their access to medium- and long-term U.S. sources of financing. By designating firms in the arms or related materiel sector, Treasury has cut these firms off from the U.S. financial system and the U.S. economy."
The European Union (EU) has also passed limited sanctions against specific individuals it deems responsible for the growing conflict in Ukraine. Until the downing of the Malaysian Air flight MH17 over Ukraine, however, Brussels was hesitant to invoke more restrictive measures against the Russian economy, largely because the EU economy has stronger trade ties with Russia.
The bombing of flight MH17, however, has been a turning point. In a show of support for the Netherlands - the country that suffered the most from the tragedy - EU countries are rallying around stronger sanctions against Russia.
The EU widened the sanctions in a meeting on July 25, so currently 87 individuals and 20 entities in Ukraine and Russia are affected, according to media reports.
The list now targets Russian intelligence officers: Alexander Bortnikov, head of the Russian Federal Security Service (FSB), and Sergei Beseda, head of the FSB department that oversees international operations and intelligence activity, were both added to the EU sanctions list.
In a letter to EU heads of state on July 25, EU Council President Herman van Rompuy called for more restrictive measures against the Russian economy. Brussels Blog on the Financial Times website, quoted the letter as saying:
"On 24 July, the Committee of Permanent Representatives (COREPER) agreed to list 33 further entities and persons. It also expanded the legal basis of the restrictive measures so as to target individuals or entities actively providing material or financial support to or benefiting from the Russian decision makers responsible for the annexation of Crimea or the destabilisation of Eastern-Ukraine.
"A Trade and Investment ban for Crimea and Sevastopolas well as an additional list of entities and individuals both under the current and the expanded criteria will be ready for adoption by COREPER on 28 July.
"As requested by the Foreign Affairs Council, the Commission and the European External Action Service (EEAS) presented to COREPER a set of restrictive measures related to access to capital markets, defence, dual use goods, and sensitive technologies on 24 July. My assessment is that this package strikes the right balance when it comes to cost/benefit ratio and scalability/reversibility over time. It should have a strong impact on Russia's economy while keeping a moderate effect on EU economies."
In the letter, the EU Council president stresses the need to keep a "balance" across all sectors and "preserve EU energy security."
"The overall balance will be maintained across sectors and across Member States," the letter reads, as republished by the blog.
"The principle of non-retroactivity will apply across all targeted sectors, notably in the field of arms trade and restrictions on access to capital markets; The measures in the field of sensitive technologies will only affect the oil sector in view of the need to preserve EU energy security; The prohibition of dual-use technology exports will be limited at this stage to military end-users."
A final decision on the EU sanctions is expected by the end of July.
Moscow responded to the initial wave of sanctions by publishing a reciprocal list of individuals banned from travel to Russia. As the sanctions have picked up speed, however, Moscow has yet to fully respond.
Media reports have speculated that Russia could be preparing to roll out its own measures against the US and EU.
In the meantime, however, Moscow has started implementing sanctions against Moldova and Ukraine, two countries that signed the Association Agreement with the EU in June, together with Georgia.
On July 25, Russia announced sanctions against Ukrainian milk products; similar bans have already started against Moldovan fruit and other goods.
To date, however, Russia has not implemented any new measures against Georgia. Moscow banned all Georgian goods in a wide range of sanctions in 2006; over the past year, the two countries have been working together to reinstate trade. Russian officials, however, have warned that Moscow could impose restrictions "to protect" the Russian economy if it feels that the EU Association Agreement poses a risk to Russian interests.
For more detailed information about the sanctions, please visit the following websites:
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