The EU has approved six packages of sanctions in response to Russia's unprecedented and unprovoked military offense against Ukraine. The measures are aimed at limiting the Kremlin's ability to finance the war and cause clear economic and political costs to Russia and to Russian individuals who are connected to the regime.
What does the sixth package of sanctions against Russia prohibit?
The first official announcement of the Council on the sixth package of sanctions against Russia, concluded by the Permanent Representatives of the Member States in Brussels, provides that with the new package of sanctions the European Union provides a ban on all Russian seaborne crude oil. Additionally, the package provides a ban on petroleum products as well as prohibitions for the provision of accounting services, auditing services, tax consulting and public relations services in Russia.
In relation to seaborn crude oil, the ban will come into force with a transitory period of 6 months for existing contracts and spot transactions to allow markets to adjust and in relation to petroleum products, the EU will prohibit the import from Russia of refined petroleum products after a transitory period of 8 months for adjustment of existing contracts and spot transactions.
For whom does the ban apply?
The ban applies to the Russian government and to legal entities established in Russia. The sanctions, however, do not cover entities established in Russia but owned or controlled solely or jointly by a legal entity established under the law of a Member State. This means that companies established in Russia but belonging to European entities are exempt from sanctions. Therefore, a company founded in Cyprus by Russians, which has established another company in Russia, is not affected by the ban.
One element of the package is a ban on EU operators for insuring and financing tankers carrying Russian crude oil anywhere in the world through maritime routes. This will make it difficult for Russia to continue exporting its crude oil and petroleum products to the rest of the world since EU operators are important providers of such services.
Cyprus approved the sixth package of sanctions since Cyprus’ objections (as well as objections of Malta and Greece) to the bans on provision of Russian oil from European ships were accepted and introduced exceptions to the ban on the provision of such services.
The ban on providing insurance on tankers carrying Russian crude oil is expected to have a large impact on the Russian economy as any tanker without an insurance will not be accepted to global ports.
Particularly, the ban on crude oil is expected to have a large impact on Russia as around half of Russia’s total oil exports go to the EU.
By Ekaterini Lyberi
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