EU’s Twentieth Sanctions Package: Controversial in Adoption, Limited in Effect

The twentieth package of EU sanctions against Russia has proven the most controversial in the entire history of Brussels’ restrictive measures. It was meant to be adopted back in February—to coincide with another anniversary of the Special Military Operation. At the time, however, it was blocked in the Council of the European Union by Hungary and Slovakia. They justified their decision by pointing to Ukraine blocking the Druzhba oil pipeline. Yet following Kiev’s concessions on Druzhba, the twentieth package was given the green light. The new sanctions are numerous, and their nuances matter. However, they scarcely alter the overall nature of the sanctions regime.

The twentieth package of EU sanctions against Russia has proven the most controversial in the entire history of Brussels’ restrictive measures. It was meant to be adopted back in February—to coincide with another anniversary of the Special Military Operation. At the time, however, it was blocked in the Council of the European Union by Hungary and Slovakia. They justified their decision by pointing to Ukraine blocking the Druzhba oil pipeline. Yet following Kiev’s concessions on Druzhba, the twentieth package was given the green light. The new sanctions are numerous, and their nuances matter. However, they scarcely alter the overall nature of the sanctions regime.

Ivan Timofeev:
Escalation of EU Energy Sanctions: The Eighteenth and Nineteenth Packages

First and foremost, there has been yet another expansion of the lists of individuals and entities subject to asset-freezing financial sanctions. There are no surprises here. Once again, they have been extended to cover defence, industrial, and oil companies, their managers and owners, as well as prominent public figures. Yet they make little real difference. Transactions involving companies of this profile within EU jurisdictions were already close to zero. The EU continues to impose secondary financial and trade sanctions on partners of Russian firms in third countries. This practice was present in earlier packages as well, but so far it remains an order of magnitude below what the United States implemented in this area under Joe Biden. Smaller intermediary firms involved in supplying industrial equipment to Russia are primarily the ones caught in the crossfire. Judging by all indications, new ones simply emerge in their place.

Export controls on industrial equipment have been further expanded. However, back in 2022–2023, these already came to encompass virtually all dual-use goods, as well as a significant share of industrial products. The latest additions bring no qualitative change. The same applies to imports from Russia.

Efforts to combat Russia’s “shadow fleet” continue—the number of tankers barred from accessing services in the EU has risen to 651. This likely complicates logistics, but does not impair them.

Additional legal procedures have been introduced to make the sale of tankers to Russia via third parties and third countries more difficult. Restrictions have also been extended to two Russian ports, and similarly to an oil terminal in Indonesia. The number of Russian banks subject to transaction bans has increased, now reaching 50. For some of them, this measure may prove sensitive in external operations, as it obstructs access to the SWIFT financial messaging system.

The EU had already threatened secondary sanctions for the use of Russia’s SPFS in earlier packages. Transactions involving Russian digital financial instruments are now prohibited, although such operations involving EU persons were already rare. The campaign against Russia’s countermeasures continues. Individuals who benefit from the temporary administration of EU-owned assets in Russia, or from their transfer into Russian ownership, may now themselves face sanctions. The same applies to companies conducting operations or procurement without the consent of EU rights holders—including parallel imports. Yet here too, sanctions are unlikely to stop them, given that their business is not directly connected to the EU.

Perhaps the most notable development is the extension of EU export controls on certain industrial goods to Kyrgyzstan. EU authorities recorded a surge in imports and subsequent re-exports—by several hundred per cent—following the start of the Special Military Operation. This move sends a signal to other countries as well. Also noteworthy is the lifting of sanctions on a number of foreign banks that ceased their Russia-related operations that had drawn EU objections. Among them are two agricultural banks from China and three banks from Tajikistan. Brussels is signalling its readiness to lift sanctions in the event of a “change in behaviour” by the target. The problem, however, lies in the sheer number of such targets—there may simply be too many of them.

First published in the Valdai Discussion Club.