EU extends sanctions against Russian oligarchs

Some 87 Russian officials now subject to sanctions following annexation of the Crimea

People watch as a convoy of hearses arrives at the Korporaal van Oudheusdenkazerne in Hilversum. Photograph: EPA

People watch as a convoy of hearses arrives at the Korporaal van Oudheusdenkazerne in Hilversum. Photograph: EPA

Sat, Jul 26, 2014, 13:08

The European Union has extended sanctions against senior Russian officials in the wake of the shooting down of the Air Malaysia flight last week.

Two hundred and ninety-eight people died when the plane came down in Ukraine on July 17th, 10 of whom were British nationals.

EU member states agreed to add 15 individuals and 18 entities to the list of those subject to asset freezes earlier this week.

Among them are head of the Russian Federal Security Service Alexander Bortnikov, Sergei Beseda, head of the FSB department that oversees international operations and intelligence activity and four members of Russia’s Security Council.

The list, published in the EU’s Official Journal, brings to 87 the total number of people subject to sanctions in relation to Russia’s annexation of the Crimea.

Britain’s UN ambassador Mark Lyall Grant said the Security Council is likely to endorse any agreement reached by the Netherlands and Australia with

Ukraine about sending their police to the site of the crash in eastern Ukraine.

He said it is “quite likely that the Security Council will want to take note of that agreement, very possibly in a resolution”.

After months of hesitation, the EU is set to go beyond asset freezes by imposing sanctions on sectors of the Russian economy.

The 28-nation EU toughened its stance towards Moscow following last week’s downing of a Malaysian airliner, killing 298 people, in an area of eastern Ukraine held by Russian-backed separatists.

EU ambassadors reached a preliminary agreement last night.

European Council president Herman Van Rompuy wrote to EU leaders asking them to authorise their ambassadors to complete an agreement by Tuesday. That would avoid the need for leaders to hold a special summit to approve the sanctions.

Mr Van Rompuy said the proposed sanctions package “strikes the right balance” in terms of costs and benefits to the EU and in its flexibility to ramp up sanctions or reverse them over time.

“It should have a strong impact on Russia’s economy while keeping a moderate effect on EU economies,” he wrote in the letter, seen by Reuters.

But Mr Van Rompuy said the sanctions on access to capital markets, arms and hi-tech goods were likely to apply only to future contracts, leaving France free to go ahead with the controversial delivery of Mistral helicopter carriers being built for Russia.

The narrowing of the proposed measures highlighted the difficulty of agreeing to tough sanctions among countries which have widely different economic interests and rely to varying degrees on Russian gas.

European Commission president Jose Manuel Barroso said late last night that following the ambassador’s discussions the commission had adopted a draft legal text for the Russia sanctions package.

“The final decision now lies with the EU’s member states, but I believe that this is an effective, well-targeted and balanced package providing the flexibility to adjust our reaction to changes on the ground. I hope that member states will agree on this package of restrictive measures next week,” he said in a statement.

The measures are not an end in themselves, “but a means to achieve a negotiated and political solution to the crisis ... I call on Russia to take decisive steps to stop the violence and genuinely engage in peace plan discussions,” he said.

EU ambassadors will try to reach a final deal at a meeting on Tuesday.

Key measures include closing EU capital markets to state-owned Russian banks, an embargo on arms sales to Moscow and restrictions on the supply of dual-use and energy technologies. They would not affect current supplies of oil, gas and other commodities from Russia.

Mr Van Rompuy said there was an “emerging consensus” among EU governments that “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 Commission had proposed restricting equipment for deep-sea drilling, shale oil and Arctic energy exploration.

If the sanctions had applied to gas technology, they could have affected Gazprom’s huge South Stream pipeline project to Europe and Novatek’s Arctic Yamal liquefied natural gas (LNG) facility.

That in turn would have hit large EU energy suppliers and manufacturers with an interest in the project, including in Germany, Austria and Italy. The prospect of EU sanctions sent shares in French energy services firm Technip plunging 8 per cent on Thursday.

Gazprom’s main partners in South Stream are Italy’s Eni , France’s EDF, Austria’s OMV and Germany’s Wintershall, a subsidiary of German chemical giant BASF.

Mr Van Rompuy said EU governments also agreed that the sanctions should not be applied retroactively, particularly in the area of arms trade and restrictions on access to capital markets.

France was determined to uphold existing contracts with Russia to preserve a €1.2 billion 2011 deal to supply two Mistral helicopter carriers.

EU governments also agreed that a ban on exports of dual-use technology - that can be used in both military and civilian products - would be limited at this stage to military users, Van Rompuy said.

The EU’s latest list brought the number of people under EU sanctions to 87 and the number of companies and other organisations to 20.

A further sanctions list could be agreed as early as Monday under new criteria targeting companies and people who support Russian decision-makers responsible for annexing Crimea or destabilising eastern Ukraine, Mr Van Rompuy said. New restrictions on trade and investment in Crimea could also be agreed on Monday, he said.

Reuters / PA