World Economy

EU Extends Russia Sanctions

EU Extends Russia Sanctions EU Extends Russia Sanctions

On July 1 the European Union Council prolonged the economic sanctions targeting specific sectors of the Russian economy until January 31, 2017.

The measures were introduced on July 31, 2014 initially for one year in response to Russia's actions in Ukraine. They were reinforced in September 2014. They target the financial, energy and defense sectors, and the area of dual-use goods, EU News reported.

On March 19, 2015, the European Council agreed to link the duration of the sanctions to the complete implementation of the Minsk agreements, which was foreseen to take place by December 31, 2015.

Since the Minsk agreements were not fully implemented by December 31, 2015, the Council extended the sanctions until July 31, 2016. Having assessed the implementation of the Minsk agreements, the council decided to renew the sanctions for a further six months, until January 31, 2017.

The economic sanctions prolonged include:

1. Limit access to EU primary and secondary capital markets for five major Russian majority state-owned financial institutions and their majority-owned subsidiaries established outside of the EU, as well as three major Russian energy and three defense companies.

2. Impose an export and import ban on trade in arms.

3. Establish an export ban for dual-use goods for military use or military end users in Russia.

4. Curtail Russian access to certain sensitive technologies and services  that can be used for oil production and exploration.

In addition to these economic sanctions, several EU measures are in place in response to the crisis in Ukraine, namely:

1. Targeted individual restrictive measures, namely a visa ban and an asset freeze, currently against 146 people and 37 entities until September 15, 2016.

2. Restrictive measures in response to the illegal annexation of Crimea and Sevastopol, limited to the territory of Crimea and Sevastopol, currently in place until June 23, 2017.

The decision was adopted by written procedure and as it is the rule for all decisions on prolongation of restrictive measures, unanimously.

Reciprocal Moves

Russian President Vladimir Putin has signed a decree that prolongs economic sanctions on some western products from August of this year until the end of 2017, RT reported.

A ban on importing certain agricultural produce, foods and raw materials from countries that have sanctioned Russia was first introduced in the summer of 2014. Moscow extended its counter measures in response to anti-Russia sanctions in June last year.

The latest decree, aimed at "protecting Russia's national interests," followed suggestions put forward by Prime Minister Dmitry Medvedev in late May.

Putin's decree says that the government may offer proposals to change the ban's terms "when necessary."

A number of western officials oppose an economic stand-off with Russia saying that it is their economies that suffer.

Sanctions against Russia should be lifted as soon as possible, France’s Minister of Foreign Affairs, Jean-Marc Ayrault, said last Wednesday following a meeting in Paris with his Russian counterpart, Servey Lavrov,  while insisting that implementation of the Minsk agreements still remain key to the process.

Russia sanctions should gradually be lifted in return for each step forward on the Minsk agreement, Austrian Foreign Minister Sebastian Kurz said ahead of the EU summit.

With trade between Russia and the EU having dropped by over $180 billion between 2013 and last year, Russia has repeatedly criticized the West’s restrictive policy as counterproductive.

Russia has repeatedly said that it’s doing everything in its power to facilitate the implementation of the Ukrainian peace deal, while Kiev has been hindering the process. The West should work with its “allies” in Kiev, Putin has said, adding that direct dialogue between the parties to the conflict should be promoted.

Russia’s European partners should not hold Moscow solely responsible for fulfilling the Minsk agreements, Putin said at the St. Petersburg International Economic Forum last month, adding that there are “issues that are beyond our abilities.”