EU approves new sanctions against Russia; Chinese companies targeted over circumventing existing bans

European Union governments have agreed to the 11th package of sanctions on Russia, which enables the bloc to punish third countries and companies for circumventing existing measures.

Sweden, which holds the bloc’s rotating presidency, said on Wednesday that the new measures were approved at a meeting of EU ambassadors in Brussels.

The package forbids transit via Russia of an expanded list of goods and technology which might aid Russia's military or security sector.

According to this new mechanism, if third countries, for example in Central Asia, fail to comply with Western sanctions or can’t explain a sudden rise in trade in banned goods, they could face EU punishment.

Details of the measures will be unveiled later this week when the sanctions are officially adopted by written procedure.

European Commission President Ursula von der Leyen welcomed the decision, saying the package will deal another blow to Russia "with tightened export restrictions, targeting entities supporting the Kremlin.”

“Our anti-circumvention tool will prevent Russia from getting its hands on sanctioned goods,” she added.

#COREPER II | Today, the EU Ambassadors agreed on the 11th package of sanctions against Russia. The package includes measures aimed at countering sanctions circumvention and individual listings.

— Swedish Presidency of the Council of the EU (@sweden2023eu) June 21, 2023

The new sanctions list includes three China-based companies and Hong Kong-based firms, several diplomats have told media, speaking on condition of anonymity because the final document is not yet public.

“China is a permanent member of the UN, and this comes with responsibility. And China has influence on Russia, so we expect China to use this influence to convince Russia to sit down at the negotiating table,” Leyen said in an interview with CNBC channel.

European diplomats claimed China vowed to put pressure on these companies to stop their activities, after the names were leaked in early May and following high-level contacts between the European Commission and Beijing.  

Five companies were reportedly taken off the list while the three remaining, registered in Hong Kong and little known, were suspected of being Russian-owned, officials added.

The new EU package extends the suspension of EU broadcasting licenses of five Russian state-controlled media. It also adds a further 71 persons and 33 entities to those banned from the EU and with EU assets frozen.

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The deal, proposed more than a month ago, had been held up as Hungary and Greece opposed it to protest the designation of their domestic companies.

Ukraine had listed five Greek shipping companies in the list of “international sponsors of war,” because they did business with Russia or in other ways contributed to Moscow’s military operation.

Ukraine removed the five Greek shipping firms from its list, securing the backing of Athens for the package and hours later the new sanction package was announced.

The package bans access to EU ports for ships engaging in ship-to-ship transfers if the cargo is suspected to be of Russian origin.

Although Hungary’s largest commercial bank, OTP, stayed on the Ukrainian list, the country backed the new sanctions.

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Meanwhile, several countries, including Germany, were not sure about naming other countries, for fear of hurting diplomatic relations, and even pushing other countries to move closer to Russia or China.

The EU had previously imposed 10 rounds of sanctions on Russia since the beginning of the Ukrainian war on February 24, 2022, with banks, companies and markets being hit, as well as parts of the sensitive energy sector, along with more than 1,000 officials subjected to asset freezes and travel bans.

The 27-nation bloc has already committed 30 billion Euros from its budget to support Ukraine and, this week the European Union announced it will inject 50 billion Euros ($54.58 billion) in aid over the next four years to support Ukraine against Russia.

Since the onset of the conflict, the United States and its European allies have unleashed an array of unprecedented sanctions against Russia and poured a huge number of advanced weapons into Ukraine to help its military fend off Russian troops, despite repeated warnings by the Kremlin that such measures will only prolong the war.

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