EU, US to tighten Russia sanctions

BRUSSELS - The EU and the US are to announce tighter Russia sanctions on Friday (5 September), with the EU’s draft legal texts - seen by EUobserver - targeting state-owned banks, oil technologies and defence goods.

The move comes as Russia continues to pour arms and troops into eastern Ukraine, despite an ultimatum given by EU leaders last week.

More peace talks are scheduled in Minsk on Friday, but a much-talked-about ceasefire has so far failed to hold.

"In view of the gravity of the situation the Council considers it appropriate to take further restrictive measures in response to Russia's actions destabilising the situation in Ukraine," the EU's draft text says.

More names and companies are to be added to a blacklist, which has been expanded to "natural or legal persons, entities or bodies conducting transactions with the separatist groups in the Donbass region of Ukraine."

In addition to an existing ban on Russian state-owned banks from raising funds in Europe and the US, the EU will also ban "Russian entities in the defence sector, and Russian entities whose main business is the sale or transportation of oil” from its capital markets.

The threshold ban for bonds issued by Russian banks has been lowered from 90 to 30 days. EU businesses will not only be prohibited from acquiring such bonds, but also from taking up loans from Russian state-owned banks.

The EU also aims to ban "the direct or indirect sale, supply, transfer or export of certain dual-use goods and technology to any person in Russia or for use in Russia by nationals of member states or from the territories of member states or using their flag vessels or aircraft."

So-called dual-use goods are items that can have both a military and a civilian function. Funding, providing technical assistance or maintenance of these goods will also be prohibited.

The same applies for oil-drilling technologies, both a ban on selling directly or indirectly, as well as funding projects, servicing or maintaining these technologies.

For is part, Ben Rhodes, US leader Barack Obama i’s deputy security advisor, told press on Thursday that America and Europe fine-tuned their response in the margins of a Nato summit in Wales.

“The president and his fellow leaders in that meeting agreed that there needs to be additional costs imposed on Russia for what they’ve done in Ukraine … Because when we move together, it has the maximum impact in imposing economic costs on Russia”, he said.

“We have broad authorities to look at a range of different sectors. So the United States is preparing our own additional sanctions … I think the key point is that Russia must continue to face costs for its own escalation. If Russia escalates, we stand prepared to escalate our pressure”.

An annex to the EU legal text lists the banned oil drilling equipment:

Equipment required to produce fuels that meet EURO IV requirements - hydrocracking and desulphurisation units and components thereof, as well as related services.

Technologies that reduce sulphur, particulate matter, benzene and aromatic and unsaturated hydrocarbon content in automotive fuels - such as:

Alkylation and isomerization units

Aromatic hydrocarbon production units

Atmospheric-vacuum crude distillation units (CDU)

Calatylic reforming / cracker units

Delayed cokers

Flexicoking units

Fractionation units

Heat exchanges

Hydrocracking reactors

Hydrocracking reactor vessels

Hydrogen generation technology

Hydrotreatment technology/units

Naphtha isomerisation units

Reactor vessels

Refining heaters

Sulphur production units

Sulphuric acid alkylation and sulphuric acid regeneration units

Thermal cracking units

[Toluene and heavy aromatics] Transalkylation units

Visbreakers

Vacuum gas oil hydrocracking units