EU's Crimea sanctions to give Putin new headache

BRUSSELS - The EU will, from Saturday (20 December), ban almost all forms of business co-operation with Crimea despite doubt on the future of its sanctions regime.

The new law - agreed on Thursday and seen by EUobserver - is designed to give teeth to EU non-recognition of Russia’s annexation of the Ukrainian region in March.

The EU has a separate sanctions regime on Russian officials, companies, banks, and energy companies.

But since it says Crimea is de jure Ukraine, new sanctions are needed to stop European firms from operating in the region in de facto support of Russia’s actions.

The EU decision stops European entities from: buying real estate; acquiring extra shares or creating new joint ventures with Crimean firms; providing loans or financial services.

It prohibits them “to sell, supply, transfer, or export goods and technology” in the areas of “transport; telecommunications; energy; [and] the prospection, exploration and production of oil, gas, and mineral resources”.

It prevents “technical assistance, or brokering, construction, or engineering services directly relating to infrastructure”.

It also bans “services directly related to tourism activities ... by nationals of member states, or from the territories of member states, or using vessels or aircraft under the jurisdiction of member states”.

It says specifically that EU cruise ships cannot “enter into or call at any port situated in the Crimean peninsula”.

The ports, listed in an annex, are: Chernomorsk; Evpatoria; Kamysh-Burun; Kerch; Sevastopol; Theodosia; and Yalta.

A second annex lists the 165 products under embargo, hitting both industry and private consumers.

They include: salt and sulphur; iron, steel, and nickel; rock-drilling tools; nuclear components; steam turbines; fridges; air-conditioning units; dishwashers and washing machines; fork-lift trucks and bulldozers; paper and cigarette-making equipment; lathes; office equipment; vending machines; ball-bearings and other machine parts.

They also include: electrical transformers; laboratory equipment; radio and TV broadcasting equipment; radar apparatus; light bulbs and circuitry; railway locomotives and rolling stock; trucks and vans; motorcycles; airplanes, ships, and related parts; liquid crystal devices; and hydrometers.

The law contains exemptions to “minimise the effect … on the civilian population” and on EU business.

It doesn’t apply to contracts signed three months or more before 20 December or to Crimea-based firms’ operations outside the region.

Cruise ships can keep calling at ports until 20 March.

There are derogations on goods and services for foreign consular missions, hospitals, and schools.

EU companies can also apply for leeway on activity “to ensure safety of existing infrastructure”, or, more broadly, “for the urgent prevention or mitigation of an event likely to have a serious and significant impact on human health and safety … or the environment”.

The ban goes much further than previous Crimea sanctions in June and July.

Given Russia’s financial crisis and the fact it has to supply Crimea by sea, it's likely to make the region, which used to survive on Ukrainian subsidies, into an economic headache.

With Crimea’s maritime zone said to hold gas reserves, the ban on gas exploration technology will slow down efforts to cash in.

Against the grain?

EU sources say France, which has the largest commercial ties with Crimea, tried to water down the measures.

It said the ban should apply only to firms which are legally domiciled in Crimea. But the final text also embargoes “subsidiaries or affiliates under … control in Crimea or Sevastopol, as well as branches and other entities”.

The new measures go against the grain of current EU thinking on the crisis.

EU leaders will take stock of Russia relations at a summit dinner on Thursday.

Their draft conclusions say that if Russia continues to flout ceasefire accords “the EU will stay the course; the European Council is ready to take further steps if necessary”.

But German, French, Russian, and Ukrainian leaders in a phone call on Wednesday concentrated on diplomatic solutions.

German chancellor Angela Merkel i’s press release said the EU wants “good and co-operative relations” and "closer" trade ties with Russia.

A senior EU diplomat told EUobserver “the mood has shifted” since Merkel met Russian leader Vladimir Putin i at a G20 event in Australia last month.

“I don’t have the feeling that there'll be a new wave of economic sanctions”, he said.

Meanwhile, EU foreign relations chief Federica Mogherini i has said she wants foreign ministers early next year to assess if the sanctions are working.

The measures expire between March and July and must be rolled-over by consensus.

But hawkish states, such as Poland, Sweden, and the UK, are concerned that Russia-friendly countries, such as Cyprus, Hungary, or Mogherini’s native Italy, might veto the move.

Smallprint, big meaning

Mogherini has little power to shape EU policy.

But the vocabulary of ministers’ texts on Russia has changed since she took up her post on 1 November.

Previous EU statements confirmed that Russian forces are fighting in Ukraine, but post-Mogherini ones refer to “foreign forces” or “illegal forces” entering Ukraine from Russia.

For his part, Ukraine’s ambassador to the EU, Kostiantyn Yelisieiev, urged EU ambassadors in a letter on 2 December to call a spade a spade.

Referring to an EU-Ukraine meeting (which later took place on 15 December), he said it “should not be an occasion for twisting language”.

He noted that “the word ‘aggression’ [in reference to Russia] should not be avoided as it is an unfortunate reality". He added that describing Crimea as “occupied” or “annexed" by Russia has “strong political connotations”.

Mogherini’s 15 December press release referred to “the illegal annexation of Crimea by the Russian Federation”.

But it didn't use the word “aggression” and spoke of “infiltration of illegal forces … from the territory of” Russia.