New sanctions against Russia include prohibiting sales of oil exploration and extraction technology, some chemicals and travel bans
BRUSSELS, Belgium—The European Union’s sanctions against Russia are bound to inflict pain on the country’s ailing economy. While still narrowly targeted, they are becoming increasingly comprehensive and may start to impact North American companies in certain industrial sectors.
Here’s a look at what we know about the sanctions and their potential impact:
Oil Technology Sanctions
The EU sanctions prohibit the exports of certain oil exploration equipment to hamper the long-term development of Russia’s oil industry.
The sanctions target equipment or services used for deep sea drilling, Arctic drilling and shale oil exploitation. EU exports of those technologies to Russia total 150 million euros, or about one tenth of the overall sales of energy technology goods to Russia, according to EU officials.
Exports to Russia of goods that could be used for such oil projects will require prior approval by the EU member states’ national export control authorities.
The sanctions prohibit the sale of bonds and shares on EU market by banks that are controlled by the Russian government. No EU firms will be allowed to help those banks in placing debt on international financial markets, and EU investors will also be barred from buying such bonds or shares on all markets.
The state-owned banks last year issued 7.5 billion euros ($10 billion) in debt with a maturity of over 90 days on Europe’s market, according to EU officials who briefed reporters in Brussels on condition of anonymity because they weren’t authorized to release details pending a formal announcement Thursday.
Exports and imports of weaponry and other military goods to and from Russia will be banned.
Once again, Russian will be hit harder than Europe. Russian exports of arms and military equipment to the EU is worth some 3.2 billion euros annually, while Europe’s exports to Russia are worth only about 300 million euros, according to EU figures.
Dual Use Goods
The EU is also forbidding the export to the Russian military of so-called dual use goods—those that can be used for military or civilian purposes.
Such goods can include, for example, chemicals that could also be used in the production or use of chemical, biological or nuclear weapons.
The EU’s total export to Russia of dual use goods last year totalled about 20 billion euros, but EU officials cautioned only “a fraction of that” will be affected by the sanctions since the bulk of exports is for civilian purposes.
Asset Freezes and Travel Bans
The EU has already imposed asset freezes and travel bans on almost 100 Russian officials or pro-Russian Ukrainians held responsible for the annexation of the Crimean Peninsula or the destabilization of eastern Ukraine.
In addition, 23 companies and institutions were also sanctioned. The bloc was expected to release the names of more sanctioned individuals, including four considered close to Russian President Vladimir Putin.
The EU on Wednesday also broadened its sanctions to limit trade and investment in Crimea, banning new investment in the transport, telecommunications and, crucially, the energy sector “and the exploitation of oil, gas and minerals.” Exports of key equipment for those sectors to Crimea are also banned.