Newsletter of the main news 14.10/20.10

1️⃣ Frozen Russian assets

   At the EU summit, the leaders of the member states supported the allocation of a €35 billion loan to Ukraine, which will be part of the overall G7 initiative to finance Ukraine for $50 billion. These funds should come from frozen Russian assets, which, according to the European Council, will remain blocked until the end of Russia's war against Ukraine. The European Parliament will consider the allocation of these funds at its plenary session this Tuesday, October 22.

   In addition, the European Council emphasized that, by EU law, Russian assets will remain frozen until Russia stops its aggression and compensates for the damage caused by the war. The decision to use the proceeds of these assets to support Ukraine has been approved, but further consideration of legal and financial aspects is required.

   In addition, some countries are working independently to implement the agreement to provide Ukraine with a loan, such as Italy, which currently holds the G7 presidency. Prime Minister Giorgia Maloni emphasized that this step is an important achievement of the Italian presidency of the G7.

   However, the United States has postponed the final decision to provide Ukraine with $20 billion in G7 loans, as Brussels has yet to be able to confirm the extension of sanctions against Russian assets for three years. The uncertainty arose from a possible veto by Hungary, which caused a delay in agreeing on the structure of the loan, which will be repaid from the profits from frozen Russian assets in Europe.

   Nevertheless, Washington has declared its readiness to provide up to $20 billion, which is 40% of the total loan amount. The final decision is likely to be linked to the US presidential election, as there are fears that if Donald Trump wins, aid to Ukraine could be cut. However, a final agreement has not yet been reached, and the US continues to consult with Congress and Ukraine.

   However, funding for the purchase of military equipment for Ukraine continues. France has allocated €300 million in interest from frozen Russian assets, including the purchase of 12 new Caesar artillery systems. Also, according to French Minister of the Armed Forces Sebastian Lecorneuil, these funds will be used to purchase 155 mm artillery shells, Aster-30 anti-aircraft missiles, AASM precision bombs and Mistral man-portable air defence systems.

2️⃣Expansion of the sanctions regime

   Another country has fully joined the 14th package of EU sanctions against Russia. This time it is Switzerland. The new restrictions will come into effect on October 17 and are aimed at limiting exports of products that could strengthen Russia's military capabilities. The sanctions list includes 61 new companies, half of which are located in third countries and have ties to Russia's military sector. The sanctions also include 27 vessels of the Russian “shadow fleet” involved in the supply of military goods.

   In addition, the new sanctions include a ban on the use of alternative SWIFT systems for Russian banks and restrictions on investments in Russian LNG projects. Swiss companies have been granted the right to indemnification from litigation in Russia or third countries, and Swiss subsidiaries abroad are required to comply with EU sanctions. At the same time, the country has not yet imposed certain restrictions on intellectual property rights, as no violations by Russia have been recorded.

   In addition, the Russian “shadow fleet” has been subject to a new package of sanctions from the UK. The new sanctions package includes 18 oil and 4 LNG tankers. These vessels will now be denied access to British ports and unable to use British maritime services. The new restrictions bring the total number of oil tankers under sanctions to 43.

   In addition, the sanctions affected four more tankers of the Russian company Rusgazdobycha, which transport liquefied natural gas. Over the past year, Russian “grey” tankers have transported oil worth about $4.9 billion. At the same time, Russia's largest shipping company, Sovcomflot, is forced to rename its ships to avoid Western sanctions.

3️⃣Fighting sanctions circumvention

   During a press conference in Luxembourg, EU High Representative Josep Borrell said that EU countries should take responsibility for combating the circumvention of sanctions against Russia by tightening control over the export of sensitive electronic components. He emphasized that Russia receives European electronic elements for weapons production through third countries, and it is the EU member states that should start fighting this problem at the national level. Borrell emphasized the importance of preventing the export of such components to prevent their use in Russian military equipment.

   For example, Spain has already begun to implement this policy. Spanish police seized more than 13 tons of banned chemicals that could have been sent to Russia to circumvent sanctions. Law enforcement officers arrested four members of a criminal group that used a front company to illegally supply chemicals that could be precursors for chemical weapons. The substances were found in the port of Barcelona, and the group, according to investigators, operated through a complex logistics network with front companies in Armenia, Kyrgyzstan and a subsidiary in Moscow.

   Three Russian students who were detained in Finland in late April on suspicion of circumventing sanctions have been released from custody. The last of the suspects, who was detained on suspicion of being part of a group that smuggled dual-use goods from Finland to Russia, was released with a travel ban. According to the investigation, these goods could have been used for military purposes, which is a gross violation of the sanctions regime.

   Two other Russian students, who were also suspected of involvement in these activities, were released in the summer. The decision to release them was made by the District Court of Finland, but investigative actions against the suspects are ongoing.