Newsletter of the main news 03.02/09.02

1️⃣ Frozen Russian assets

President of the European Commission Ursula von der Leyen stressed that the EU should find a creative way to use frozen Russian assets to support Ukraine. She noted that sanctions are already having a serious impact on the Russian economy, and the EU is preparing the 16th package of restrictions. According to her, member states should continue to put pressure on Russia, as the longer the war lasts, the higher the price will be.

Euroclear plans to transfer €2 billion in proceeds from frozen Russian assets to the European Fund for Ukraine in March 2025. This will be the second such payment after the first tranche of €1.55 billion made in July 2024. In total, in 2024, interest income from frozen Russian funds amounted to €6.9 billion, and Euroclear Bank's balance sheet at the end of the year was €212 billion, of which €183 billion were Russian assets under sanctions.

The Belgian government will allocate €1.7 billion from the proceeds of frozen Russian assets in the Euroclear depository to help Ukraine. In total, in 2024, these assets generated €3.55 billion in interest income, which is being transferred to European support funds. The first tranche of €1.55 billion was transferred in July 2024, and the second tranche of €2 billion is expected in March 2025.

The Ministry of Justice of Ukraine commented on the disbanding of the US group searching for the assets of Russian oligarchs, noting that it is too early to make alarming statements as the new administration is still being formed. Deputy Prime Minister Olha Stefanishyna stressed that the issue of frozen Russian assets remains in the focus of the US and expressed hope for a productive dialogue after the completion of the appointments. 

2️⃣ International sanctions policy

US President Donald Trump is ready to toughen sanctions against Russia, which are currently rated only a ‘three’ on a ten-point scale in terms of the effectiveness of economic pressure. Advisor Keith Kellogg said this, noting that there is an opportunity to tighten restrictions on the oil industry. He also stressed that resolving the Russian-Ukrainian war is a priority for the US administration, which is working on a comprehensive approach - combining military, economic and diplomatic pressure on Russia.

Russia plans to expand its ability to seize assets of Western companies in response to sanctions. A government commission has approved a draft law that defines the procedure for confiscating foreign property if Russian assets are seized abroad. The document, drafted by the Russian Ministry of Justice, is a follow-up to Putin's decree on possible compensation for losses from sanctions. The law will cover all ‘unfriendly’ countries, and decisions will be made through arbitration courts based on claims filed by government agencies.

The President of Estonia called on the European Union to seriously consider a full trade embargo against Russia. He stressed that the EU should strengthen its independence and completely abandon imports of Russian energy carriers in order to increase economic pressure on Russia.

Russian oligarchs Mikhail Fridman and Pyotr Aven have sold their stakes in Alfa-Bank and Alfa Insurance to their partner Andrey Kosogov, who is not under sanctions. The deal, made back in 2023, valued these assets at $2.5bn. The oligarchs hope that this move will help them challenge the EU sanctions imposed after Russia's invasion of Ukraine. Despite the partial cancellation of the grounds for the sanctions by the EU General Court, the restrictions remain in place, and Latvia has already appealed against their easing.

3️⃣ Violation and circumvention of sanctions

Lithuania conducted large-scale searches in connection with the supply of cars to Russia and Belarus in circumvention of sanctions. The investigation revealed that in 2024, 30 vehicles, including tractors, semi-trailers and luxury cars from BMW and Mercedes-Benz, were smuggled in with a total value of almost €2 billion. Law enforcement officers detained four people - two Belarusians and two Lithuanians, one of whom was arrested for a month and the other for two. They also seized 17 tractors, 15 semi-trailers and a minibus with smuggled cigarettes.

The Dominican Republic authorities confiscated a Dassault Falcon 2000EX aircraft used by the Venezuelan state-owned company PdVSA at the request of the United States due to violations of export controls and sanctions. The US Department of Justice stressed that the use of US parts to service aircraft of sanctioned companies is unacceptable. Washington will continue to combat violations of the sanctions regime, using the asset forfeiture mechanism to deter illegal activities.

In Germany, Russian oligarch Roman Abramovich was suspected of circumventing sanctions. Four luxury cars, including two Bugatti Chirons, a Lamborghini Reventón and a Mercedes CLK GTR, were seized in the city of Obersulm, and investigators confiscated artworks in a 19th-century villa in Garmisch-Partenkirchen. According to the investigation, Abramovich could have concealed his ownership of these assets through Parados Limited in Luxembourg. If proven guilty, he faces a fine or up to a year in prison. The oligarch's lawyer denies any involvement in the property.

4️⃣ Sanctions policy in Ukraine

President Volodymyr Zelenskyy enacted NSDC sanctions against the Russian ‘shadow fleet’ and those involved in the theft of Ukrainian cultural heritage. The restrictions apply to 56 Russian citizens and one Iranian citizen who help Russia circumvent oil sanctions, as well as officials and archaeologists responsible for the illegal excavation and export of cultural property from occupied Crimea. The sanctions will last for 10 years and include asset freezes, travel bans and other restrictions.