Newsletter of the main news 04.11/10.11

1️⃣ Frozen Russian assets

At a press conference in Budapest, President of Ukraine Volodymyr Zelenskyy announced a preliminary estimate of the damage caused by Russian aggression, which could reach $800 billion. He noted that $300 billion of frozen Russian assets could be used to rebuild Ukraine. Zelenskyy also pointed to the significant profits of the Russian “shadow fleet” that exceed international aid to Ukraine and called for tougher sanctions against Russian banks and energy resources.

However, it is important to note that te $800 billion figure has not yet been confirmed by international research institutions. As of now, officially recorded losses amount to $486 billion.

While Ukraine continues to fight for the return of all frozen Russian assets, the proceeds from them are already being used to restore Ukraine's energy sector. Artur Lorkowski, Director of the Energy Community Secretariat, said that part of the funds allocated by the EU to the Energy Support Fund for Ukraine comes from the proceeds of frozen Russian assets. These resources are used to purchase equipment needed to restore the damaged infrastructure, which is an effective way to hold Russia accountable for the damage.

2️⃣  International sanctions regimes

The European Union is working on the 15th package of sanctions against Russia, aimed at strengthening measures against circumvention of existing restrictions and isolation of Russian industry from imports. At a press conference with Ukrainian Foreign Minister Andriy Sybiga in Kyiv, EU High Representative Josep Borrell emphasized the importance of preventing Russia's access to imported components necessary for its industry. Sibiga emphasized the need to increase sanctions pressure on both Russia and the countries supporting it in the war.

The UK approved a new, largest package of sanctions against Russia since May 2023, adding 56 more organizations and individuals to the list. The restrictions include companies associated with Russian military production, including Zenit Finance, the Espanyol football team, electronics manufacturer Elesar Group, and the Navis bureau. The sanctions also affected Chinese companies that cooperate with the Russian military sector, as well as members of the Wagner PMC and its successor, the African Corps. Sanctions were also imposed on Denis Sergeev, who was involved in the Salisbury poisoning. Sanctioned assets are frozen, cooperation is prohibited, and entry to the country is restricted.

3️⃣ Combating the circumvention of sanctions against Russia

The American company Eleview International Inc. and its executives are accused of illegally exporting technology to Russia to circumvent sanctions. From March 2022 to June 2023, the company supplied millions of dollars worth of goods to Russia through Kazakhstan, Turkey, and Finland, using evasion schemes. Managers Oleg Nayandin and Vitaly Borisenko are accused of conspiracy to violate export laws. The prosecution claims that the company deliberately misled freight forwarders and authorities about the end users of the goods, some of which could be used to manufacture drones and other equipment. The suspects face up to 20 years in prison.

The European Anti-Fraud Office (OLAF) is investigating a possible violation of sanctions by the supply of Russian oil products to the EU via Turkey. In the year since the embargo on Russian oil was imposed, EU countries have imported 5.2 million tons worth more than €3 billion from Turkish ports, which have no refining capacity. Russia is exploiting a loophole in EU sanctions rules that allows imports subject to substantial refining. At the same time, Turkish fuel exports to the EU have increased by 107%, which brings Russia significant profits and supports its military actions in Ukraine.

In Germany, a 56-year-old businessman was sentenced to seven years in prison for violating trade sanctions by selling tooling machines to a Russian arms manufacturer. The machines were used to manufacture sniper rifles, despite the EU sanctions in place since 2014. In 2015, the entrepreneur entered into agreements with the Russian customer, delivering the equipment through intermediaries in Switzerland and Lithuania, concealing the final recipient. From these deals, he received €2.1 million, and his company received another €3 million; all the proceeds were confiscated by the court.

Lithuanian car exporter Biovarda appealed against a €13.6 million fine imposed by customs for violating international sanctions and has not yet paid it. The Lithuanian customs decided not to enforce the payment until the end of the trial, which began in September at the Regional Administrative Court. After the fine was imposed, the company reduced the number of trucks in its ownership, which threatens to bankrupt it, while another company of its shareholder, Cooltransa, increased the number of vehicles. According to the investigation, Biovarda continues to sell trucks in Russian-speaking markets, and its transactions with partners from Kazakhstan, Belarus and Turkey violate the existing sanctions because the vehicles were registered in Russia.