New EU Sanctions Program: Hybrid Threats (Russia)

On 8 October 2024, the Council of the European Union (the "Council") adopted a new sanctions framework allowing measures against those responsible for destabilising activities against the EU and its member states. The EU will be able to sanctions individuals and entities engaged in actions and policies by the government of the Russian Federation, which undermine the fundamental values of the EU and its member states, their security, independence and integrity, as well as those of international organisations and third countries.

The Council will be able to impose sanctions on legal persons, entities or bodies that are:

(a) responsible for, implementing, supporting, or benefitting from actions or policies by the Government of the Russian Federation which undermine or threaten democracy, the rule of law, stability or security in the Union or in one or several of its Member States, in an international organisation, or in a third country, or which undermine or threaten the sovereignty or independence of one or several of its Member States, or of a third country through planning, directing, engaging in, directly or indirectly, or otherwise facilitating:

• (i) the obstruction or undermining of the democratic political process, including by obstructing or undermining the holding of elections or attempting to destabilise or overthrow the constitutional order
• (ii) violent demonstrations;
• (iii) acts of violence, including activities to silence, intimidate, coerce, or exact reprisals against persons critical of the actions or policies of the Russian Federation;
• (iv) the use of coordinated information manipulation and interference;
• (v) any actions targeted at the functioning of democratic institutions, economic activities or services of public interest, including by unauthorised entry into the territory of a Member State, including its airspace, or aimed at interfering with, damaging or destroying, including through sabotage or malicious cyber activities as part of hybrid activities, critical infrastructure, including submarine infrastructure;
• (vi) the instrumentalisation of migrants.
• (vii) exploiting an armed conflict, instability or insecurity, including through the illicit exploitation or trade of natural resources and wildlife in a third country;
• (viii) instigating or facilitating an armed conflict in a third country;

(b) associated with the natural or legal persons, entities or bodies listed under point (a);

(c) supporting the natural or legal persons, entities or bodies engaged in activities referred to point (a).

No sanctions had been imposed under this new program as of this edition.

New EU Designations

The Council imposed additional sanctions against several individuals and entities under three sanctions programs.

Iran

On 14 October 2024, the Council imposed sanctions against seven individuals and seven entities in response to Iran’s transfer of missile and UAVs transfers to Russia. The entities (including three airlines) were listed for their involvement in the transfer and supply, through transnational procurement networks, of Iran-made UAVs and related components and technologies to Russia, to be used in its war of aggression against Ukraine.

Two companies involved in the production of propellant used to launch rockets and missiles were also sanctioned. These actions follow various statements in September 2024 from the EU, several of its Member States and international partners condemning the transfer of Iranian-made ballistic missiles to Russia, considered as a direct threat to European security and as a material escalation.

The measures were adopted on the basis of the EU's sanctions program targeting Iran’s military support to Russia’s war of aggression against Ukraine and to armed groups and entities in the Middle East and the Red Sea region.

Moldova

On 14 October 2024, the Council imposed sanctions on five individuals and one entity responsible for actions attempting to overthrow the constitutional order, thereby threatening the sovereignty and independence of the Republic of Moldova, and democracy, stability and security in the Republic of Moldova. The measures were adopted on the basis of the EU's sanctions program established in April 2023 in view of actions destabilising the Republic of Moldova, now targeting a total of 16 individuals and 2 entities.

Myanmar

On 29 October 2024, the Council sanctioned three individuals and one entity responsible for scam operations entailing serious human rights violations and threatening the peace, security and stability of Myanmar and the region. A total of 106 people and 22 entities are now subject to sanctions under the program introduced in 2013 in view of the situation in Myanmar.

Prolongations & Amendments

The Council extended the duration or amended eight of its sanctions programs:

• Sudan: The Council renewed the sanctions targeting those responsible for undermining the stability and political transition of Sudan. The measures will continue to apply until 10 October 2025.
• Nicaragua: The Council prolonged and amended the sanctions taken against individuals and entities involved in the deterioration of human rights, democracy and the rule of law in the country. The measures were renewed for an additional year, until 15 October 2025.

• Chemical Weapons: The Council prolonged the EU sanctions program targeting the proliferation and use of chemical weapons. The measures were prolonged for a further year, until 16 October 2025.
• Niger: The Council renewed the sanctions in view of the situation in Niger until 24 October 2025.
• Guinea: The Council renewed the sanctions in view of the situation in Guinea until 27 October 2025.
• ISIL/Da’esh and Al-Qaeda: The Council amended the EU sanctions program against ISIL/Da'esh and Al-Qaeda and persons, groups, undertakings and entities associated with them. The measures were prolonged for a further year, until 31 October 2025.
• Burundi: The Council prolonged the EU sanctions adopted in view of the situation in Burundi for a further year, until 31 October 2025. The program sanctions program was introduced in 2015, when it targeted individuals responsible for undermining democracy, committed acts that constituted serious humain rights abuses, or obstructing the search for a political solution in Burundi.
• Moldova: The Council renewed the sanctions against the leadership of the Transnistrian region of the Republic of Moldova until 31 October 2025.

European Council & G7 Sanctions Updates

European Council

On 17 October 2024, the European Council adopted conclusions on Ukraine, the Middle East, ensuring a rules-based international order, competitiveness, migration, the Republic of Moldova, Georgia, external relations and other items.

• Concerning Russia, the conclusions noted that the EU "[...] remains ready to further limit Russia’s ability to wage war, including by further sanctions [...]. The European Council reiterated "its call for the full and effective enforcement of sanctions and for further measures to counter their circumvention, including through third countries."
• Concerning the Middle East, the European Council noted that "[it] strongly condemns the further escalation in the West Bank, including East Jerusalem, following increased settler violence, the expansion of illegal settlements and Israel’s military operation." It invited the Council to "take work forward on further [sanctions] against extremist settlers and against entities and organisations which support them."
• Concerning hybrid threats, the European Council welcomed the adoption of EU restrictive measures in view of Russia’s destabilising activities. It noted that "[t]he European Union and the Member States will continue to strengthen their resilience and make full use of the EU hybrid toolbox to prevent, deter and respond to Russia’s hybrid activities."

G7

The G7 Finance Ministers and Central Bank Governors echoed the group’s readiness to take further measures.  In a 25 October 2024 statement it noted, in relevant parts (emphasis added):

[...] We are also committed to obstructing Russia’s ability to evade or circumvent sanctions and acquire dual use goods for the battlefield also in cooperation with third countries. The Oil Price Cap has been successful in supporting stability in energy markets, while reducing Russia’s revenues. We welcome the Coalition efforts to ensure the Oil Price Cap measures are correctly implemented. We remain committed to taking further initiatives in response to oil price cap violations and to increasing the costs to Russia of using the shadow fleet to evade sanctions. We remain committed to constraining the Kremlin’s sources of revenue, including further action to target energy revenues and future extractive capabilities, building on the measures we have taken so far. We intend to intensify our efforts to prevent financial institutions from supporting Russia’s evasion of our sanctions, especially in third countries, and to keep engaging with the private sector to make sure G7 operators are not part of Russia’s circumvention schemes. We strongly condemn the increasing military cooperation between North Korea and Russia, in direct violation of relevant UNSCRs.

Compliance & Enforcement

Price Cap Coalition: Updated Maritime Industry Guidance

On 21 October 2024, the Price Cap Coalition issued an updated advisory to provide recommendations concerning specific best practices for private sector actors (“industry stakeholders”) involved in the maritime trade of crude oil and refined petroleum products, as well as government stakeholders. This updated advisory reflects ongoing efforts to promote responsible practices in the industry to prevent and disrupt sanctions evasion.

The guidance discusses increased risks from recent developments in the maritime oil trade and lays out recommended actions.

No Re-export to Russia / Belarus Clauses: Codes for Export Declarations

As part of the implementation and enforcement of EU sanctions against Russia and Belarus, customs authorities released new codes to indicate on export declarations in relation to the no re-export to Russia / Belarus clauses where applicable. For instance, on 19 October 2024, French customs published the codes here whereas on 24 October German customs published the codes here.

Commission Consultation on Article 12g

Meanwhile, on 25 October 2024, the Commission announced that it was soliciting input on Article 12g. A recital of the 14th package had noted that the European Commission (the "Commission") would:

assess the impact that the entry into force of the existing obligation under Article 12g of Regulation (EU) No 833/2014 to use a ‘no-Russia clause’ has on deterring circumvention. It will also assess very closely trade data, export statistics and other information concerning circumvention patterns regarding the goods referred to in that Article, including the role that subsidiaries of Union operators in third countries may play in such patterns. On that basis, the Commission will assess whether the ‘no-Russia clause’ is appropriate for its purpose and consider any other appropriate actions to curb Russia’s access to sensitive goods which enable it to pursue the war in Ukraine, including the possibility of requiring Union operators to ensure that their subsidiaries in third countries also use the ‘no-Russia clause.

EU operators, associations and other relevant stakeholders are invited to share their experiences and views by 24 November 2024 23:59 (CET). Feedback can be submitted here.

Continued Expansion of Due Diligence Expectations

Echoing those introduced with the 14th package of EU sanctions against Russia, recital (5) of the Hybrid Threat Sanctions Regimes clarified the limited availability of the "no liability clause "of the regulation.

It is appropriate to clarify that the protection against liability that is granted to Union operators if they do not know, and have no reasonable cause to suspect, that their actions would infringe Union restrictive measures cannot be invoked where Union operators have failed to carry out appropriate due diligence. It is appropriate for publicly or readily available information to be duly taken into account when carrying out such due diligence. Therefore, for example, a Union operator cannot successfully invoke such protection when it is accused of breaching the relevant restrictive measures because it has failed to carry out simple checks or inspections.

Preventing Sanctions Circumvention through FDI Screening

On 17 October 2024, the Commission published the 4th Annual Report on the screening of foreign direct investments (FDI) into the Union. The report noted, among other things, the proposal to integrate prevention of sanctions evasion in the FDI screening process. It noted (emphasis added):

Furthermore, the proposal takes into account geopolitical developments that have happened since the current Regulation entered into force. For example, following Russia’s military aggression against Ukraine and ensuing comprehensive set of sanctions against Russia aiming to weaken its economic base and deprive of critical technologies, the effectiveness of the sanctions is measured only by their successful implementation and non-circumvention. Therefore, to close any potential loopholes in the implementation of sanctions also in the context of the FDI screening and for greater vigilance towards potentially risky investments from sanctioned persons or entities into and within the Single Market, all Member States would be required to assess whether the foreign investor is owned or controlled by, or acting on behalf of, a sanctioned person or entity, or whether the foreign investor is likely to facilitate the development of a third country’s military capabilities.

OLAF Support to Spanish Enforcement Action

The European Anti-Fraud Office (OLAF) assisted the Spanish authorities with the enforcement of EU sanctions against Russia during Operation “Probirka" (Russian for “Test Tube"). The operation led to the arrest of four individuals involved in the illegal export of chemicals to Russia and the seizure of 13 tons of chemical substances.

As part of the Joint Sanctions Enforcement Operation that OLAF has been running since July 2023, Spanish authorities requested OLAF to assist with investigations into the export of chemical substances from Spain. It was suspected that certain companies were bypassing EU sanctions by rerouting goods through intermediaries in Kyrgyzstan, with the final destination being Russia.

OLAF responded by gathering export data from various EU Member States and sharing critical intelligence with the Spanish investigators. OLAF’s collaboration provided crucial evidence to confirm that these illegal exports were in fact reaching Russia.

Export Controls

Recommendation & Guidelines on the Export of Cyber-surveillance Items

On 18 October 2024, the Commission published guidelines on the export of cyber-surveillance items under Article 5 of Regulation (EU) 2021/821 of the European Parliament and of the Council (the "Commission Recommendation"). The guidelines, also published by the Council, aiming to raise awareness of the risks associated with misuse of cyber-surveillance technologies and provide exporters with practical tools to evaluate human rights.

They are intended to support exporters in the application of controls on non-listed cyber-surveillance items including, among others, due diligence measures assessing risks related to the export of such items to end-users and end-uses under the new provisions of the dual-use regulation.

The Commission Recommendation provides detailed guidance on:

• The relevant legal provisions and key definitions,
• The technical scope of controls,
• The due diligence expectations and compliance enhancements structured around four steps, including examples of red flags.
• Clarify when exporters must notify the competent authority based on the result of their compliance analysis.

It also includes an annex of cyber surveillance items as controlled under the dual-use regulation.

The recommendation includes a flow chart to assist with the requirements set out by Article 5(2) of Regulation (EU) 2021/821

New Dutch National Controls

On 18 October 2024, Dutch authorities announced a new licensing requirement for additional dual-use items originating from the semiconductor, quantum and additive manufacturing industries. From 1 December 2024 onwards, companies must apply to the Minister for export licenses to export these listed goods and technologies to entities outside of the EU.

On 15-17 October, the Commission chaired the annual meeting of the world’s six main semiconductor-producing regions, focused on promoting competitiveness and a global level-playing field, while supporting industry’s carbon reduction efforts.

Select Developments in EU Sanctions Litigation

On 2 October 2024, the General Court of the EU ruled on challenges brought by several bar associations against the legal services ban under the EU sanctions against Russia. The Court confirmed the legality of the ban.

• Case T-797/22, Ordre neerlandais des avocats du barreau de Bruxelles and Others.
• Case T-798/22, Ordre des avocats á la cour de Paris and Couturier.
• Case T-828/22, ACE.

On 16 October 2024, the General Court rejected the challenge by Communications Regulatory Authority (CRA) of Iran against its designation.

• Case T‑201/23, Communications Regulatory Authority (CRA).

On 23 October 2024, the General Court annulled the designation by the Council of Mr. Vladimir Gheorghe Plahotniuc under the sanctions program in view of the situation in Moldova.

• Case Case T‑480/23, Vladimir Gheorghe Plahotniuc.

The Niinistö Report

A report by Sauli Niinistö titled "Safer Together Strengthening Europe's Civilian and Military Preparedness and Raediness" made several findings and recommendations concerning EU sanctions and export controls. The report noted, among other things, that "[...] ensuring faster and – most importantly – stronger decisions, for example on restrictive measures, will also be essential to reinforcing the credibility of the EU’s readiness to respond." It stressed the importance that EU sanctions policy be iterative, particularly in light of the adaptive nature of the targets.

Experience shows that restrictive measures usually do not lead to an immediate change in behaviour, but they need to be seen in this context as a tool to alter the cost-benefit analysis of the targeted actors over time by making it as difficult, slow and costly as possible for them to carry out the malicious activities that have led to the imposition of sanctions in the first place. Here, we need to take into account that threat actors are actively building up their resilience to international sanctions, including through alternative structures, buffers and supply chains, and they are actively learning from each other how best to evade sanctions. To maximise the impact of sanctions and minimise the ability of sanctioned actors to evade them, we should take full advantage of the excellent work of EU Sanctions Envoy David O’Sullivan over the past years.

The report also recommended to strengthen dual-use and civil-military cooperation at the EU level, echoing some recommendations made in the Mario Draghi report on European competitiveness.

Recent Articles and Policy Briefs

Here is a selection of noteworthy articles and commentaries published this month relevant to EU sanctions:

• The New Directive on the Violation of Union Restrictive Measures in the Context of the EPPO, by Peter Csonka and Lucia Zoli of the European Commission.
• Russia Sanctions and the Global South: Let’s Talk National Interest, by Tom Keatinge and Kinga Redlowska of the Centre for Finance and Security (CFS) at RUSI.
• Tackling Circumvention of EU Sanctions, by Marco Sibona of the Jacques Delors Institute.

Looking Ahead

• With the U.S. presidential election around the corner, the EU reportedly seeks to underpin Russia sanctions, fearing Trump overhaul.
• The EU and its partners will consider responses to the sending of North Korean troops to support Russia in its war of aggression against Ukraine.
• Poland will take over the rotating presidency of the Council in January 2025. Initial discussions regarding new sanctions against Russia are reportedly ongoing: After Orbán, EU eyes new Russia sanctions push.

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