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European Union introducing targeted sanctions against Ukraine

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Clyde and Co logosThe international community has been watching  the events unfolding in Ukraine and particularly Kiev over the last week with increasing concern.  The European Union stated on Thursday that it was “appalled and deeply dismayed by the deteriorating  situation”. On the same day, the French, Polish and German Foreign Ministries sent representatives to  Kiev for discussions with the relevant parties with the task of exploring whether a meaningful and  lasting solution could be found.

In parallel with this direct  engagement and the EU taking  a quasi-mediation role with the  Government of Mr Yanukovych,  there have been calls for concrete EU  sanctions as a consequence of the  increasing repression, violence and  death toll in Ukraine.
The difficulty for the EU is that Ukraine is a sophisticated economy  with significant European and  international investment across the  Ukrainian economy, particularly  in the agribusiness and iron and steel sectors. Added to this, there  is not only significant investment  by Ukrainian companies and  businessmen in the EU but some
substantial Ukrainian entities are  listed on European stock exchanges.
In that context, the question which  arises is what measures are open  to EU legislators that will articulate  Europe’s concerns about recent  events in Ukraine but will not create  economic distance between the EU and Ukraine. This is especially the case as the latter consequence would be seen by many in and outside  Ukraine as counterproductive given  that the original spark for the protests  in November 2013 was a decision  by the Ukrainian Government not  to proceed with an EU Association  Agreement. It is noteworthy that  Russia has, in effect applied its own  economic sanction, by withholding the latest payment to Ukraine due under a bond-purchase agreement on  the basis that it cannot provide funds to a country where the government is  not in control.

Following Thursday’s discussions,  the Council of the European Union  has now adopted 6 conclusions which  condemned the use of violence, urged  all sides to enter into meaningful  dialogue, encouraged a lasting  solution to the political crisis and  introduced targeted sanctions.
Unsurprisingly, given the concerns  discussed above, the targeted  sanctions outlined in the Council  Conclusions do not include any general, widespread economic  sanctions but are limited to asset  freeze and visa ban against “those  responsible for human rights violations,  violence and use of excessive force”. While  the Council has not yet published the  list of individuals/entities who will subject to the asset freeze and visa ban it is expected that the list will be dominated by members of the government, with whom the EU High Representative of the Union for Foreign Affairs and Security Policy, Catherine Ashton, is understood to have noted  that primary responsibility for the  current violence lies.

Member States have also agreed  to suspend export licences on  equipment which could be used for  internal repression and reassess  export licences for equipment covered  by Common Position 2008/944/CFSP  defining common rules governing  control of exports of military  technology and equipment.
The relevant Working Parties have  already been instructed to make the  necessary preparations to enable the  targeted sanctions to be implemented  as soon as possible in view of the  deteriorating situation in Ukraine. The  exact implementation date is not yet  known but in view of the increasingly  serious situation in Ukraine and the
urgency with which the EU has gone  about taking the necessary steps  to implement the sanctions it is  expected that they will be introduced  without any significant delayThese targeted sanctions should  not be seen as the full extent of  sanctions which the EU is prepared  to introduce in an effort to halt the  violence and repression in Ukraine.
In fact, the Council has already  stated that “the scale of implementation  [of sanctions] will be taken forward in
light of developments in Ukraine”, thus  leaving the door open for further  and potentially more widespread
sanctions should a lasting, inclusive  solution not be achieved.
The announcement today that  President Yanukovych and the  opposition have agreed to an early  presidential poll before the end of the  year as part of an EU mediated deal  to end the current political crisis may  be seen as a sign that the threat of  imminent sanctions combined with  concerted international efforts to
achieve a lasting solution may now be  making much welcomed progress.
A link to the Council Conclusions can  be found here.

Further information:
Viewers who would like further information  on any issue raised in this update  please get in touch with any of the
key contacts listed on our sanctions microsite, sanctions.clydeco.com  or contact: Michael Swangard
E: michael.swangard@clydeco.com


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