The 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.
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