EU to hit Russia with trade bans and tech export controls worth €11bn

The EU will hit Russia with trade bans and technology export controls worth €11bn as the bloc seeks to weaken Moscow’s ability to maintain its “war machine”, the European Commission president said.

The latest EU measures will restrict exports of electronic components used in Russian systems including drones, missiles and helicopters, Ursula von der Leyen told MEPs in Strasbourg on Wednesday.

The EU will seek to clamp down on supplies of Iranian drones to Russia, with proposals to impose sanctions on Iranian entities, including some linked to the country’s Revolutionary Guard, she said.

The proposals will form part of the EU’s tenth package of sanctions, which member states are pushing through as the first anniversary of Russia’s full-scale invasion of Ukraine looms on February 24. It comes as the EU steps up its scrutiny of the enforcement of existing rounds of sanctions as it seeks ways of further degrading the Russian economy.

“With nine packages of sanctions in place, the Russian economy is going backwards,” von der Leyen said. “To keep up this strong pressure, we are proposing a tenth package of sanctions, with new trade bans and technology export controls to Russia.”

The proposals will add certain rare-earth compounds, integrated circuits and cameras to the list of barred products, according to draft rules seen by the Financial Times. They will also ban transit via Russia of dual-use goods and technology exported from the EU, according to the proposals, which have to be unanimously agreed to by the 27 member states.

They are further set to extend restrictions on media outlets linked to the Kremlin, as well as people deemed to be promulgating false narratives and “information warfare”, the EU said.

Josep Borrell, the EU’s high representative, added that he would be submitting proposals to sanction almost 100 additional individuals and entities, including those involved in deportations and forced adoption of Ukrainian children sent to Russia.

The new round of sanctions will create obligations to report holdings of Russian central bank assets to the European Commission and national authorities, amid frustration within Brussels over a lack of clarity over where the assets are located.

This measure is needed, von der Leyen explained, “in view of the possible use of public Russian assets to fund reconstruction in Ukraine.”

The EU also vowed to step up its efforts to trace assets being hidden by sanctioned oligarchs, and to convince countries outside the union to keep in step with the western sanctions regime.

Late last year Brussels appointed David O’Sullivan, a former EU ambassador to the US, to serve as an envoy spearheading the commission’s efforts to ensure compliance around the world.

The commission has been paying increasing attention to closing loopholes after issuing multiple rounds of sanctions last year. Valdis Dombrovskis, EU executive vice-president, said on Tuesday that member states wanted to work on ensuring “uniform” implementation of the rules across the bloc, while cracking down on circumvention of the measures around the world.

He said the existing rounds of sanctions on the Russian fossil fuel sector were having the desired effect, observing that Moscow’s fiscal position was “deteriorating fast”.

Swedish finance minister Elisabeth Svantesson said, however, that it was proving difficult to measure the effects of the sanctions, as she pointed to IMF forecasts predicting slight growth in the Russian economy this year.

“It has effects, definitely, and the council wants the commission to follow this very closely and to see what kinds of sanctions [are] most effective,” she said. “It is very difficult to measure.”