Documents considered by the Committee on 21 July 2015 - European Scrutiny Contents


70 Ukraine and Russia: EU restrictive measures

Committee's assessment Politically important
Committee's decisionCleared from scrutiny
Document detailsCouncil Decision concerning restrictive measures in view of Russia's actions destabilising the situation in Ukraine
Legal baseArticle 29 TEU; unanimity
DepartmentForeign and Commonwealth Office
Document number(36956), —

Summary and Committee's conclusions

70.1 The EU Council has amended Council Decision 2014/512/CFSP (which was previously amended by Council Decisions 2014/659/CFSP and 2014/872/CFSP) concerning the economic (Tier III) restrictive measures in view of Russia's actions destabilising the situation in Ukraine. The new amendment extends the restrictive measures for a further period of six months, so that the duration of the restrictive measures is linked to the complete implementation of the Minsk agreements.

70.2 Decision 2014/512/CFSP, as amended, imposed a number of sectoral sanctions against Russian entities. These include an arms embargo, ban on the supply of equipment and services to Russian deep water, Arctic and shale oil exploration and production projects, and a ban on Russian access to certain EU financial instruments and services (see the "Background" section and Annex 1 of this chapter of our Report for full details).

70.3 Decision 2014/512/CFSP will be renewed for a further six months, until 31 January 2016, to enable the Council to assess the implementation of the Minsk agreement (see Annex 2 of this chapter of our Report for full details of the Minsk agreement).

70.4 The Minister for Europe (Mr David Lidington) describes Russia's implementation of the Minsk agreement as "limited and inconsistent"; with most of its commitments falling towards the end of the Minsk timeline, the EU has agreed to adopt a six-month "technical rollover" of the restrictive measures until January 2016. The Minister had hoped that these measures would have been adopted soon after the March European Council; but consensus was not reached until on 17 June; and to "ensure that this issue did not complicate an already heavily loaded European Council", the measures were adopted by the Foreign Affairs Council on 22 June. A scrutiny over-ride has thus occurred, which the Minister regrets.

70.5 For understandable reasons the Minister glosses over the internal disagreements among Member States that delayed the process, which have been widely reported in the media. In the circumstances and on this occasion, we do not take issue with his having over-ridden scrutiny.

70.6 Though this "rollover" was also widely publicised at the time, and raises no issues in and of itself, we are reporting it to the House because of the widespread interest in developments in Ukraine and in the EU response to it.

70.7 We now clear the Council Decision.

Full details of the documents: Council Decision (CFSP) 2015/971 of 22 June 2015 amending Decision 2014/512/CFSP concerning restrictive measures in view of Russia's actions destabilising the situation in Ukraine: (36956), —.

Background

70.8 The European Union is focusing its efforts on de-escalating the crisis in Ukraine. The EU calls on all sides to continue engaging in a meaningful and inclusive dialogue leading to a lasting solution; to protect the unity and territorial integrity of the country and to strive to ensure a stable, prosperous and democratic future for all Ukraine's citizens. The EU has also proposed to step-up its support for Ukraine's economic and political reforms.

70.9 An extraordinary meeting of the European Council on 3 March 2014 condemned the clear violation of Ukrainian sovereignty and territorial integrity by acts of aggression by the Russian armed forces as well as the authorisation given by the Federation Council of Russia on 1 March for the use of the armed forces on the territory of Ukraine. The EU called on Russia to immediately withdraw its armed forces to the areas of their permanent stationing, in accordance with the Agreement on the Status and Conditions of the Black Sea Fleet stationing on the territory of Ukraine of 1997.

70.10 In a statement of the Heads of State or Government following an extraordinary meeting on 6 March, the EU underlined that a solution to the crisis must be found through negotiations between the Governments of Ukraine and the Russian Federation, including through potential multilateral mechanisms. Having first suspended bilateral talks with the Russian Federation on visa matters and discussions on the New (EU-Russia) Agreement as well as preparations for participation in the G8 Summit in Sochi, the EU also set out a second stage of further measures in the absence of de-escalatory steps and additional far-reaching consequences for EU-Russia relations in case of further destabilisation of the situation in Ukraine.

70.11 In the absence of de-escalatory steps by the Russian Federation, on 17 March 2014 the EU imposed the first travel bans and asset freezes against Russian and Ukrainian officials following Russia's illegal annexation of Crimea. The EU strongly condemned Russia's unprovoked violation of Ukrainian sovereignty and territorial integrity.

70.12 The EU believes a peaceful solution to the crisis should be found through negotiations between the Governments of Ukraine and the Russian Federation, including through potential multilateral mechanisms.

70.13 The EU also remains ready to reverse its decisions and reengage with Russia when it starts contributing actively and without ambiguities to finding a solution to the Ukrainian crisis.[ 495]

70.14 On 31 July 2014, the Council adopted Council Decision 2014/512/CFSP[ 496] and Council Regulation (EU) No. 833/2014,[ 497] which imposed a number of sectoral sanctions against Russian entities, in view of Russia's destabilising actions in Ukraine. These included an arms embargo, ban on the supply of equipment and services to Russian deep water, Arctic and shale oil exploration and production projects, and a ban on Russian access to certain EU financial instruments and services.

70.15 On 8 September 2014, the Council adopted Council Decision 2014/659/CFSP[ 498] and Council Regulation (EU) No. 960/2014.[ 499] They strengthened restrictions on Russia's access to EU capital markets, so that EU nationals and companies could no longer provide loans with a maturity exceeding 30 days to five major Russian state-owned banks; at the same time, trade in new bonds, equity or similar financial instruments with a maturity exceeding 30 days, issued by the same banks, were prohibited; the same prohibitions were extended to three major Russian defence companies and three major energy companies. In addition, the scope of the prohibition on the supply of sensitive technologies was broadened to include prohibiting the provision of certain services necessary for deep water and Arctic oil exploration and production, and shale oil projects in Russia; and the ban on the export of dual-use goods and technology was extended to prohibit the supply of certain dual-use items to specific Russian military/civilian end-users.

The Council Decision

70.16 In his Explanatory Memorandum of 2 July 2015, the Minister says that:

—  the March European Council made a commitment to rolling over these measures before they expire at the end of July 2015, concluding that the "duration of the restrictive measures" are "clearly linked to the complete implementation" of the Minsk agreements; and

—  due to the way these agreements are structured the timeframe for implementation cannot be completed before December 2015.

The Government's view

70.17 The Minister comments thus:

"Russia's implementation of Minsk has been limited and inconsistent so far, and since most of its commitments fall towards the end of the Minsk timeline the EU has agreed to adopt a six-month technical rollover of the restrictive measures until January 2016. We will continue to press Russia to implement its obligations, whilst monitoring closely, and stand ready to pursue further restrictions if there are serious breaches of the ceasefire."

70.18 In a separate letter of the same date, the Minister says:

"Whilst I had hoped that this item would have been adopted soon after the March European Council, in order to ensure the consensus of Member States, the political agreement to renew the measures was only secured at the EU Committee of Permanent Representatives on 17 June. The Committee will be aware of the importance of renewing these measures to maintain the pressure on Russia for its actions in Ukraine. To ensure that this issue did not complicate an already heavily loaded European Council, renewal of the measures was put forward for adoption to the Foreign Affairs Council on 22 June.

"I therefore regret that I found myself in the position of having had to agree to the adoption of these Council documents before your Committee had an opportunity to scrutinise them."

Previous Committee Reports

None, but see (36573),— (36574), —: HC 219-xxvi (2014-15), chapter 12 (17 December 2014); (36262), — (36263), — (36264), — and (36265), —: Thirteenth Report HC 219-xiii (2014-15), chapter 1 (15 October 2014) and Eleventh Report HC 219-xi (2014-15), chapter 1 (3 September 2014) and (36235),— (36236), — (36240), — and (36241), —: Ninth Report HC 219-ix (2014-15), chapter 40 (3 September 2014).

Annex 1: Summary of EU measures concerning Russia's actions in Ukraine and the Crimea

"RESTRICTIVE MEASURES (ASSET FREEZES AND VISA BANS)

·  "Asset freezes and visa bans apply to 151 persons while 37 entities are subject to a freeze of their assets in the EU. This includes 145 persons and 24 entities responsible for action against Ukraine's territorial integrity, six persons providing support to or benefitting Russian decision-makers and 13 entities in Crimea and Sevastopol that were confiscated or that have benefitted from a transfer of ownership contrary to Ukrainian law. 

"RESTRICTIONS FOR CRIMEA AND SEVASTOPOL

"As the EU does not recognise the annexation of Crimea and Sevastopol, the following restrictions have been imposed.

·  "The EU has adopted a prohibition on imports originating from Crimea and Sevastopol unless accompanied by a certificate of origin from the Ukrainian authorities.

·  Investment in Crimea or Sevastopol is outlawed. Europeans and EU-based companies may no more buy real estate or entities in Crimea, finance Crimean companies or supply related services.

·  In addition, EU operators will no more be permitted to offer tourism services in Crimea or Sevastopol. In particular, European cruise ships may no more call at ports in the Crimean peninsula, except in case of emergency. This applies to all ships owned or controlled by a European or flying the flag of a member state. Existing cruise contracts may be still be honoured until 20 March.

·  It has also been prohibited to export certain goods and technology to Crimean companies or for use in Crimea. These concern the transport, telecommunications and energy sectors or the prospection, exploration and production of oil, gas and mineral resources. Technical assistance, brokering, construction or engineering services related to infrastructure in the same sectors must not be provided.

"On 19 June 2015, the Council extended the EU restrictive measures in response to the illegal annexation of Crimea and Sevastopol until 23 June 2016.

"MEASURES TARGETING SECTORAL COOPERATION AND EXCHANGES WITH RUSSIA ("ECONOMIC" SANCTIONS)

·  "EU nationals and companies may no longer buy or sell new bonds, equity or similar financial instruments with a maturity exceeding 30 days, issued by:

1.  five major state-owned Russian banks, their subsidiaries outside the EU and those acting on their behalf or under their control.

2.  three major Russia energy companies and

3.  three major Russian defence companies.

·  Services related to the issuing of such financial instruments, e.g. brokering, are also prohibited.

·  EU nationals and companies may not provide loans to five major Russian state-owned banks.

·  Embargo on the import and export of arms and related material from/to Russia, covering all items on the EU common military list.

·  Prohibition on exports of dual use goods and technology for military use in Russia or to Russian military end-users, including all items in the EU list of dual use goods. Export of dual use goods to nine mixed defence companies is also banned.

·  Exports of certain energy-related equipment and technology to Russia are subject to prior authorisation by competent authorities of Member States. Export licenses will be denied if products are destined for deep water oil exploration and production, arctic oil exploration or production and shale oil projects in Russia.

·  Services necessary for deep water oil exploration and production, arctic oil exploration or production and shale oil projects in Russia may not be supplied, for instance drilling, well testing or logging services."[ 500

Annex 2: Text of the Minsk agreement[ 501]

"1. An immediate and comprehensive ceasefire in individual areas of the Donetsk and Luhansk regions of Ukraine and its strict implementation starting at 0000 (Kyiv time) February 15, 2015.

2. The withdrawal of all heavy weapons by both parties at equal distances in order to create at least a 50 kilometer security zone for 100mm or larger caliber artillery systems, a 70 kilometer security zone for Grad multiple rocket launcher systems and a 140 kilometer security zone for the Tornado-S, Uragan, and Smerch multiple rocket launcher systems and Tochka (Tochka-U) tactical missile systems:

—  for the Ukrainian troops: [withdrawal] from the actual contact line;

—  for the military units of individual areas of the Donetsk and Luhansk regions of Ukraine: [withdrawal] from the contact line in accordance with the Minsk memorandum of September 19, 2014

Withdrawal of aforementioned heavy weapons shall begin no later than the second day of the ceasefire and end within 14 days.

The OSCE will contribute to this process with the support of the Trilateral Contact Group.

3. Starting the first day of such withdrawal, ensuring the effective monitoring and verification by the OSCE of the ceasefire and the withdrawal of heavy weapons with the use of all necessary technical means, including satellites, UAVs, radar systems, etc.

4. On the first day after the withdrawal, to begin a dialogue on the procedures for holding local elections in accordance with Ukrainian law and the Law of Ukraine 'On a temporary order of local government in individual areas of the Donetsk and Luhansk regions,' as well as on the future regime of these areas, according to this Act.

Immediately, no later than 30 days from the date of signing of this document, to adopt a resolution of the Verkhovna Rada of Ukraine with the specification of a territory subject to the special regime in accordance with the Law of Ukraine 'On temporary order of local government in some regions of the Donetsk and Luhansk regions' based on the line set in a Minsk memorandum of September 19, 2014.

5. To provide pardons and amnesties by the enactment of a law prohibiting prosecution and punishment of persons with regard to the events that took place in individual areas of the Donetsk and Luhansk regions of Ukraine.

6. To ensure the release and exchange of hostages and illegally detained persons based on the principle of 'all for all'. This process must be completed no later than the fifth day after the withdrawal.

7. To provide secure access, delivery, storage and distribution of humanitarian aid to the needy on the basis of an international mechanism.

8. Determination of the procedure for the full restoration of the socio-economic relations, including transactions of social payments, such as pensions and other payments (takings and income, timely payment of all utility bills, renewal of taxation within Ukraine's legal framework).

To this end, Ukraine shall regain control over the segment of its banking system in conflict-affected areas, and an international mechanism to facilitate such transfers will probably be created.

9. Restoration of full control over the state border of Ukraine by Ukraine's government throughout the whole conflict area, which should begin on the first day after the local elections and be completed after a comprehensive political settlement (local elections in individual areas of the Donetsk and Luhansk regions on the basis of the Law of Ukraine, and a constitutional reform) by the end of 2015, on condition of implementation of paragraph 11 — with consultations and in agreement with the representatives of individual areas of the Donetsk and Luhansk regions in the framework of the Trilateral Contact Group.

10. The withdrawal of all foreign armed forces, military equipment, as well as mercenaries from the territory of Ukraine under the supervision of the OSCE. Disarmament of all illegal groups.

11. Conducting constitutional reform in Ukraine, with the new constitution coming into force by the end of 2015, providing for decentralization as a key element (taking into account the characteristics of individual areas of the Donetsk and Luhansk regions, agreed with representatives of these areas), as well as the adoption of the permanent legislation on the special status of individual areas of the Donetsk and Luhansk regions in accordance with the measures specified in Note [1], until the end of 2015. (See Notes)

12. On the basis of the Law of Ukraine 'On temporary order of local government in individual areas of Donetsk and Luhansk regions' the questions regarding local elections shall be discussed and agreed with the individual areas of the Donetsk and Luhansk regions in the framework of the Trilateral Contact Group. Elections will be held in compliance with the relevant standards of the OSCE with the monitoring by the OSCE ODIHR.

13. To intensify the activities of the Trilateral Contact Group, including through the establishment of working groups to implement the relevant aspects of the Minsk Agreement. They will reflect the composition of the Trilateral Contact Group.

Notes:

Such measures, in accordance with the Law 'On the special order of local government in individual areas of the Donetsk and Luhansk regions,' include the following:

—  Exemption from punishment, harassment and discrimination of persons associated with the events that took place in individual areas of the Donetsk and Luhansk regions;

—  The right to self-determination with regard to language;

—  Participation of local governments in the appointment of heads of prosecutors' offices and courts in individual areas of the Donetsk and Luhansk regions;

—  The possibility for the central executive authorities to conclude agreements with the relevant local authorities on economic, social and cultural development of individual areas of Donetsk and Luhansk regions;

—  The state shall support socio-economic development of individual areas of Donetsk and Luhansk regions;

—  Assistance from the central government to cross-border cooperation between the individual areas of the Donetsk and Luhansk regions and regions of the Russian Federation;

—  The creation of people's militia units [police] upon the decision of local councils in order to maintain public order in individual areas of the Donetsk and Luhansk regions;

—  The powers of local council deputies and other officials elected in snap elections, appointed by the Verkhovna Rada of Ukraine according to this law, cannot be terminated.

The document is signed by the members of a Trilateral Contact Group:

[OSCE] Ambassador Heidi Tagliavini

Second President of Ukraine L.D. Kuchma

The Ambassador of the Russian Federation to Ukraine M.Yu. Zurabov

A. V. Zakharchenko

I. V. Plotnitsky."


495   See EU sanctions against Russia over Ukraine crisis. Back

496   Available at COUNCIL DECISION 2014/512/CFSP of 31 July 2014 concerning restrictive measures in view of Russia's actions destabilising the situation in Ukraine. Back

497   Available at COUNCIL REGULATION (EU) No 833/2014 of 31 July 2014 concerning restrictive measures in view of Russia's actions destabilising the situation in Ukraine.  Back

498   Available at COUNCIL DECISION 2014/659/CFSP of 8 September 2014 amending Decision 2014/512/CFSP concerning restrictive measures in view of Russia's actions destabilising the situation in Ukraine.  Back

499   Available at COUNCIL REGULATION (EU) No 960/2014 of 8 September 2014 amending Regulation (EU) No 833/2014 concerning restrictive measures in view of Russia's actions destabilising the situation in Ukraine.  Back

500   See EU sanctions against Russia over Ukraine crisis for full details and further background. Back

501   Minsk agreement. Back


 
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Prepared 30 July 2015