Global Sanctions Update: The U.S. Shifts Focus While the EU Prepares 16th Sanctions Package

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The evolving sanctions landscape has seen significant shifts in both the United States and the European Union as they refine their responses to Russia’s ongoing aggression in Ukraine. Recent developments, including U.S. sanctions exemptions and the EU’s introduction of its 15th sanctions package alongside preparations for a 16th, underscore the complexity and coordination involved in these efforts.

U.S. Exemptions Highlight Pragmatic Approach

The United States recently granted exemptions to Turkey and Hungary, allowing them to continue making payments for Russian gas through Gazprombank. Turkey, which relies on Russia for over half of its pipeline gas imports, sought this exemption to secure its energy needs. Similarly, Hungary negotiated an alternative payment mechanism to comply with sanctions while maintaining energy flows. These exemptions signal a pragmatic shift in U.S. policy, particularly under the Trump administration, which appears increasingly focused on balancing sanctions enforcement with geopolitical and energy considerations. This approach reflects a nuanced strategy, accommodating critical dependencies while maintaining pressure on Moscow.

EU’s 15th Sanctions Package Tightens Restrictions

In contrast, the European Union has pursued a more aggressive stance. The adoption of the 15th sanctions package represents a tightening of economic restrictions against Russia. Among the most significant measures are the expanded asset freezes targeting 54 individuals and 30 entities, including Russian defense companies, shipping firms, and suppliers of drone components. The package also bans port access and services for 52 vessels associated with Russia’s energy sector or sanctions evasion efforts, addressing what has been termed the “shadow fleet.”

Targeted Changes to Asset Freezes and Export Controls

The EU introduced a new derogation to the asset freeze provisions under Article 6b(5j) of Regulation No. 269/2014, allowing central securities depositories (CSDs) to request the unfreezing of cash balances. This change ensures CSDs can meet legal obligations, particularly in addressing litigation and retaliatory measures imposed by Russia on EU CSD assets. The amendment demonstrates a targeted effort to mitigate unintended consequences of sanctions while preserving their overall effectiveness.

To address the growing use of the so-called ‘shadow fleet’—vessels facilitating Russian trade in defiance of sanctions—the Council extended port access bans and service restrictions to 52 additional third-country ships involved in Russia’s energy sector, military transport, or the transportation of Ukrainian grain. These measures are aimed at further closing loopholes exploited by Moscow.

The Council also expanded its focus on dual-use goods and technologies with reinforced export controls targeting 32 new entities. This list includes several Chinese companies found to be supplying materials and components directly supporting Russia’s military and industrial complex. This move underscores the EU’s

commitment to preventing the circumvention of sanctions through indirect supply chains.

Protecting EU Companies from Unfair Legal Practices

The EU introduced Article 11c of Regulation No. 833/2014 to shield European companies from rulings issued by Russian courts under Article 248 of the Russian Arbitration Procedure Code. These rulings, known as anti-suit injunctions, compel foreign parties to conduct legal proceedings solely in Russia, often resulting in significant financial penalties. The EU’s response prohibits the recognition or enforcement of such rulings within its member states, protecting companies from unfair litigation tactics and safeguarding their financial interests.

Extended Timelines for Russian Market Withdrawal

Recognizing the complexities of disengaging from Russian markets, the EU extended deadlines for divestment under Articles 5aa(3)(d), (3a), and 11(4) of Regulation No. 833/2014 until December 31, 2025. These extensions are designed to facilitate an orderly and efficient exit for EU companies, reflecting the challenges of unwinding long-term engagements.

Sanctions on Belarus and Hybrid Threats

Sanctions on Belarus also feature prominently in the 15th package, targeting 26 individuals and two entities. These measures address Belarusian judicial figures linked to politically motivated sentences, correctional officials overseeing inhumane conditions, and business leaders benefiting from regime ties or sanctions circumvention activities. These sanctions align with broader efforts to hold Belarus accountable for its support of Russian aggression.

The EU also used a new framework to impose asset freezes on 16 individuals and three entities associated with hybrid threats. These include a covert Russian military intelligence unit, a disinformation network operating in Africa, and individuals involved in intelligence operations and propaganda dissemination. Regulation 2024/3188 reflects the EU’s recognition of the need to counteract non-military tactics undermining its stability and that of its partners.

Looking Ahead to the 16th Sanctions Package

Looking ahead, the European Union is preparing its 16th sanctions package, slated for adoption on February 24, 2025, to coincide with the invasion’s third anniversary. While the exact measures remain under discussion, the package is likely to build on existing restrictions. It is expected to include further asset freezes and travel bans, new export and import bans targeting Russia’s defense and industrial sectors, and measures to close loopholes exploited by third-country entities. Additional restrictions on financial institutions and expanded controls on the shadow fleet used for circumventing oil and grain sanctions are also under consideration.

Comparing U.S. and EU Approaches

These developments highlight a divergence in strategies between the United States and the European Union. While the U.S. adopts a more flexible approach, particularly in granting exemptions to ensure energy security, the EU’s escalating

measures demonstrate a commitment to tightening the screws on Moscow’s economy. The EU’s focus on hybrid threats and disinformation also reflects a broader understanding of the multifaceted nature of modern conflicts. Coordination between the two remains strong, particularly with G7 partners, but differences in emphasis and scope underscore the challenges of aligning diverse geopolitical and economic priorities.

Implications for Businesses and Legal Practitioners

For businesses and legal practitioners, these sanctions present both risks and opportunities. Compliance frameworks must be updated to reflect the latest regulations, while due diligence on transactions and counterparties becomes increasingly critical. Companies with exposure to Russian markets or neighboring countries must carefully assess their operations, supply chains, and potential liabilities. At the same time, avenues for securing exemptions or clarifications offer strategic possibilities for those navigating complex regulatory environments.

As the global sanctions regime continues to evolve, proactive adaptation is essential. The developments in both the United States and the European Union demonstrate a shared commitment to countering Russian aggression, even as their approaches differ. The year ahead promises further challenges and adjustments, demanding vigilance and expertise from all stakeholders involved.