In the Netherlands, the Dutch government has shed some light on their ongoing support to the Ukrainian government in their war efforts. At a European level, discussions concerning the 12th sanction package against Russia are ongoing. The United States of America (“US”) has effectuated further restrictions against Russia, in the form of extensive measures against Russian and third country parties. This, and more, in this newsletter.
1. The Netherlands
- The Netherlands – Parliamentary questions regarding delivery of JSF-components to Israel – On 8 November 2023, parliamentary questions were asked to the Dutch Minister of Foreign Affairs and the Dutch Minister of Foreign Trade and Development Cooperation regarding the delivery of components of the Joint Strike Fighter (“JSF”) to Israel. Members of the Dutch House of Representatives questioned how this delivery passed the scrutiny for arms exports, given that the Netherlands refrains from issuing export licenses when military goods are deemed to “contribute to human rights violations, internal repression, international aggression, or instability.” An answer to these questions is expected later this year.
- The Netherlands – The Dutch Minister of Defence informed the House of Representatives about the state of arms deliveries to Ukraine – On 11 October 2023, the minister stated that the total value of Dutch military support provided to Ukraine amounted to EUR 2.1 billion. The minister emphasized that an accelerated assessment against the European Union (“EU”) arms export criteria was carried out for all deliveries by the ministries involved, after which an export license was issued by the Ministry of Foreign Trade and Development Cooperation. This procedure will also be followed for any potential future deliveries.
- The Netherlands – Public Prosecution Service uses civil powers in sanctions investigation – On 15 October 2023, the Dutch Public Prosecution Service (“PPS”) has used its civil powers in the context of a criminal investigation into alleged sanction violations by a Dutch company. In order to do so, the PPS submitted a petition to the court for the dissolution of the company and the appointment of an independent liquidator. The PPS argued that in recent years, the company had been solely involved in the circumvention of sanctions against Russia. By using its civil powers, the PPS wants to send a signal that it will not only take criminal action, but will also use other powers to stop such criminal conduct.
2. European Union
- EU – EU’s 12th sanction package – On 4 November 2023, President Ursula von der Leyen of the European Commission (“EC”) announced that the EU is weighing a new round of restrictive measures that are rumoured to hit some EUR 5 billion in trade with Russia. At the heart of the package is a ban on Russian diamonds. While US restrictions on Russian-origin diamonds are already in place, the EU so far did not impose any restrictions on diamond related trade, in an effort to protect EU economic interests. Furthermore, the proposal would include tougher reporting requirements regarding the oil price cap. Export restrictions on welding machines, chemicals and technologies used for military purposes, software license bans, and import restrictions on processed metals, aluminium products, construction items and transportation related goods are also reportedly part of the proposed measures. In an effort to crack down circumvention attempts, more goods may be added to the existing transit ban and additional companies in third countries may be listed. Lastly, the package is expected to include roughly 150 individuals and entities in additions to the sanctions list. The proposals could still be amended before they are formally introduced to member states, who in turn need to agree with the proposed package unanimously before the package gets approved.
- EU – The EU is working on a proposal to use windfall profits from frozen Russian assets to support Ukraine – On 27 October 2023, EC-President Ursula von der Leyen gave more details about the plan on how to use frozen Russian state assets. In an effort to repurpose Moscow’s immobilised wealth for the reconstruction of Ukraine, the EC aims to use the proceeds from Russia’s sovereign frozen assets to be directed towards Kyiv. Von der Leyen stated that “these […] profits are already quite substantial. And the idea is to pool them and then channel them through the EU budget “en bloc” to Ukraine and for the reconstruction of Ukraine.”
- EU – The EC has clarified that sanctions don’t apply to Russian “exit-tax” – On 26 October 2023, the EC has published an FAQ in an effort to allay concerns of foreign companies that aim to divest their assets in Russia. Companies that want to get out of Russia, are required to pay a contribution fee to the Russian government, often referred to as an “exit tax”. These transactions potentially involve the Central Bank of Russia, which is subject to restrictive measures. The EC however clarified that payment of the so-called “exit tax” is not prohibited, by confirming that such payment does not amount to enabling the Russian Central Bank to manage its reserves or assets.
3. United States of America
- US – US imposes sanctions on 130 entities and persons in an effort to further harden the Russia sanction regime – On 2 November 2023, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) published extensive measures targeting various entities and individuals based in Turkey, the UAE and China, which are generally involved in supporting Russia’s military-industrial complex. With these designations, OFAC is aiming to disrupt Russia’s international supply chain, by targeting companies involved in trade or production of the high-priority items identified by US and its international partners. Moreover, Russia-based firms involved in the domestic industrial, technology and financial service sector were targeted.
- US – US prohibits financial services with Myanmar Oil and Gas Enterprise and further sanctions Burmese individuals and entities – On 31 October 2023, the US, in a coordinated action with Canada and the United Kingdom, has designated multiple entities and individuals connected to Burma’s military regime. Moreover, OFAC published a new directive prohibiting certain financial services by US persons to or for the benefit of the Myanmar Oil and Gas Enterprise.
- US – US imposes a second round of sanctions on Hamas officials and financial networks – On 27 October 2023 OFAC targeted various Iran-, Sudan- and Gaza-based individuals and entities for their (financial) support and facilitation of sanction evasion by Hamas-affiliated companies. With these measures, OFAC is targeting assets in Hamas’s secret international investment portfolio, as well as persons and entities supporting sanction evasion by Hamas.
- US – US prosecutors charge several individuals in two separate cases involving Russia sanctions and export control evasion – On 30 October 2023, in the US, a criminal action was filed against three Russian individuals that unlawfully exported electronic components to third-country companies, which were subsequently diverted to Russia. A day later – on 1 November 2023 – four individuals were arrested in a separate case in which over USD 7 million worth of dual-use electronics were shipped to Russia.
4. Around the Globe
- Canada – Canadian bill proposed that would allow for the repurpose of frozen Russian state assets – On 4 October 2023, the Canadian Parliament proposed amendments to the Canadian Special Economic Measures Act. These amendments would create a legal pathway to seize foreign state assets owned by states involved in a breach of international peace and security and/or gross human rights violations. With the proposed amendments, the seized assets can subsequently be utilized for any of the predefined purposes.
Questions?
Should you wish to receive more information about one of the topics described in this newsletter, please contact BenninkAmar Advocaten via e-mail at info@batradelaw.com or via telephone at +31203085918.