The EU and UK adopt additional comprehensive sanctions on Belarus

The European Union and the United Kingdom have each significantly expanded the scope of their sanctions against Belarus in response to the forced Ryanair aircraft landing in May. The new measures adopted target a significant part of the Belarusian economy and impose several restrictions on trade in goods and services with Belarus in the sectors of technological equipment and dual-use items, petroleum, potassium chloride, tobacco, investment services and loans, as well as insurance and re-insurance. The revamped EU and UK regimes are now some of the most comprehensive sanctions programmes maintained by each party.

On 4 June 2021, the EU imposed a prohibition on Belarusian air carriers from landing in, taking off from or overflying the territory of the EU, in response to the forced Ryanair flight in Minsk on 23 May (Council Regulation (EU) 2021/907 and Council Decision (CFSP) 2021/908). On 21 June 2021, additional persons were added to the list of persons subject to asset freezing measures (Council Implementing Regulation (EU) 2021/997 and Council Implementing Decision (CFSP) 2021/1002; Council Implementing Regulation (EU) 2021/999 and Council Decision (CFSP) 2021/1001). On 24 June 2021, the EU adopted further comprehensive restrictions through Council Regulation (EU) 2021/1030 and Council Decision (CFSP) 2021/1031 on a significant part of the Belarusian economy.

On 21 June 2021, the UK added additional persons to the list of persons subject to asset freezing measures under The Republic of Belarus (Sanctions) (EU Exit) Regulations 2019. On 9 August 2021, the UK adopted an additional package of trade, financial, and aviation sanctions on Belarus through The Republic of Belarus (Sanctions) (EU Exit) (Amendment) Regulations 2021, that is similar to the comprehensive restrictions adopted by the EU in June 2021.

Please find below an overview of EU and UK sanctions that corporates must observe when doing business in or with Belarus.

Targeted economic sanctions

Equipment/technology

The EU imposed a prohibition on the direct and indirect sale, supply, transfer, or export of equipment, technology or software intended primarily for use in the monitoring or interception of the internet and of telephone communications by or on behalf of the Belarusian authorities. Listed items not used for these uses require an export licence before they are exported to any party in Belarus or for use in Belarus.

  • The products covered by this prohibition include:
    • Deep Packet Inspection equipment
    • Network Interception equipment including Interception Management Equipment (IMS) and Data Retention Link Intelligence equipment
    • Radio Frequency monitoring equipment
    • Network and Satellite jamming equipment
    • Remote Infection equipment
    • Speaker recognition/processing equipment
    • International Mobile Subscriber Identity, Mobile Subscriber Integrated Services Digital Network Number, International Mobile Equipment Identity, and Temporary Mobile Subscriber Identity interception and monitoring equipment
    • Intrusion software
    • Equipment designed or modified to perform cryptanalysis
    • Tactical SMS/GSM/GPS/GPRS/UMTS/CDMA/PSTN interception and monitoring equipment
    • Dynamic Host Configuration Protocol/Simple Mail Transfer Protocol/GPRS Tunnelling Protocol information interception and monitoring equipment
    • Pattern Recognition and Pattern Profiling equipment
    • Remote Forensics equipment
    • Semantic Processing Engine equipment
    • WEP and WPA code breaking equipment
    • Interception equipment for VoIP proprietary and standard protocol
    • Software and technology for the development, production or use of any of the equipment listed above
  • An export licence is required for the provision of technical assistance or brokering services related to listed equipment, software and technology or to the installation, provision, manufacture, maintenance and use of such listed items;
  • An export licence is required for the provision of any telecommunication or internet monitoring or interception services of any kind to, or for the direct or indirect benefit of, the Belarusian Government, public bodies, corporations and agencies or any natural or legal person or entity acting on their behalf or at their direction.

The UK imposed a similar prohibition on the direct and indirect sale, supply, transfer, and export of goods, technology, and software that may be used for interception and monitoring services.

Dual-use and military items

The EU imposed a prohibition on the direct or indirect sale, supply, transfer, or export to anyone in Belarus of dual-use goods and technologies for military end-use.

Additionally, it is prohibited to sell, supply, or transfer dual-use items to certain listed parties in Belarus, as well as on the provision of related technical assistance, brokering services, financing, or financial assistance or other related services to listed parties. At the time of writing this update, the EU has not identified the Belarusian parties subject to this prohibition.

This prohibition does not apply to the export of dual-use goods and technology or the provision of related technical or financial assistance for the maintenance and safety of existing civil nuclear capabilities for non-military use or for a non-military end-user.

EU restrictive measures also prohibit the provision of technical assistance related to goods listed in the EU Common Military List.

The UK imposed a similar prohibition on the sale, export, supply, delivery, transfer, and making available to anyone in Belarus of dual-use goods and technologies for military end-use. In addition the UK imposed a prohibition on the provision of technical assistance and financial services to a person connected with Belarus or for military use in Belarus in connection to arrangements relating to dual-use items and military end-use technologies. 

Potash/Tobacco

The EU and the UK each imposed restrictions on trade in potassium chloride (potash) and tobacco products, as follows:

  • It is prohibited to sell, supply, transfer, or export certain listed items used for the production or manufacturing of tobacco products to any person, entity, or body in Belarus or for use in Belarus. Listed goods in the EU regime include filters, papers for cigarettes, flavours for tobacco, and machinery for preparing or making up of tobacco.
  • It is prohibited to import, purchase or transfer, directly or indirectly, certain listed products of potash and chemical or mineral fertilisers containing potassium from Belarus, regardless of their origin.

The restrictions in the EU regime allow for the grandfathering of existing contracts concluded before 25 June 2021 or ancillary contracts necessary for the execution of such contracts.

Petroleum products

The EU and the UK each imposed restrictions on trade in petroleum products, as follows:

  • It is prohibited to:
    • Import certain listed petroleum products originating in Belarus or exported from Belarus.
    • Purchase petroleum products located in or originating in Belarus.
    • Transport petroleum products originating in Belarus, or are being exported from Belarus to any other country.
    • Provide, directly or indirectly, technical assistance, brokering services, financing or financial assistance, including financial derivatives, as well as insurance and re-insurance, related to listed petroleum products.
  • Petroleum products covered by these restrictions are those classified under CN 2710, 2711, 2712, 2713, and 2715.
  • An exception is made for purchases of listed petroleum products which are required in order to meet the essential needs of the purchaser in Belarus or of humanitarian projects in Belarus. The UK regime makes an additional exception for petroleum products acquired in Belarus by an individual on a retail basis, for that individual’s personal use.

The restrictions in the EU regime allow for the grandfathering of existing contracts concluded before 25 June 2021 or ancillary contracts necessary for the execution of such contracts.

Investment services/loans/credit

Under the new EU regime:

  • It is prohibited to directly or indirectly purchase, sell, provide investment services for or assistance in the issuance of, or otherwise deal with transferable securities and money-market instruments with a maturity exceeding 90 days, issued after 29 June 2021 by the Belarussian government and Belarusian public bodies and entities, or Belarusbank, Belinvestbank, and Belagroprombank (or any non-EU legal entity directly or indirectly owned by more than 50 percent by these three credit institutions or any legal entity acting on behalf of or at the direction of the above entities or bodies).
  • It is also prohibited to directly or indirectly make or be part of any arrangements to provide new loans or credit with a maturity exceeding 90 days, after 29 June 2021 to the Republic of Belarus, its Government, its public bodies, corporations or agencies, or Belarusbank, Belinvestbank, and Belagroprombank (or any non-EU legal entity directly or indirectly owned by more than 50 percent by these three credit institutions or any legal entity acting on behalf of or at the direction of the above entities or bodies).
  • EU Member States may grant an authorisation for the purpose of providing support to the Belarussian population (humanitarian assistance, environmental projects, nuclear safety).
  • There are exceptions concerning legitimate trade financing between the EU and third countries, as well as drawdowns or disbursements made under pre-existing contracts (i.e., contracts concluded before 25 June 2021).

The UK has imposed a similar prohibition on the direct and indirect purchase, sale, provision of investment services and other forms of dealings in transferable securities and money-market instruments with a maturity exceeding 90 days issued by a “relevant person” after 9 August 2021. In addition, the UK has imposed a similar prohibition on the direct and indirect making available of loans and other credit arrangements with a maturity exceeding 90 days to “relevant persons.”  “Relevant persons” include Belarus and Belarusian authorities, as well as credit and financial institutions majority owned by, and other entities wholly owned by, Belarus or Belarusian authorities. The prohibitions do not apply to loans first made or granted at any time prior to 9 August 2021.

Insurance/re-insurance and EIB financing

Under the new EU regime it is prohibited to provide insurance and re-insurance to the Belarussian government and Belarusian public bodies and entities, while there are certain restrictions on the European Investment Bank (EIB) in relation to projects in the public sector. The EIB will stop any disbursement or payment under any existing agreements in relation to projects in the public sector and any existing Technical Assistance Service Contracts. Member states will also be required to take actions to limit the involvement in Belarus of multilateral development banks of which they are members.

The UK has imposed a similar prohibition on the provision of insurance and re-insurance to the Belarussian government and Belarusian authorities and entities. The prohibition does not prohibit compliance with insurance and reinsurance agreements concluded before 9 August 2021.

Asset freezing measures

To date, the EU has imposed asset-freezing measures against 166 individuals and 15 entities.   EU persons are prohibited from making available, directly or indirectly, funds or economic resources to listed parties. The UK has imposed asset-freezing measures against 100 individuals and nine entities. UK persons are prohibited from making available, directly or indirectly, funds or economic resources to listed parties.

Restrictions in relation to aircraft carriers

The EU imposed a specific prohibition on Belarusian air carriers from landing in, taking off from or overflying the territory of the EU, including as a marketing carrier in code-sharing or blocked-space arrangements. There are exemptions or authorisations for emergency landings and flights with a humanitarian purpose.

The UK imposed a specific prohibition on Belarusian air carriers from overflying or landing in the UK, and a prohibition on the provision of technical assistance related to aircrafts listed in UK Statutory Guidance where this is provided to or for the benefit of specific designated persons.

Next steps

These new sanctions are expected to have a significant impact on EU and UK companies trading with Belarus, who will need to comply with relevant restrictions. Companies doing business in or with Belarus are required to assess their risk exposure to the new measures and take appropriate due diligence measures to allow them to remain compliant.

Hogan Lovells is available to assist you in assessing your exposure and in ensuring compliance with EU and UK sanctions in your transactions.

 

 

Authored by Lourdes Catrain, Aline Doussin, Stephanie Seeuws, Eleni Theodoropoulou, Imogen Brooks, and Iris Karaman.

 

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