Council Regulation (EU) 2023/2878 of 18 December 2023 amending Regulation (EU) No 833/2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 215 thereof,

Having regard to Council Decision (CFSP) 2023/2874 of 18 December 2023 amending Decision 2014/512/CFSP concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine (1),

Having regard to the joint proposal from the High Representative of the Union for Foreign Affairs and Security Policy and the European Commission,

Whereas:

(1) On 31 July 2014, the Council adopted Regulation (EU) No 833/2014 (2), concerning restrictive measures in view of Russia's actions destabilising the situation in Ukraine.

(2) Regulation (EU) No 833/2014 gives effect to certain measures provided for in Council Decision 2014/512/CFSP (3).

(3) On 18 December 2023, the Council adopted Decision (CFSP) 2023/2874, amending Decision 2014/512/CFSP.

(4) Decision (CFSP) 2023/2874 adds 29 new entities to the list of legal persons, entities and bodies set out in Annex IV to Decision 2014/512/CFSP, namely the list of persons, entities and bodies directly supporting Russia’s military and industrial complex in its war of aggression against Ukraine, on which tighter export restrictions regarding dual-use goods and technology, as well as goods and technology which might contribute to the technological enhancement of Russia’s defence and security sector, are imposed. In addition, in view of the key enabling role of electronic components for use by Russia’s military and industrial complex in supporting the war of aggression against Ukraine, Decision (CFSP) 2023/2874 also includes on that list certain entities in third countries other than Russia involved in the circumvention of trade restrictions, as well as certain Russian entities involved in the development, production and supply of electronic components for Russia’s military and industrial complex.

(5) Decision (CFSP) 2023/2874 expands the list of items which contribute to Russia’s military and technological enhancement or to the development of its defence and security sector by adding items which have been used by Russia in its war of aggression against Ukraine and items which contribute to the development or production of its military systems, including chemicals, lithium batteries, thermostats, DC motors and servomotors for unmanned aerial vehicles, machine tools and machinery parts.

(6) Decision (CFSP) 2023/2874 introduces a list of partner countries which apply a set of restrictive measures on imports of iron and steel and a set of import control measures that are substantially equivalent to those in Regulation (EU) No 833/2014. It also extends certain wind-down periods for the import of specific steel products.

(7) Decision (CFSP) 2023/2874 imposes further restrictions on exports of goods which could contribute in particular to the enhancement of Russian industrial capacities. Furthermore, in order to minimise the risk of circumvention of the restrictive measures, Decision (CFSP) 2023/2874 prohibits the transit via the territory of Russia of certain goods and technology which could contribute in particular to the enhancement of Russian industrial capacities, exported from the Union.

(8) Additionally, Decision (CFSP) 2023/2874 introduces further restrictions on imports of goods which generate significant revenues for Russia, thereby enabling the continuation of its war of aggression against Ukraine, such as liquefied propane gas, pig iron and spiegeleisen, copper wires, aluminium wires, foil, tubes and pipes. Certain exceptions and transitional periods are provided for.

(9) In addition, Decision (CFSP) 2023/2874 permits Member States to allow the entry into the Union of personal effects which do not pose significant circumvention concerns, such as personal hygiene items, or clothing worn by travellers or contained in their luggage, and which are clearly intended for their or their family members’ strict personal use. It also provides for an exemption for cars that have a diplomatic vehicle registration plate to enter the Union and, in order to facilitate the entry into the Union of Union citizens living in Russia, permits Member States to authorise, under such conditions as they deem appropriate, the entry of cars of Union citizens or their immediate family members who are resident in Russia and are travelling into the Union, provided that the cars are not for sale and are driven for strict personal use. The situation of cars from Russia which are already in the territory of the Union may be regularised by Member States.

(10) Decision (CFSP) 2023/2874 introduces a derogation enabling the granting of loans or credits to entities operating in the Russian energy sector which are subject to the transaction ban provided for in Regulation (EU) No 833/2014, under the conditions provided for therein.

(11) Decision (CFSP) 2023/2874 imposes a prohibition on the direct or indirect import, purchase or transfer of diamonds from Russia. That prohibition applies to diamonds originating in Russia, diamonds exported from Russia, diamonds transiting Russia and Russian diamonds when processed in third countries other than Russia.

(12) The prohibition applies to non-industrial natural and synthetic diamonds, as well as diamond jewellery, as of 1 January 2024, and includes a progressive phasing-in, from 1 March 2024 until 1 September 2024, of an indirect import ban on Russian diamonds when processed in third countries other than Russia, including jewellery incorporating diamonds originating in Russia. The phasing-in of indirect import bans takes into consideration the need to deploy an appropriate traceability mechanism that enables effective enforcement measures and minimises disruptions for market players.

(13) The ban on Russian diamonds is part of a G7 effort to develop an internationally coordinated diamond ban that aims at depriving Russia of such an important source of revenue. For the ban to effectively deprive Russia of revenues from diamond mining, action needs to be taken together with simultaneous action in other major markets for diamonds, including restricting imports of Russian diamonds that have been processed in third countries other than Russia.

(14) Decision (CFSP) 2023/2874 prolongs by an additional year specific derogations from the prohibition on imports from Russia of crude oil and petroleum products in order to ensure the security of supply of certain Member States.

(15) The price cap mechanism relies on an attestation process that enables operators in the supply chain of seaborne Russian oil to demonstrate that it has been purchased at or below the price cap agreed by the Price Cap Coalition. In order to further support the implementation of, and compliance with, that mechanism, while increasing barriers to the falsification of attestations, Decision (CFSP) 2023/2874 introduces a requirement that itemised price information for ancillary costs, such as insurance and freight, be shared upon request throughout the supply chain of Russian oil trade. In accordance with the Price Cap Coalition tier system for attestations that modulates actors’ compliance obligations on the basis of their access to the purchase price for Russian crude or petroleum products, the itemised price information is to be shared by those actors with access to that information, such as traders and charterers. Actors down the supply chain, such as shipowners and insurers, should be able to collect as part of their due diligence procedures, and share, the itemised cost information provided by actors closer to the origin of such information. Competent authorities can request that information from any actor, regardless of their place in the supply chain, at any time, in order to verify compliance with the price cap mechanism. An appropriate transitional period is provided for.

(16) Decision (CFSP) 2023/2874 also provides that the implementation and enforcement of the price cap mechanism should be further supported by information sharing between the Commission, with the support of the European Maritime Safety Agency, and Member States to identify vessels and entities carrying out one or more deceptive practices, such as ship-to-ship transfers used to conceal the origin or destination of cargo and manipulations of the automatic identification system, while transporting Russian crude oil or petroleum products. Such information could support enforcement actions by Member States.

(17) In order to introduce transparency into the sale of tankers, in particular second-hand carriers, that could be used to evade the import ban on Russian crude oil or petroleum products and the price cap agreed by the Price Cap Coalition, Decision (CFSP) 2023/2874 provides for a notification obligation for the sale of tankers to any third country and a derogation from the prohibition on the sale of tankers to Russian persons and entities, or for use in Russia. This obligation applies to the owner of a tanker who is a national of a Member State, to a natural person residing in a Member State, and to a legal person, entity or body which is established in the Union. The owner, or anyone acting on his or her behalf, should notify the competent authorities of any such sale concluded since 5 December 2022 and provide all the necessary details.

(18) The price cap mechanism provides that specific projects that are essential for the energy security of certain third countries may be exempted from the price cap agreed by the Price Cap Coalition. Decision (CFSP) 2023/2874 extends the exemption provided for in relation to the Sakhalin-2 (Сахалин-2) Project, located in Russia, until 28 June 2024 to ensure Japan’s energy security needs.

(19) Decision (CFSP) 2023/2874 further seeks to limit circumvention of the prohibition on the provision of crypto-asset wallet, account or custody services to Russian persons and residents by including a ban on Russian nationals or natural persons residing in Russia from owning or controlling, or holding any posts on the governing bodies of, the legal persons, entities or bodies providing such services.

(20) Additionally, Decision (CFSP) 2023/2874 extends the existing prohibition on the provision of services to also include the provision of software for the management of enterprises and software for industrial design and manufacture, subject to appropriate exemptions and derogations.

(21) In view of the importance of the Paks II project for the interests of Hungary in relation to security of energy supply, Decision (CFSP) 2023/2874 also clarifies that the exemptions and derogations in this Regulation concerning civil nuclear projects are fully applicable to all goods and services needed for that project.

(22) Decision (CFSP) 2023/2874 also imposes certain reporting requirements for the transfer of funds out of the Union made by entities established in the Union, including Special Purpose Entities, whose proprietary rights are owned by entities established in Russia, by Russian nationals or by natural persons residing in Russia.

(23) Moreover, Decision (CFSP) 2023/2874 requires that exporters contractually prohibit re-exportation to Russia and re-exportation for use in Russia of sensitive goods and technology as listed in Annexes XI, XX and XXXV to Regulation (EU) No 833/2014, common high priority items, or firearms and ammunition as listed in Annex I to Regulation (EU) No 258/2012.

(24) Finally, Decision (CFSP) 2023/2874 makes certain technical amendments, including by replacing exemptions from certain prohibitions by derogations, by adding exemptions for personal use, by providing for notification obligations, by adding references that are missing in some articles but which were included in analogous articles, and by deleting references to transitional periods which have expired and other references that are not necessary for complying with the purpose of a particular provision. The deletion of references to transition periods which have already expired is not intended to have any legal effects on past or ongoing contracts or on the applicability of those transition periods.

(25) These measures fall within the scope of the Treaty on the Functioning of the European Union and therefore, in particular with a view to ensuring their uniform application in all Member States, regulatory action at the level of the Union is necessary.

(26) Regulation (EU) No 833/2014 should therefore be amended accordingly,

HAS ADOPTED THIS REGULATION:

Article 1

Regulation (EU) No 833/2014 is amended as follows:

(4) in Article 3, paragraphs 4 and 5 are replaced by the following: ‘4.   The prohibitions in paragraph 2 shall not apply until 20 June 2024 to the provision of insurance or reinsurance to any legal person, entity or body that is incorporated or constituted under the law of a Member State with regard to its activities outside the energy sector in Russia.

(5) in Article 3a, the following paragraph is inserted: ‘3a.   By way of derogation from point (b) of paragraph 1 of this Article, the competent authorities may authorise, under such conditions as they deem appropriate, any activity referred to therein after having determined that, in accordance with point (b) of Article 5aa(3), such an activity is necessary to ensure the operation of a deep-water offshore gas project in the Mediterranean Sea in which a legal person, entity or body listed in Annex XIX was a minority shareholder before 31 October 2017 and remains so, provided that the project is solely or jointly controlled or operated by a legal person incorporated or constituted under the law of a Member State.”

(6) in Article 3c, paragraphs 5, 5a, 5b and 5c are deleted;

(9) in Article 3h, paragraph 1 is replaced by the following: ‘1.   It shall be prohibited to sell, supply, transfer or export, directly or indirectly, luxury goods, whether or not originating in the Union, as listed in Annex XVIII, to any natural or legal person, entity or body in Russia or for use in Russia.’

(23) in Article 5p, paragraph 2 is deleted;

(27) Article 12d is replaced by the following: ‘Article 12d The prohibitions laid down in this Regulation shall not apply to the provision of pilot services which are necessary for reasons of maritime safety.’

(28) the following Article is added: ‘Article 12g

(29) Annex IV is amended in accordance with Annex I to this Regulation;

(30) Annex VII is amended in accordance with Annex II to this Regulation;

(31) Annex XXI is amended in accordance with Annex III to this Regulation;

(32) Annex XXIII is amended in accordance with Annex IV to this Regulation;

(33) Annex XXIX is amended in accordance with Annex V to this Regulation;

(34) Annexes XXIIIA and XXIIIB are inserted in accordance with Annex VI to this Regulation;

(35) Annex XXXVI is added in accordance with Annex VII to this Regulation;

(36) Annex XXXVII is added in accordance with Annex VIII to this Regulation;

(37) Annexes XXXVIIIA and XXXVIIIB are added in accordance with Annex IX to this Regulation;

(38) Annex XXXIX is added in accordance with Annex X to this Regulation;

(39) Annex XL is added in accordance with Annex XI to this Regulation.

Article 2

This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 18 December 2023.

For the Council The President P. NAVARRO RÍOS

(1) OJ L, 2023/2874, 18.12.2023, ELI: http://data.europa.eu/eli/dec/2023/2874/oj.

(2) Council Regulation (EU) No 833/2014 of 31 July 2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine (OJ L 229, 31.7.2014, p. 1).

(3) Council Decision 2014/512/CFSP of 31 July 2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine (OJ L 229, 31.7.2014, p. 13).