Before heading off on their summer break, the ambassadors of the 27 EU member states agreed to review some of the individual sanctions on the mainly Russian people and companies that the bloc deems to have undermined Ukraine's territorial integrity.
Since the February 2022 invasion of Ukraine, the bloc has slapped asset freezes and visa bans on more than 1,800 individuals and entities, including Russian President Vladimir Putin, Foreign Minister Sergei Lavrov, and many oligarchs and businessmen close to the Kremlin. The rollover of these sanctions usually takes place in March and September each year, offering individual member states a chance to make changes as the six-month extensions require unanimity.
Although no individual sanctions have so far been removed, the discussions have given Hungary plenty of opportunities to voice its displeasure about the EU's general sanctions policy on Russia. While Budapest has eventually agreed to all the EU's restrictive measures to date, it has used its veto power to water down some sanctions -- for example, by not agreeing that the head of the Russian Orthodox Church, Patriarch Kirill, should be targeted by the bloc; and by securing opt-outs for itself when it comes to the EU's embargo on Russian oil.
In September 2022, when the cases of sanctioned individuals were up for review, Budapest asked for the removal of three Russian oligarchs. It backed down, according to diplomats familiar with the file, after Hungarian officials were promised that the sanctions reviews would take place every six months and not every 12 as most other member states wanted, giving Budapest more opportunities to challenge the listings.
Hungary did just that. Ahead of the extension in March of this year, Budapest wanted nine people removed from the sanctions list. Once again, Hungary backed down but only after getting a commitment from the legal service of the Council of the EU to thoroughly examine the legitimacy of some of the listings.
Deep Background: When discussing the legal review ahead of the upcoming September rollover, I was told by diplomats familiar with the issue but who prefer to remain anonymous as they aren't authorized to speak on the record that Hungary has once again pushed for nine removals. (It's not clear if these are the same people Budapest wanted taken off the sanctions lists in March.) In the talks that took place throughout July, it was clear that there would be some delistings, though not necessarily the ones Hungary was pushing for.
The Council of the EU's legal service has identified so-called "weak cases," ones that EU lawyers fear they would likely lose in the European Court of Justice (ECJ), if challenged. So far, over 70 individuals and firms -- often wealthy oligarchs using expensive European lawyers -- have lodged appeals against their listings in the ECJ. Many hearings have already taken place, and some rulings are expected to come this fall.
Brussels would very much like to avoid the humiliation of losing such cases as it could open legal grounds for even more delistings. The EU has already lost one case, on March 8, after Prigozhin's mother, Violetta Prigozhina, challenged her inclusion on the list.
She had been sanctioned by the bloc due to supposed business ties with her son, but the ECJ reasoned that these links were tenuous at best. She remains listed because the ruling only concerned the decision to sanction her in February 2022 and not the subsequent renewals of the restrictive measures in September 2022 and in March of this year when the scope of EU sanctions was widened to make it easier to target family members of oligarchs. A warning shot, however, had been fired.
- According to several officials who are familiar with the talks but who are not authorized to speak on the record, the EU is set to delist three individuals ahead of the September renewal: Aleksandr Shulgin, Farkhad Akhmedov, and Grigory Berezkin. Blacklisted in April 2022, all of them have taken their cases to the ECJ, and EU lawyers have indicated they are likely to win in court.
- Shulgin was presented in the EU's official journal, where the bloc's reasons for blacklisting are stated, as the "CEO of Ozon, Russia's leading multi-category e-commerce platform." The journal also noted that "he attended a meeting of oligarchs at the Kremlin with President Vladimir Putin to discuss the impact of the course of action in the wake of Western sanctions." According to EU sources familiar with his file but not permitted to speak on the record, Shulgin has submitted documents that state that he no longer has a connection to the company and no new evidence to the contrary has emerged.
- Akhmedov, who according to the EU's official journal, is "close to the Kremlin and is a leading businessperson involved in economic sectors providing a substantial source of revenue to the Government of the Russian Federation," notably by owning gas companies. According to EU sources familiar with his case, he is set to be delisted because he was sanctioned based on old information.
- Berezkin is described as "a leading Russian businessperson and considered to be the 'henchman' of President Vladimir Putin." As the chairman of the board of the Russian private equity firm ESN, the EU journal notes that he has invested in industries that have provided "a substantial source of revenue to the Government of the Russian Federation." According to sources familiar with his case, even some members of the Russian opposition support his removal from the list because he isn't thought to be closely linked to the Kremlin.
- Three removals were not enough for Hungary, however, with Budapest lobbying for a fourth person to be delisted. That was Nikita Mazepin, the racing-driving son of oligarch Dmitry Mazepin. Hungary might not get what it wants, though, as sources within the EU legal service have suggested that there is likely enough evidence to show that Mazepin junior has financial ties with his sanctioned father.
- There is still one key name missing from the sanctions list: Belarusian oligarch Alyaksandr Moshensky. Nicknamed "the fish king" due to his ownership of Belarusian seafood giant Santa Bremor, Moshensky is believed to enjoy close links to the Lukashenka regime. Various EU member states have tried to get him blacklisted several times, only to come up against Hungarian opposition, with Budapest citing "food security" as the reason. It's worth noting that Syarhey Niadbaylau, Moshensky's aide and the managing director of Santa Bremor, is also the honorary Hungarian consul in Belarus.
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