Sanctions against Russia: progress in Dutch compliance and enforcement | News item

News item | 21-04-2023 | 5:50 pm

Why are there sanctions against Russia?

The EU imposes sanctions against Russia in response to the invasion of Ukraine. The purpose of the sanctions: to make it as difficult as possible for Russia to wage war against Ukraine. And put pressure on Russia to stop the aggression. With the sanctions, the EU is sending clear signals: we support Ukraine. And there are consequences for those involved in violations of human rights and international law. The Netherlands continues to look within the EU for ways to further increase pressure on Russia with new sanctions.

Do sanctions against Russia work?

The sanctions against Russia are having an effect. This is evident in several ways:

• The EU’s export restrictions ensure that Russia has fewer resources and technology to wage war. As a result, Russian shortages are reported on the battlefield.
• By freezing assets of the Russian Central Bank, among others, Russia has less financial reserves.
• There are also trends that show that the Russian economy is in decline. That’s how Russia gets less income from exports (e.g. of energy), European companies are leaving from the country and foreign investment in Russia is historically low. The sanctions contribute to these trends.
• Read more about the consequences of the sanctions for the Russian economy.

Countering sanctions circumvention

The longer the sanctions last, the more impact they have on Russia. But also: the more Russia will look for ways to circumvent the sanctions. The Netherlands and other EU countries are taking strict action against this. The conscious and intentional participation of Dutch people or Dutch companies in order to circumvent the sanctions is punishable.

Customs is extra alert to new trade flows and checks for the risk that ‘back country’ will be used to export sanctioned goods via a detour to Russia. Because there are so many sanctions, a greater effort is needed to prevent circumvention. Not only in the Netherlands, but also in and with other countries. That is why the Netherlands is committed to greater cooperation between EU countries to prevent circumvention. That works better together.

Dutch state of affairs sanctions

Last year, the government presented the final report of the national coordinator for sanctions compliance to the House of Representatives. It stated how the Netherlands supervised the sanctions, and also where improvements were needed. In a letter to the House of Representatives dated 14 April 2023, the cabinet shares the current state of affairs. The Netherlands is committed to:

• modernizing the sanctions system with new rules and agreements. This is done under the coordination of the Ministry of Foreign Affairs.
• participate in EU working groups. The working groups in Brussels are intended to work together with EU countries to more effectively comply with sanctions and to exchange knowledge.
• exchange of data between government organizations. The Netherlands has set up the Sanctions Compliance Collaboration Platform (SPS), which meets regularly. This ensured, for example, that current criminal investigations were accelerated and new investigations were initiated.
• self-report obligation for sanctioned persons. As part of it In the seventh sanctions package against Russia, there is a self-report obligation for sanctioned persons or organizations. In the Netherlands, five reporting points have been set up where possessions can be reported. So far 12 reports have been received.
• use of frozen funds for reconstruction of Ukraine. The European Commission is actively considering – with the support of the Netherlands – how frozen Russian assets can be used for the reconstruction of Ukraine.
• more capacity for Customs. Supervision of sanctions requires a lot of effort from Customs. That is why extra resources have been added to the Customs budget until 2026 to recruit more people.

Frozen credits and assets in the Netherlands

On April 2, 2023, this was the state of compliance with the sanctions:

What are frozen funds and assets?

If assets (money) are frozen, an affected person, organization or company can no longer withdraw or transfer the money. If assets such as planes or ships are frozen, they can no longer be sold, traded or used as collateral. Possessions cannot be confiscated or expropriated by Dutch authorities.