The European Union has introduced the fifth package of sanctions. What is important to know

The EU, as part of a new package of sanctions, banned the import and transit of coal from RUSSIA, the EXPORT of printing paper, planting material and other goods important for the Russian market.What consequences this can lead to - in the material of RBC

After several days of consultations, the European Union introduced the fifth package of anti-Russian sanctions at the end of last week. it includes a broader €8 billion embargo on coal imports than previously stated, as well as a ban on the export of a wide range of products to Russia, including plants, photographic films, printing ink, paper, certain turbines and engines, particle accelerators, an extended ban on import of petrochemical equipment, including for LNG projects. This is stated in the Official Journal of the EU.

“Together with the previous four packages, these sanctions will increase economic pressure on the Kremlin and undermine its ability to finance the invasion of Ukraine,” the European Commission said in a statement.

The report emphasizes that these measures are wider and sharper, so that they "cut" even deeper into the Russian economy, and they are agreed with the EU's international partners.

How the EU managed to increase the amount of sanctions on coal from Russia

The fifth package of sanctions provides for a ban on the purchase, import or transit of coal and other solid fossil fuels from Russia; It will take effect from August 10th. Until then, the parties will be allowed to fulfill contracts concluded before April 9.

This ban affects 25% of all Russian coal exports, which is about €8 billion, according to the press service of the European Commission. A few days earlier, on April 5, the HEAD of the European Commission, Ursula von der Leyen, announced that the EU would ban coal imports from Russia for half the amount - € 4 billion per year.

EU announces details of new export and import sanctions against Russia Politics

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At the same time, according to the Federal Customs Service, in 2021 Russia exported coal for almost $17.6 billion, of which $3.7 billion to the European Union. According to Eurostat, the total import of coal and coal products from Russia to the EU in 2021 was estimated at € 5.17 billion (most of all in Germany - at € 988 million).

Most likely, the European Union considered that it actually had more opportunities to replace Russian coal than was previously allowed, and introduced a stricter ban than originally planned, says Finam's metallurgy analyst Alexei Kalachev. Apparently, initially the EU meant only coal (foreign trade nomenclature code 2701), but as a result, all types of solid fuels, including coke and peat, fell under the embargo, he added. Indeed, the final categories of coal products banned include coke and semi-coke and oils and other products of high-temperature distillation of coal tar, according to a publication in the EU Official Gazette. The import of these products from Russia to the EU countries in 2021 amounted to about another €3 billion. The European Commission confirms that the embargo has been imposed on “all types of Russian coal.”

It will be problematic to replace Russian coal, in particular energy coal, which is used to generate heat and electricity and makes up about 70% of all imports to Europe, says Kirill Chuiko, head of the analytical department at BCS Global Markets. Alternative deliveries from Indonesia and Australia will be more expensive due to the longer transport distance, he explains.

RBC sent inquiries to the press services of SUEK (the largest supplier of thermal coal from Russia to the EU), Mechel and Raspadskaya, which export coking coal used for steel production.

What else is prohibited to import from Russia

The EU has also decided to ban imports from Russia of certain types of timber, cement, potash and complex fertilizers, seafood, spirits, caviar and crustaceans. According to the European Commission, this ban will affect Russian goods worth €5.5 billion.

At the same time, the EU countries practically did not buy sturgeon caviar from Russia - on the contrary, it imported it from the Union countries. Italy acquired a small amount of Russian black caviar — 4 kg worth $2.7 thousand — in 2021, according to the Federal Customs Service. At the same time, in 2021, Russia imported 1.6 tons of sturgeon caviar from Italy for $242.6 thousand; caviar was also imported from Germany and France.

A ban on the import of crustaceans into the EU, which includes crabs, could block Russian fishermen from accessing one of the main transport hubs used to supply the most marginal aquatic product. Crabs bring more than 40% of export earnings to the Russian fishing industry, the All-Russian Association of Fishermen previously estimated. Most of the crabs harvested in Russia are exported: in the first half of 2021, this figure amounted to 70% of the total production. The main buyer of Russian crabs is the usa, which introduced a ban on their import from Russia back in March, but direct deliveries, as explained in the Fish Union, were insignificant. Crabs caught in the Northern Basin and the Far East went to buyers in transit through third countries, in particular the Netherlands. According to the Federal Customs Service, in 2021 the Netherlands was the second largest buyer of Russian crabs after SOUTH KOREA — 18.8 thousand tons of crustaceans worth $928.9 million were delivered there in 2021.

In general, the fifth package of EU sanctions contains import bans from Russia only for those goods that the EU can quickly replace, said Sergey Grishunin, head of the rating service of the National Rating Agency (NRA). Moreover, if necessary, national governments are allowed to allow the import of prohibited goods from Russia with the obligation to notify the European Commission about this within two weeks. Both export and import restrictions exclude products intended for mass consumption, as well as those related to medicine, pharmaceuticals, food and agriculture, so as not to “harm the population,” the European Commission points out.

How dependent is Russia on imported seeds and plants

According to the new package of sanctions, the export from the European Union to Russia of flowers (roses, rhododendrons, azaleas), as well as tubers and bulbs of plants, is limited. According to the Federal Customs Service of Russia, the import of these products from the category of living plants from the European Union in 2021 amounted to about $220 million.

Planting material for the most popular flowers in Russia - roses and tulips - is 100% imported, notes Alexei Sitnikov, president of the Greenhouses of Russia association. Rose cuttings were supplied from Holland and Germany, tulip bulbs from Holland. But Sitnikov does not expect big problems for the industry due to the ban on supplies from European countries. Enough planting material for roses has been brought to Russia, which can be propagated while simultaneously resuming internal breeding work to develop new varieties, he explains. Therefore, most of the existing investment projects that are engaged in growing roses have already been provided with materials, only new projects can experience difficulties with planting material at this stage, the expert believes.

Sitnikov notes that there may be difficulties with tulips: in Russia, in fact, there are no farms involved in the propagation of tulip bulbs. However, they are usually purchased in August-September, and flower growers have time to look for alternative suppliers.

So far, there are no questions regarding crop seeds - their supplies have not been banned, Russia has a stock of seeds that will be enough for the next sowing, and for the future the Ministry of Agriculture has provided for work to stimulate selection and seed centers, Sitnikov adds.

“Our country largely provides itself with all the components necessary for food production. For example, farmers mainly use domestic seeds of grain and leguminous crops, plant protection products, mineral fertilizers, and equipment, ”the press service of the Ministry of Agriculture told RBC earlier. At the same time, the possibility of promptly changing the routes for the supply of imported products, as well as reorientation to alternative markets, is currently being explored.

What sanctions are still imposed on trade between Russia and the EU

The EU expanded the embargo on the supply of equipment to Russia that could contribute to the “improvement of the military and technological capabilities” of the country, with categories of goods such as instrumentation of drilling rigs, monitoring and detection systems for hydrogen sulfide, equipment for seismological measurements, equipment and components for quantum computers, quantum electronics, several types of electron microscopes, metal additive manufacturing equipment, vacuum pumps, cryogenic cooling systems, high entropy alloys, explosives, etc.

The embargo is intended to affect those sectors "where Russia is vulnerable - for example, quantum computers and advanced semiconductors," the European Commission points out.

Separately, a ban has been introduced on the sale to Russia of goods that can help “improve its industrial capabilities”: these are, in particular, hydrogen and oxygen, certain metal compounds, polyvinyl chloride, paints and varnishes, film, some bathtubs, showers, toilet bowls, paper and cardboard , synthetic fabrics, ceramic roof tiles, aluminum LNG containers, car locks, liquid fuel burners, tunnel boring machines, some machine tools, transformers and batteries, particle accelerators, some railroad locomotives, fire engines, aircraft seats.

The EU also expanded the list of products for the petrochemical industry that are prohibited from being shipped to Russia by adding equipment for the production of LNG. According to the FCS, in 2021 Russia imported this equipment from the EU for $750 million.

The volume of the missing EU exports to Russia in value terms is estimated by the European Commission at €10 billion.

How much trade will be affected by the ban on access to the EU for ships and trucks from Russia

The European Union also banned Russian cars from transporting goods through European countries, and ships from Russia from entering European ports. These restrictions "will undermine trade carried out by road and sea transport, both from Russia and to Russia," the European Commission notes.

According to the EU, the Russian merchant fleet has 2,873 ships, and "these ships will no longer be able to call at European ports." The ban also applies to ships that have changed or will change the Russian flag after February 24.

According to Eurostat data analyzed by RBC, in 2021, almost 55% of imports of Russian goods to the European Union (€87 billion) were imported by sea, 7% (€11.7 billion) by road, that is, almost €99 billion in total. However, up to 70% of imports transported by sanctioned transport methods can potentially be withdrawn from these sanctions, since we are talking about the supply of Russian hydrocarbons, non-ferrous metals, food and agricultural products to Europe. Regulators in European countries may allow Russian trucks (vessels) to enter the territory of the EU (to enter the port) when it comes to transporting oil, petroleum products, gas, titanium, aluminum, copper, nickel, palladium, iron ore, pharmaceutical and medical products, agricultural products (including wheat and non-potash fertilizers), nuclear fuel for nuclear power plants and coal (until August 10).