EU Fast-Tracks New Russia and Belarus Sanctions while Indefinitely Immobilizing Russian Sovereign Assets
While discussions surrounding the adoption of a more substantive 20th “package” of sanctions in response to Russia’s war in Ukraine continue, the European Union has moved forward with the imposition of additional restrictive measures targeting (i) Russia’s energy sector and shadow fleet enablers, and (ii) hybrid threats posed by Russia and Belarus. This shift in approach signals the European Union’s willingness to be more proactive in closing loopholes and addressing circumvention.
In parallel, and as part of the negotiations relating to the provision of “reparations loans” to Ukraine, the European Union adopted an ad hoc mechanism to temporarily, but indefinitely, prohibit the transfer of the assets and reserves of the Central Bank of Russia and entities acting on its behalf or at its direction (“CBR”). Based on legal provisions distinct from those applicable to sanctions, this mechanism effectively ensures that such assets and reserves will remain immobilized, even if current sanctions to that effect—which must be renewed unanimously every six months—were to elapse. This shift in the European Union’s strategy is however not without challenges.
1. New Sanctions Targeting Russia and Belarus
1.1 New sanctions targeting Russia’s energy sector and shadow fleet enablers
New asset freeze designations (Article 2 and Annex I of Regulation 269/2014): Through Decision 2025/2594 and Regulation 2025/2588, the European Union imposed, effective December 15, 2025, asset-freeze measures and travel bans against:
- Five individuals who own and/or control companies which enable shipments and exports of Russian oil, and control a large proportion of Russia’s shadow fleet vessels; and
- Four shipping companies based in Russia, the United Arab Emirates and Vietnam, which manage shadow fleet vessels and engage in irregular and high-risk shipping practices.
Extension of the list of designated vessels (Article 3s and Annex XLII of Regulation 833/2014): Through Decision 2025/2617 and Regulation 2025/2618, which enter into force on December 19, 2025, the European Union designated 41 vessels that are part of Russia’s shadow fleet. These vessels are now subject to an EU port ban, as well as a ban on a broad range of activities and services.
A more proactive approach, to ensure the efficiency of sanctions: The fast-tracked adoption of targeted sanctions against Russian shadow fleet enablers, instead of waiting for the adoption of a broader 20th “package,” marks the acknowledgment that reaching a consensus on such broader packages is becoming increasingly difficult. At the same time, it signals the European Union’s willingness to act more proactively to close loopholes and tackle circumvention. In that regard, High Representative Kaja Kallas announced that the European Union would now “sanction shadow Fleet vessels on a rolling basis, with decisions every month.”
1.2 New sanctions targeting hybrid threats posed by Russia and Belarus
New asset freeze designations in response to Russia’s hybrid threats (Article 2 and Annex I of Regulation 2024/2642): Through Decision 2025/2572 and Regulation 2025/2568 the European Union imposed, effective December 15, 2025, asset freeze measures and travel bans against 12 individuals and two entities involved in Russia’s continued hybrid activities. These designations target foreign information manipulation interference, malicious cyber activities, electronic warfare, foreign-policy analysts, pro-Russian propaganda influencers, international Russophile movements, and members of the Russian military intelligence, including US, Swiss, and French citizens.
New asset freeze listing criterion targeting individuals and entities involved in Belarusian hybrid threats (Article 2 and Annex I of Regulation 765/2006): Adopted in direct response to the recent Belarussian meteorological balloon incursions into Lithuania’s airspace, Decision 2025/2585 and Regulation 2025/2601, which entered into force on December 17, now empower to the European Union to impose asset freeze measures under its sanctions regime targeting Belarus (Decision 2012/642 and Regulation 765/2006) against individuals and entities responsible for, implementing, supporting, benefitting from, involved in or facilitating Belarus’ hybrid activities.
2. Ad Hoc Mechanism Aimed at Indefinitely Immobilizing Russian Sovereign Assets
Context: Under the main sectoral sanctions regime targeting Russia, transactions related to the management of reserves and assets of the CBR were already prohibited, while information relating to such assets and reserves had to be reported to Member States’ national competent authorities (“NCAs”) and the European Commission (“Commission”) (Article 5a, paragraph 4 et seq. of Regulation 833/2014). Effectively, these assets were thus immobilized in the European Union.
As part of the discussions surrounding the potential use of these immobilized assets to provide financing to Ukraine in the form of “reparations loans,” concerns emerged that the renewal of these restrictive measures—which must be adopted unanimously by the 27 Member States every six months—may be vetoed, thereby forcing the assets to be returned to Russia.
To overcome this situation, on December 13, 2025, the European Union adopted an ad hoc mechanism, through Regulation 2025/2600, to temporarily, but indefinitely immobilize the CBR’s assets. This Regulation is not based on legal provisions governing sanctions, but based on the “emergency clause” contained in Article 122(1) of the Treaty on the Functioning of the European Union (“TFEU”), which empowers the European Union to adopt exceptional emergency measures “appropriate to the economic situation, in particular if severe difficulties arise in the supply of certain products, notably in the area of energy.” Contrary to sanctions measures, which must be adopted unanimously, measures are adopted under Article 122(1) based on a qualified majority vote.
Keeping the CBR’s assets immobilized: Regulation 2025/2600 effectively prohibits any direct or indirect transfer of assets or reserves of the CBR. In addition, it essentially replicates the reporting obligations set forth under Russian sectoral sanctions, although those would only apply “to the extent not already required by other provisions of Union law” (i.e., if and when reporting obligations under Regulation 833/2014 would no longer apply).
Effectively, Regulation 2025/2600 ensures that, even if EU sectoral sanctions against Russia were to be terminated, assets or reserves of the CBR will remain immobilized, without requiring a specific vote every six months.
This notwithstanding, such immobilization is designed to be “temporary” and should only for so long as “the making available of the significant resources to Russia to continue its actions in the context of its war of aggression against Ukraine poses, or threatens to pose, serious economic difficulties within the Union and the Member States and the risk of causing further serious deterioration of the economic situation in the Union and the Member States persists.” Three cumulative conditions are therefore set for such immobilization to be lifted: (i) Russia ceases its war of aggression against Ukraine; (ii) Russia provides reparations to Ukraine to the extent necessary to allow for construction without adverse economic or financial consequences for the European Union; and (iii) Russia’s actions, in the context of its war of aggression against Ukraine, have objectively ceased to pose a serious risk of severe difficulties to the economy of the European Union and its Member States.
To further ensure that immobilization cannot be jeopardized by Member States, the Commission is entrusted to review every 12 months whether the above conditions are met and, if so, to put forward a proposal to lift immobilization for adoption by the Council of the European Union.
Protecting EU operators from claims enforcement, but without right to damages in relation to potential retaliatory measures by Russia: Similar to Regulation 833/2014, Regulation 2025/2600 provides for a “no claims” clause, which protects EU operators by preventing the enforcement in the European Union of (i) claims or (ii) judicial, arbitral or administrative decisions linked to the measures imposed by Regulation 2025/2600, if they are made or have been obtained by the Russian Federation, the CBR or persons acting on their behalf or at their direction.
However, contrary to the Commission’s initial proposal, Regulation 2025/2600 does not entitle EU financial institutions to claim damages in the European Union in case of expropriation, seizure, confiscation, transfer or similar measures imposed by Russia in retaliation. Actions for damages remain nonetheless foreseen under the EU sanctions regimes targeting Russia, in particular Regulations 269/2014 and 833/2014.
An innovative approach, which is not without risks: The use of Article 122(1) TFEU is justified in Regulation 2025/2600 by the need to “avoid a serious deterioration of the economic stability in the EU and its Member States by preventing significant resources being made available to Russia.”
While Article 122 TFEU has been seldom used in the past, including for the adoption of the SAFE Regulation in response to the war in Ukraine, several Member States – despite having voted in favor of the adoption of Regulation 2025/2600 – cautioned that the use of the “emergency clause” implied “legal, financial and institutional consequences that might go well beyond this specific case.” Going further, Hungary has publicly stated its opposition to Regulation 2025/2600, arguing that the use of the “emergency clause” circumvents the unanimity requirement for imposing sanctions, while reserving its right to challenge the text before EU courts.
