Significant diplomatic capital has been invested by the EU, the United States, the UK and NATO in developing policies to deter Russia from invading Ukraine. Sanctions have been the main focus of discussion. EU Member States agreed in Council Conclusions that potential sanctions will include “a wide array of sectoral and individual restrictive measures that would be adopted in coordination with partners”, and UK Prime Minister Johnson stated before parliament that the UK and its allies are considering “imposing coordinated and severe sanctions, heavier than anything we have done before against Russia”.

However, what exactly such statements mean remains unclear. Furthermore, government officials have explicitly refused to give any information when asked about the details, and those who have given information did so under the condition of anonymity. To help companies plan ahead in light of such uncertainty and to help assess the risk of exposure to EU/UK sanctions, we outline below what EU/UK sanctions may be adopted, and key indicators that may influence both the severity and timing of such sanctions.

Potential Severity of EU Sanctions

Behind closed doors, Member States will most probably seek to agree on a modular package of sanctions which may be adopted depending on developments on the ground. The package of sanctions will potentially include the following:

  1. Sanctions on the Russian financial and banking sectors, ranging from sanctions on Russian banks, including asset freezes and limits on transactions, to further limiting Russian access to capital and the international bond markets, and freezing Russia’s access to the IMF’s Special Drawing Rights, to the most severe measure of excluding Russia from SWIFT.Banning Russia from SWIFT is an item being discussed at length by Member States, even more so as the European Central Bank has asked banks to consider how they would handle different risk scenarios related to SWIFT. It has also requested banks to share details of their own assessments and contingency plans. While the EU has some experience to draw on, as Iran was banned from SWIFT in 2012, the Council could not reach unanimity when considering whether to ban Russia from SWIFT in 2014 when Russia annexed Crimea. In this regard, we understand that some Member States, including Germany, have expressed opposition to the idea of cutting Russia off from SWIFT, and this option is likely to only be used as a last resort.
  2. Trade restrictions, ranging from severely tightened export controls on vital technologies, to the indefinite suspension of the Nord Stream 2 pipeline, or to restrictions on energy exports, although the latter remain unlikely. Further measures aimed at limiting future investment in Russian oil and gas exploration are also possible. Similarly, further sanctions on the Russian defense sector and/or Russian state-owned enterprises are also under consideration. While there was much debate over whether to tie Nord Stream 2 to developments at the Ukrainian border with initial opposition by Germany, it is now more likely that the pipeline will be targeted should Russia invade Ukraine, as Germany has signaled that sanctions on Nord Stream 2 are now on the table. This is supported by most EU Member States, the United States and the UK, despite some resistance, such as from Austria, which has a stake in Nord Stream 2 through the Austrian OMV Group, and from Hungary, which has close ties with Russia.
  3. Individual restrictive measures, such as asset freezes, prohibitions on making funds or economic resources available, and travel bans against individuals close to President Putin, although it appears that the EU is not considering sanctions on the president himself. When drawing up the list of names, the EU will in principle require a connection between the targeted individuals and the developments in Ukraine for them to be sanctioned, especially considering the potential for legal challenges.

Key Indicators Influencing the Severity and Timing of EU Sanctions

Whereas Russia is considered to be seeking to destabilize Europe by exerting pressure in sensitive areas, in particular energy sufficiency and cybersecurity, Member States are not yet fully aligned on the threshold which should trigger the adoption of restrictive measures. Businesses fearing exposure to potential sanctions should be casting an eye over the following indicators as they are the most likely to determine when the EU may adopt sanctions, and how severe these may be. Indicators include:

  1. How the situation evolves on the ground and political rhetoric. While Member States may be expected rapidly to adopt the most severe EU sanctions should President Putin choose to invade Ukraine, other scenarios should also be considered. In particular, Member States’ resolve to adopt sanctions may be tested should any Russian action fall short of a clear invasion, such as a “limited incursion” into Eastern Ukraine or damaging cyberattack against critical infrastructure, with reports of disagreements on the threshold to impose sanctions in the absence of a full-scale invasion. Furthermore, doubts have arisen about who exactly in Moscow is doing what. Therefore, a high level of deniability about what is happening at the borders may make it harder to mobilize a common EU position, even more so on particularly severe sanctions.
  2. The cost benefit calculus for European partners. The adoption of further EU sanctions against Russia will result in potentially severe repercussions. This outcome is unavoidable due to the EU’s deeper economic and energy ties with Russia compared to the United States for whom most sanctions present fewer risks, and the UK which is significantly less dependent on Russian gas. This risk is particularly acute for energy supplies, in a context of already heightened energy prices.
  3. How the United States reacts. The EU’s response to any Russian escalation is likely to be, initially at least, driven by the determination of the United States. If the United States takes an aggressive approach to new sanctions, the EU will be under pressure to follow suit. While differences between the sanctions’ packages are likely, there is a broad agreement between the United States, the EU, and the UK, that sanctions should be severe in case of a Russian invasion. Please see our colleagues’ note on potential US sanctions here.

Specificities of EU Decision Making for Sanctions

The Council of the EU adopts sanctions by unanimity. This process is complex as Member States’ interests often diverge. The Council may consider the adoption of a new sanctions framework, but it may also decide to extend the existing sanctions regimes targeting Russia.

The Council Decision is based on a proposal from the High Representative of the Union for Foreign Affairs and Security Policy. On the basis of the Council Decision, the High Representative and the European Commission will make a joint proposal for a Council Regulation.

Once an agreement is reached, the Council Decision and the Council Regulation will be published on the same day. Some sanctions (such as arms embargoes and travel restrictions) are only included in the Decision, and will still have to be implemented by the EU Member States. Restrictive measures will typically apply the day after the Council’s Decision and Regulation are published in the EU’s Official Journal.

Potential Severity and Timing of UK Sanctions

The UK’s Foreign Secretary Truss has stated that new sanctions legislation will be adopted imminently to enable the UK to “target more Russian interests that are of direct relevance to the Kremlin (…) so there would be nowhere to hide for Putin’s oligarchs or Russian companies involved in propping up the Russian state.”

Additional interviews given by Foreign Secretary Truss give a clearer understanding of the measures currently under consideration by the UK, which include:

  1. Designation of individuals and entities connected to the Russian state. The designation criteria currently available under the Russia (Sanctions) (EU Exit) Regulations 2019 (Russia Regulations) will be broadened by February 10, 2022. The current designation criteria only permit the targeting of individuals or entities involved in destabilizing Ukraine or undermining or threatening the territorial integrity, sovereignty or independence of Ukraine. The proposed amendments could significantly expand the reach of sanctions measures under the UK’s Russia sanctions regime. Foreign Secretary Truss has said the revised legislation will provide for the designation of companies linked to the Russian state, individuals and companies of strategic or economic interest to the Russian state, companies operating in sectors of strategic significance to the Russian state, and those who own or control such companies.  In light of comments from Foreign Secretary Truss that the amended legislation will be “very wide-ranging,” such measures could target the Russian financial, oil and gas and commodities sectors as well as government and military officials and oligarchs.
  2. Trade restrictions. While refusing to be drawn on the details of any UK package of measures, Foreign Secretary Truss has indicated that “nothing is off the table,” which may potentially include export controls on key technologies and measures targeting Nord Stream 2. In media reports, Foreign Secretary Truss already has indicated that the Nord Stream 2 project should be stopped in the event of a Russian invasion of Ukraine.
  3. Adopting potentially more severe sanctions than the EU. UK sanctions may go further than those being considered by the EU. While UK and EU sanctions against Russia currently are fairly closely aligned, Foreign Secretary Truss has stated that the proposed revisions to the UK’s Russia sanctions regime “will amount to the toughest sanctions regime against Russia [the UK has] had in place yet, and mark the biggest change in [the UK’s] approach since leaving the European Union.”
  4. Individual restrictive measures, travel bans and assets freeze measures may be adopted against Russian individuals sharing responsibility for Russia’s “aggressive, destabilizing action.” Further, UK businesses and nationals would not be able to transact with them.
  5. Preserving multilateral cooperation. The proposed amendments to the UK’s Russia sanctions regime are designed to permit the UK to act “in concert with the United States and other partners rapidly, multiplying our collective impact” in the event of any further Russian incursion into Ukraine.

Speaking during a joint press conference with President Zelensky of Ukraine on February 1, 2022, Prime Minister Johnson stated that the UK would enact the package of sanctions and other measures it has been preparing alongside allies “the moment the first Russian toe-cap crosses further into Ukrainian territory.”  During a debate in the House of Lords on the same day, Lord Ahmad of Wimbledon (Minister of State, Foreign, Commonwealth and Development Office) clarified that the trigger for the imposition of such measures by the UK would be “the physical movement of [Russian] troops” further into Ukrainian territory.

Specificities of UK Decision Making for Sanctions

The UK implements a range of sanctions regimes through regulations made under the Sanctions and Anti-Money Laundering Act 2018 (SAMLA). The SAMLA provides the main legal basis for the UK to impose, update, and lift sanctions. UK autonomous sanctions regulations made under the SAMLA generally come into effect on the same day that they are laid before parliament under the made affirmative procedure, which permits the UK government to make changes to sanctions regimes swiftly. Parliament then has a set period of time within which to approve the regulations (normally 28 days). If a regulation is not approved within the specified time period it stops being law at the end of the period. Some sanctions measures such as asset freezes and travel bans apply only to persons or ships that have been designated or specified by the UK government.  Designation decisions are published and enforced immediately.


While many leaders have vowed to adopt sanctions with “massive consequences” in face of a Russian invasion, it remains unclear what exactly this will mean, particularly if Russian action falls short of what can be considered a full invasion, due also to the complexities of obtaining EU unanimity on measures likely to cause considerable economic pain in Europe. The pointers provided based on the limited information made available by officials and existing sanctions regimes are, at this stage, only indicators which can be used to help companies assess risk. Nevertheless, preliminary steps can be taken to estimate the businesses’ potential exposure based on the above, and plan a course of action should acute risks be identified. Keeping a close eye over developments will be key to preparing for all eventualities.