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Now, back to the news. This week, our main story is about how EU sanctions have been tightened to prevent Russians from bringing items as mundane as toothpaste into the bloc’s territory. Also, we’ll look at why Russian authorities are continuing to subsidize the country’s increasingly expensive mortgage rates, and at the last elections in Russia before Putin’s presidential ballot of 2024.
Why cars and personal items could be confiscated
The European Commission made new clarifications in the sanctions regime against Russian citizens — and it became apparent that Russians are now barred from bringing any personal items into the European Union, from cars and laptops to simply a tube of toothpaste.
These “new” restrictions on Russians are described in the Sept. 8 update to the FAQs relating to sanctions against Russia.The update explains that any Russian-registered vehicle, whether intended for personal or commercial use, will be considered an illegal import and banned from entry into the EU.
The ban on Russian-registered cars is nothing new, having been implemented in 2022 in response to the full-scale invasion of Ukraine. The European Commission has merely provided up-to-date official confirmation. The implementation of the rules depends on the specific country. But earlier this summer, German customs aalready made reference to the ban and warned that it could confiscate the private cars in which Russians entered the country.
At least a dozen motorists were affected, including one case in which the German authorities impounded a car with Russian plates belonging to a Belgian citizen who drove into Germany. According to the Russian Embassy in Berlin, the German customs service continued to seize cars into the fall. At least one Russian managed to get his car back, with customs officials admitting that there were no grounds for confiscation.
The same Sept. 8 update explained that Russians’ personal items are also subject to seizure. The list includes not only passenger cars, but many other common possessions including laptops, cellphones, suitcases, leather and fur goods, jewelry, shampoo, toothpaste, yachts and toilet paper. The ban does not extend to gold jewelry intended for personal use.
The European Commission spokesman Daniel Sheridan Ferrie, speaking to The Bell, said that clothes worn by a person when crossing the border are unlikely to be used to circumvent sanctions. That is unlike, cars or other valuable items.
What’s next?
The enforcement and implementation of sanctions lies with the EU member states, the clarification explained. The relevant authorities in these countries should determine whether the legislation has been violated and apply the appropriate measures.
“Member states are obliged to comply with European sanctions. The European Commission periodically issues guidance to help member states understand their obligations, although guidance alone does not change the legal situation,” Ferrie told The Bell.
Several Russian lawyers argue that confiscating personal items is unlawful, as Article 3i of the legislation prohibits the import or transfer of goods that “generate significant income for Russia.” This implies that the goods are intended for sale. “The fact that a Russian citizen is on the territory of another state, assuming he travelled there not on forged documents but on a legal basis, does not constitute a crime,” said Vladimir Starinsky, chairman of the Starinsky & Partners law firm.
Why the world should care:
From a legal standpoint, the ban on importing personal items should have been enforced since 2022. But there have been no reports of European customs services confiscating laptops or toothpaste from Russian visitors. However, German customs impounded vehicles with Russian plates. While this is hardly a frequent occurrence, these incidents show that the European authorities have taken at least some steps to enforce sanctions legislation.
The ban on bringing personal items into the EU was widely discussed by Russians on social networks this weekend. These restrictions, if enforced strictly, will certainly pose problems for citizens.
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Russian authorities start winding down the preferential mortgage program
With the Russian Central Bank raising its base rate, the Russian authorities have begun tightening the conditions to access preferential and family mortgages. Previously, this scheme allowed Russians to take advantage of subsidized loans to buy houses. The program is consuming increasing levels of budget funding, but the authorities are apparently not able to make radical changes.
- Preferential and family mortgages enable Russians to take out loans at reduced rates (8% or 6% respectively) under certain conditions, such as purchasing an apartment in a new building. Typically, Russian families cannot purchase a home without a mortgage. Each month, the banks receive funds from the state budget to subsidize the amount of interest lost when compared with the base rate, which has typically been around 3 percentage points higher. However, in mid-August, during the currency crisis, the Bank of Russia suddenly hiked its annual rate from 8.5% to 12%, increasing the amount which needs to be subsidized. Now, the average market rate for a mortgage in Russia hovers around 15%.
- The Russian mortgage market continues to grow quickly despite the war and the economic crisis. The regulator’s latest figures show that 56.1% of mortgages are part of the preferential program. In total, the mortgage portfolio increased by 11% to $162.6 billion since the start of 2023.
- As the base rate rises, driving up commercial lending rates, the preferential mortgage scheme becomes another headache for the government. The higher the base rate, the more budget money is needed to subsidize the mortgage scheme to make up the difference. However, the Central Bank repeatedly warned in the past that discounted mortgages increase the risks on the mortgage market. For example, it can lead to an imbalance in the market for new builds and pre-occupied housing (the former is 40% more expensive than the latter).
- Now the authorities are considering some fairly toothless changes in the terms and conditions. The minimum deposit is set to increase from 15% to 20%, and the maximum available subsidy for the banks could be cut by 0.5%. But banks that issued preferential mortgages for homes in rural areas already stopped that program due to the high base rate.
Why the world should care:
These first steps seem insignificant, but that’s not surprising. With the 2024 presidential elections on the horizon, officials are unwilling to cut social programs so as not to jeopardize President Vladimir Putin’s rating.
A rehearsal before Putin’s election in 2024
Last week, Russia held federal and regional elections in 49 of its 83 regions, as well as in Crimea and the four regions of occupied Ukraine. Russians chose mayors, regional leaders and deputies for regional parliaments and the upper chamber of the Federation Council.
- This year’s elections are affected by the greatest pressure on candidates, observers and voters seen at any time in Putin’s 23-year rule, according to a report from the independent election monitoring organization Golos. Last month, members of Golos had their homes searched by the police, and their chairman was arrested. Many regions saw the blandest, most inconspicuous campaigning of modern times and in many cases the formal opposition candidates merely pretended to take part, the movement’s analysts wrote.
- This year’s elections officially lasted for three days, even though the elections themselves were labeled “single voting day.” Electronic voting was used in 25 regions, and Golos reported mass coercion to force voters to use online polling. Putin himself cast his vote electronically.
- Experts believe that online polling runs the risk of falsification and compromises voter anonymity. With electronic polling, it is hard to ensure that each vote is legitimate. “You can’t see if, for example, an employee of a state organization might have been forced to vote for a candidate, how they might have sat him at a computer, how they pressured his colleagues in the same way,” said Mikhail Klimarev, executive director of the Internet Protection Society.
- For the first time, elections were held in the occupied territories: Donetsk, Luhansk, Kherson and Zaporizhzhia. In these regions, the ruling United Russia party recorded an expected victory. Judging from photos from these regions, in many instances voters cast their ballots under the gaze of masked men carrying machine guns.
Why the world should care:
Wartime elections in Russia and the occupied territories of Ukraine passed with no big surprises. They can be seen as a dress-rehearsal for Putin’s 2024 election. However, there is still a question mark hovering over the role of online voting. It’s possible that the system will be further developed to cover a wider geographical area, suggested pro-Kremlin analyst Alexei Chesanov.
