Sanctions Ensemble: How Synchronized Are Anti-Russian Restrictions and Bans in Ukraine and the West?

Transparency International Ukraine has analyzed how exactly the sanctions on Russia applied in the EU and the United States differ from the restrictions in Ukraine. 

On December 18, the European Union finally approved the long-awaited 12th package of sanctions. It provides, in particular, for a ban on the direct or indirect import and purchase or transfer of diamonds from Russia. It is also indicated that exporters from the EU on a contractual basis will prohibit the re-export of secret goods and technologies to the aggressor country when concluding agreements with third countries.  

There are many other prohibitions in the package, in particular on the transit of all military goods through Russia or the prohibition of Russian citizens to own, control, or occupy any positions in the governing bodies of legal entities that provide cryptocurrency services. 

However, according to our European partners, most of the attention in this package is paid to ensuring the functioning of the previously adopted restrictions on Russia so that the already imposed sanctions function more effectively. Here, I wonder what exactly can interfere with this efficiency.

How the understanding of sanctions changed in almost two years of the full-scale war 

Russia remains the most sanctioned country in the world. It is not only about prohibitions and restrictions on the Russian Federation as a state, for example, restrictions on trade or diplomatic relations with the aggressor, but also about personal sanctions against individuals and legal entities that support the Russian war against Ukraine. In particular, for almost two years we have been reading news about the seizure of property of sanctioned individuals, the ban on their entry into the territory of the Western world, the blocking of financial transactions, etc.  

As a rule, sanctions are primarily political measures, not legal ones, and they are designed to change the behavior of sanctioned persons. Therefore, after such changes, all restrictions should be lifted; for example, frozen assets will be returned to their owners. In addition, states or blocs of states, such as the EU, have appropriate laws governing the imposition of sanctions on a person as well as providing an opportunity to appeal such measures.  

For example, this week, the Court of Justice of the European Union lifted sanctions against Viktor Yanukovych and his son based on the results of the appeal. The reason was that at the time of their inclusion in the EU sanctions list in 2021, there was still no confirmation that the trial of the fugitive president for treason was politically impartial. However, this decision of the EU court is not critical because the EU applied sanctions to Yanukovych again in 2022, and these prohibitions remain in force. 

There are also cases where the EU court decided to exclude the Russians from the sanctions lists due to the rupture of their relations with Putin’s military machine. For example, in November this year, sanctions were lifted regarding Oleksandr Pumpianskyi. The reason for the imposition of sanctions was that he was on the board of the Pipe Metallurgical Company belonging to his father and cooperating with Russian state-owned enterprises Rosneft, Gazprom, and Russian Railways. However, after the twice-extended period of the application of sanctions, Pumpianskyi Jr. left the boards of the Pipe Metallurgical Company, Sinara Group, and Sinara Bank. 

From the very beginning, both Europe and the United States, when applying sanctions, focused on such approaches so that through sanctions, Russian enterprises and oligarchs, after losing access to their savings and due to a decrease in profits, changed their behavior, influenced the leadership of Russia and personally Putin, and stopped the war. But even though they discussed the possibility of transferring frozen Russian property to Ukraine, this was not the main goal of the sanctions policy of our international partners. 

It seems that now the situation is somewhat changing, in particular because of the understanding that the behavior of the sanctioned Russians cannot be corrected. Therefore, in recent months, we have often heard news about the consideration of new ways to confiscate the assets that have already been sanctioned. In particular, this was actively discussed in Europe, and recently, there was information about significant changes in this issue in the United States as well.

Lack of synchronization in restrictions and bans

To date, in Ukraine, according to the decision of the National Security and Defense Council, enacted by a presidential decree, personal sanctions have been applied to almost 9,000 individuals and more than 5,600 companies connected to Russia.  

After the full-scale invasion, sanctions in Ukraine did go beyond their political dimension and became a mechanism for confiscating Russian property.  

Thus, initially, a specific person is sanctioned under the decision of the National Security and Defense Council in the form of blocking their assets located on the territory of Ukraine. After that, the Ministry of Justice, if there is sufficient evidence, may apply to the High Anti-Corruption Court with a statement of claim for the recovery of the property of such a person. Currently, we have 29 such HACC decisions, and work on the confiscation of Russian property in Ukraine continues. 

If we talk about Ukraine’s international partners, they have imposed sanctions on more than 12,000 Russians and Russian companies. In particular, the leaders of such a policy today are the United States, the EU, the United Kingdom, Canada, Switzerland, Australia, and Japan. Except for Canada, where such a mechanism was developed, it is impossible to confiscate property through the sanctions mechanism in these countries. But it can be seized; that is, the owner can be deprived of the opportunity to dispose of their assets.  

We see that in terms of the number of Russians and Russian companies that are sanctioned, Ukraine is several thousand individuals ahead of its Western partners; that is, the difference is quite small. However, we decided not only to compare the number of sanctions, but also to check whether they were synchronized in their content. 

As mentioned earlier, based on the sanctions applied, Ukraine confiscated assets in 29 cases. Confiscation of assets, as opposed to their blocking or freezing, is a legally more complex process that requires thorough preparation, the collection of evidence, and consideration of the case in court. Thus, the High Anti-Corruption Court, satisfying the claim, records in its decision the fact of support of Russia’s military aggression by the sanctioned person.  

But did these decisions of the HACC with the facts of pro-Russian activities of individuals have any influence on international allies during the formation of their sanctions lists?  

After analyzing all 29 cases of confiscation in Ukraine, we found that in the countries of the Western world, sanctions were not applied to seven Russians. Among them are: 

1. Yevgeny Giner, a Russian businessman, president of the CSKA football club. He probably has assets in Slovakia because he has been doing business there with his partners for many years.
2. Mikhail Shelkov, the former head of the investment division of the state-owned company Rostec, which controlled military contractors in Russia. He and his partners also own a controlling stake in VSMPO-AVISMA, the world’s largest titanium producer for the aerospace industry.
3. Oleg Polukhin, the rector of the Belgorod State National Research University.
4. Anatoly Torkunov, the rector of the Moscow State Institute of International Relations of the Ministry of Foreign Affairs of the Russian Federation.
5. Artemy Lebedev, a Russian blogger, designer, and businessman. The offices of his studio (Art. Lebedev Studio) are located in London and New York.
6. Andrey Molchanov, a Russian oligarch who owns a controlling stake in LSR Group, one of the largest construction companies in Russia.

There are also cases where only one ally state imposed sanctions against pro-Russian henchmen. For example, only Canada applied sanctions against the deputy chairwoman of the so-called “public chamber of the Donetsk People’s Republic” Kateryna Martyanova and the Russian airline Volga-Dnepr.  

Interestingly, the Russian oligarch Vladimir Yevtushenkov was included in the sanctions lists of the UK, New Zealand, and Australia, but is not sanctioned in the EU and the United States. This is although the U.S. was investigating Yevtushenkov back in 2018 because his company Sistema implemented projects in Crimea.  

We can assume that Western partners ignored the above-mentioned Russians because they did not have significant assets on the territory of these states. However, this is most likely due to the complex ownership structure of their assets. That is, it is very difficult to identify the ultimate beneficiary of such an asset.  

It is unlikely that Russian oligarchs, like Shelkov and Giner, do not own any property in the West indirectly. However, given all the time since the beginning of the full-scale invasion, it is likely that the Russians managed to withdraw their assets from the jurisdiction of Ukraine’s allies or transfer them to nominal owners. 

However, even in this case, it still makes sense to impose sanctions. After all, if a person is included in the sanctions list, for example, in the EU, then all financial institutions of the bloc and other financial service providers are prohibited from conducting financial transactions with the sanctioned person, if this can directly or indirectly generate their income or provide access to assets. In addition, the sanction in the form of a ban on entry into the territory of a state or, especially, a bloc of states, as in the case of the EU, also significantly limits the mobility of a person.  

Thus, it is the synchronized imposition of sanctions against Putin’s accomplices that will have the greatest effect and can really significantly complicate their lives, even if they manage to withdraw their assets from the jurisdiction of Ukraine’s allies.

Who did not get on the sanctions lists of Ukraine? 

Ukraine has not imposed sanctions on some important Kremlin accomplices, either. This is even though restrictions have already been imposed in the West, and in Ukraine, these people have long been well known.  

Who has not been sanctioned by Ukraine? 

Andriy Kliuyev, a former head of the Administration of fugitive President Yanukovych, in particular responsible for the bloody dispersal of the Maidan and support for the separatists. He has been under U.S. sanctions since 2015.

Andriy Portnov, a former deputy head of the Administration of the fugitive President Yanukovych. The U.S. imposed sanctions on him in 2021, indicating that Portnov had established extensive ties with Ukraine’s judicial and law enforcement apparatus through bribery.

Volodymyr Sivkovych, a former deputy head of the National Security and Defense Council of Ukraine during the Azarov government, an associate of traitor Viktor Medvedchuk. He has been under sanctions in the United States, the United Kingdom, Australia, and New Zealand since 2022. 

The situation with sanctions in the form of blocking the assets of oligarchs Dmytro Firtash and Pavlo Fuks is also interesting; they were introduced in Ukraine in 2021 before the update of legislation allowing confiscation. Thus, until the NSDC “blocks” the assets of pro-Russian oligarchs, we will not witness the confiscation. 

The absence of the traitors’ names on the sanctions lists of the National Security and Defense Council for almost two years of the full-scale invasion of Russia is unacceptable. Especially given that before February 24, 2022, the public had many questions to these people. Ukraine should be a leader in the process of bringing Putin’s henchmen to justice. Moreover, we have a legislative opportunity to confiscate their assets based on sanctions.

Will the 12th sanctions package change the situation? 

More than 60 individuals and more than 80 companies were included in the sanctions list adopted on December 18. 

In particular, Ilya Medvedev, the son of Dmitry Medvedev, who is responsible for creating digital services in the illegally occupied Ukrainian regions, was included in the lists. Among other things, he coordinated the I Am a Russian project, aimed at providing Russian public services to residents of these regions, including the provision of a simplified procedure for obtaining Russian citizenship, social services.  

The military leadership of Russia was also included in the lists: Viktor Afzalov, the Commander-in-Chief of the Aerospace Forces; Alexei Shaposhnikov, the head of the Moscow City Duma; and the entire composition of the central election commission of Russia. In addition, sanctions were imposed on companies and individuals closely associated with the military-defense complex of Russia: Yuri Chikhanchin, Director of the Military-Industrial Commission of Russia; Boris Obnosov, General Director of the Russian missile-building company JSC Tactical Missiles Corporation (KTRV); JSC Spetsmash; Perm Gunpowder Plant; Uraltransmash, etc. 

The updated list also mentions Russian propagandists and collaborators working in the Russian-occupied territories of Crimea, as well as Zaporizhzhia and Kherson oblasts (Alyona Trokay), and companies that provide broadcasting of the propaganda agenda (the Spas TV channel). 

The EU has included a significant number of sanctioned persons in Ukraine, in particular the above-mentioned Russian businessmen and rectors, in the updated list of important Russian henchmen. However, Afzalov and Shaposhnikov are not under Ukrainian sanctions, which would be an appropriate thing to correct.  

It is also interesting that almost half a year has passed since the adoption of the previous package of sanctions, so we are witnessing a tendency for the reduction of sanctions activity among Ukraine’s partners.

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As we can see, both in Ukraine and in our partner countries, there is currently no centralized mechanism for anti-Russian sanctions. The sanctions lists of Ukraine and its allies are not synchronized, and both lack influential Russian henchmen. Slowing down the pace of updating sanctions lists by our allies does not contribute to the joint anti-Russian effort. The longer a company or a person is not subject to sanctions, the less likely they are to be affected by such bans after they are adopted. 

We assume that, among other things, this situation was the result of the lack of sufficient communication between national and international bodies working in the field of sanctions. As a result, there is a risk of losing the opportunity to seize or confiscate Russian property. Therefore, we hope that this will not be permitted and that, on the initiative of Ukraine, it will eventually be possible to establish a single sanctions mechanism with our partners in the war against the aggressor.

This publication was prepared by Transparency International Ukraine with the financial support of Sweden.