On December 18, the European Union approved the long-awaited 12th package of sanctions against Russia for its war in Ukraine.
According to European nations, this package focuses on ensuring the functioning of the previously adopted restrictions on Russia to prevent sanctions evasion and ensure that the sanctions already imposed work more effectively.
At the same time, experts say that it is necessary to align the sanctions between the EU, Ukraine, and the US. Natalia Sichevliuk, a legal advisor at Transparency International Ukraine, wrote this in her article.
Russia remains the country with the most severe sanctions in the world. These include not only bans and restrictions on Russia as a state, such as restrictions on trade or diplomatic relations with the aggressor state, but also personal sanctions against individuals and legal entities that support Russia’s war against Ukraine.
During almost two years of Russia’s all-out war against Ukraine, there have been reports of seizures of property of sanctioned Russians, bans on their entry into the territory of Western countries, and blocking of financial transactions.
But still, Moscow gets the resources to continue its war against Ukraine and manages to evade sanctions via trade trough third countries.
Sanctions turn to a mechanism for confiscating Russian property
Western sanctions against Russia for its war aggression against Ukraine primarily serve as political measures aimed at changing the behavior of sanctioned individuals, rather than legal ones.
From the very beginning, both Europe and the United States focused on the fact that sanctions would change the behavior of Russian businesses and oligarchs, influence the Russian leadership and Putin personally, and ultimately stop the war by causing them to lose access to their savings and experience a decline in profits.
Therefore, after Moscow’s expected behavior change, they intended to lift all restrictions, including returning frozen assets to their owners. But now Western allies are considering transferring frozen Russian property to Ukraine to rebuild the country, which has suffered terrible destruction from Russia’s war.
It is important that after Russia launched a full-scale invasion, sanctions in Ukraine have gone beyond their political dimension and become a mechanism for confiscating Russian property.
But so far, only in Ukraine sanctions have become a mechanism for confiscating Russian property. Canada has also developed a confiscation mechanism that still needs to be implemented.
The National Security and Defense Council of Ukraine, through a presidential decree, has imposed personal sanctions on almost 9,000 individuals and over 5,600 companies involved in the Russian war aggression.
As for Ukraine’s international partners, they imposed sanctions on more than 12,000 Russians and Russian companies. In particular, the United States, the EU, the United Kingdom, Canada, Switzerland, Australia, and Japan remain the leaders of this sanctions policy.
In terms of the number of Russians and Russian companies under sanctions, Ukraine is several thousand ahead of its Western partners, which is not a huge difference. However, synchronizing the sanctions in their content is important.
Except for Canada, which has developed such a mechanism, the Western countries cannot confiscate property through the sanctions mechanism. However, authorities can arrest the property, thereby depriving the owner of the ability to dispose of assets.
Confiscation of assets, unlike their blocking or freezing, is a legally more complicated process that requires thorough preparation, evidence collection, and court proceedings.
Lack of alignment in sanctions between Western allies and Ukraine
Experts found that the Western world has not sanctioned seven Russians in Ukraine. Among them:
- Yevgeny Giner is a Russian businessman and president of the CSKA football club. He probably has assets in Slovakia, as he and his partners have been doing business there for many years.
- Mikhail Shelkov, former head of the investment division of the state-owned Rostec company, which controlled military contractors in Russia, He and his partners also own a controlling stake in VSMPO-AVISMA, the world’s largest producer of titanium for the aerospace industry.
- Andrei Molchanov, a Russian oligarch, owns a controlling stake in one of the largest real estate development companies in Russia, LSR Group.
- Artemy Lebedev is a Russian blogger, designer, and businessman. His studio (Art. Lebedev Studio) has offices in London and New York.
There are a number of cases where Russian individuals and companies are subject to sanctions in the United States but are not subject to EU sanctions.
Russian oligarch Vladimir Yevtushenkov is on the sanctions lists of the UK, New Zealand, and Australia, but the EU and US have not sanctioned him. This is despite the fact that back in 2018, the United States conducted an investigation into Yevtushenkov because his company Sistema implemented projects in Russian-occupied Crimea.
Western partners have likely overlooked the above-mentioned Russians because their assets in these countries are not significant. But 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 assets.
However, even in this case, it still makes sense to impose sanctions. After all, including a person on the sanctions list, such as in the EU, prohibits all financial institutions of the bloc and other financial service providers from conducting financial transactions with the sanctioned individual. A sanction in the form of a ban on entry into the territory of a state restricts the mobility of the person.
Thus, it is the synchronized imposition of sanctions against Putin’s henchmen that will have the greatest effect and can really make their lives more difficult, even if they have managed to move their assets out of the jurisdiction of Ukraine’s allied countries.
New names in 12th package of EU’s sanctions against Russia
The 12th sanctions list, adopted on December 18, added more than 60 individuals and more than 80 companies.
It includes a ban on the direct or indirect import, purchase, or transfer of diamonds from Russia. It also stipulates that EU exporters will contractually prohibit the re-export of sensitive goods and technologies to the aggressor country when they enter into agreements with third countries.
The package also includes many other bans, including a ban on the transit of all military goods through Russia or a ban on Russian citizens owning, controlling, or holding any positions in the governing bodies of legal entities that provide cryptocurrency services.
The sanctions lists include, among others, the Russian military leadership.
These include the head of the General Staff of the Russian Aerospace Forces, Viktor Afzalov; the head of the Moscow City Duma, Alexei Shaposhnikov; and the members of Russia’s Central Election Commission.
The sanctions targeted companies and individuals closely associated with the Russian military and defense complex, including Director Yuri Chikhanchin of the Military Industrial Commission of the Russian Federation, CEO Boris Obnosov of the Russian rocketry company KTRV, as well as Spetsmash JSC, Perm Powder Plant, Uraltransmash, and others.
Additionally, it is important to address the fact that Ukrainian sanctions do not apply to Russian military officers Afzalov and Shaposhnikov.
Thus, both Ukraine and Western partner nations currently lack a centralized mechanism for anti-Russian sanctions.
It might be due to a lack of sufficient communication between national and international bodies working in the field of sanctions. As a result, it creates a risk of lowering the efficiency of anti-Russian sanctions. Thus, it reduces the pressure on the Russian economy, allowing it to sustain its war efforts in Ukraine and threaten a direct confrontation with the West.