Russia’s Sanctions Against Ukraine: Who Could Become a Target?
26 October, 2018

Russian President Vladimir Putin has decided to impose economic sanctions against Ukraine for "unfriendly actions." While the list of businesses and individuals has not yet been specified, Hromadske explored who could be affected by these sanctions.

What is the Decree?

The Russian decree "On special sanctions for unfriendly actions by Ukraine" consists of three points. Putin has instructed the Russian government to prepare a list of individuals and firms in Ukraine, against which "special economic measures" would be introduced, decide on the measures, and ensure their implementation.

Russian Prime Minister Dmitry Medvedev specified that this included blocking assets as well as prohibiting the withdrawal of funds and supplies of certain goods. He added that the sanctions would apply to "hundreds of individuals and entities" that were harming Russia and that the list would be made shortly.

Russian President Vladimir Putin (right) and Prime Minister Dmitry Medvedev during a meeting of the State Duma, Moscow, Russia, May 8, 2018 EPA-EFE/YURI KOCHETKOV

How would these lists be made? Andrey Movchan, an expert at the Carnegie Moscow Center believes that the lists will be created by lobbyists in the government.

"I think that now they are preparing the lists, all the lobbyists will be adding the names that are in their interest. Who will these lobbyists be? These will be political players who, one way or another, need to prove their worth, they will be economic players who will try to remove competitors from their field," Movchan told Hromadske.

Who Could be Banned?

Medvedev stressed that sanctions would apply to people and companies who "harm Russia" but would "not to touch ordinary people." So who is at risk?

Despite the annexation of Crimea and the war in the Donbas, Ukrainian companies are still working with Russia. However, these trade relations are weakening. According to estimates by analysts at YouControl, the trade turnover between Ukraine and Russia decreased by nearly 4.5 times between 2013 to 2016. While volume rebounded in 2017, it has not reached the previous level.

During the first three months of 2018, Ukraine increased its trade turnover with Russia by almost 15 percent – to more than $ 2.5 billion- compared to the same period last year.

Russia began to export almost a third more goods to Ukraine. Ukrainian companies however reduced exports to the aggressor country: during the first three months of this year by more than 10 percent – to $709 million. It is worth noting that over the same period, exports from Ukraine to the European Union increased by 26.5 percent, to $4 billion.

Ukraine largely exported mineral and chemical products as well as machinery and equipment to the Russian Federation. Food, fat and oil products are also among the leading exports. Therefore, it is likely that these goods and enterprises could be subjected to Russian sanctions.

Ilona Sologub, director of political and economic studies at the Kyiv School of Economics, told Hromadske until there would be specific list of companies from the Russian government, it was too early to predict.

This is not Russia's first attempt to block Ukrainian business. In August 2013, citing a "violation of sanitary norms," Russia rejected products from Roshen – the confectionary company of Ukrainian President Petro Poroshenko. Furthermore, Russia introduced a trade blockade, stopping all Ukrainian exports for several days. At the time, one of the most dependent industries was machinery - up to 90 percent of their production went to Russia. But after 2014, producers redirected flows, in particular to Latin America, Southeast Asia, China and Vietnam.

What About Ukrainian Sanctions? 

Less than an hour after Russia published the decree, a declaration was published on the website of the Council of the European Union. It stated that Ukraine, Montenegro, Albania and Norway joined the EU Council in its decision to extend sanctions against 155 people and 44 companies to March 15, 2019 due to "violation of the territorial integrity and sovereignty of Ukraine."

Ukraine’s economic sanctions against Russia have been in force for a long time. As of May this year, another 500 individuals and another few hundred companies have been added to the sanctions list.

Among those added this spring were Gazprom head Alexey Miller, Russian billionaires Oleg Deripaska, Igor Rotenberg, Suleyman Kerimov, Vladimir Bogdanov, Viktor Vekselberg and chairman of the board of VTB Bank Andrey Kostin. For the first time, the Ukrainian oligarch-fugitive Serhiy Kurchenko was added to the sanctions list of the National Security and Defense Council of Ukraine.

And in late September 2018, Ukraine imposed special sanctions against a number of transport companies in Russia that worked with companies in the occupied Donbas. The SBU then stated that during 2018, a number of Russian companies and individuals entered into "foreign economic agreements" with transport companies in the occupied Donbas. They transported goods from Russia to Donbas and vice versa through closed Luhansk customs border-crossing points Izvaryne, Dovzhanskyi and Chervona Mohila. Russian companies Russian Railways Logistics, Promkompleksplast, Gazgolder and others were also placed on the sanction list.

/Translated by Natalie Vikhrov