Ukraine’s Sanctions Policy: Learning the Ropes

BY MARIA SHAGINA

Ukraine has been learning how to use sanctions since 2014. In response to Russia’s annexation of Crimea and incursion into the Donbas, Kyiv adopted the Law on Sanctions. The restrictive measures included personal and economic sanctions that can be applied to foreign individuals and entities to protect Ukraine’s national interests, security, and sovereignty. Predictably, the first applications of the law targeted a wide range of Russian public officials, the military, entities, and individuals, including Ukrainian citizens, engaged in separatist and terrorist activities in the Donbas and Crimea who directly threatened to undermine the country’s territorial integrity.  

Over the last few months, Ukraine has become more assertive in using this foreign policy tool. In January 2021 the National Security and Defense Council (NSDC) imposed sanctions on the Chinese aviation firm Skyrizon, which has been seeking to acquire control of the Ukrainian aerospace company Motor Sich. Then, in February, Ukrainian president Volodymyr Zelensky signed a decree imposing economic sanctions on Nicaragua in response to that country’s decision to open an honorary consulate on the Crimean Peninsula, seized by Russia in 2014 but still claimed by Ukraine as part of its sovereign territory. Later that same month the NSDC decided to introduce sanctions against Taras Kozak, a Ukrainian politician affiliated with the Opposition Platform—For Life party, and banned eight sanctioned companies, including 112 Ukraine, NewsOne, and ZIK television networks, all part of the Novyny media holding created by Kozak. The channels are widely believed to be linked to Viktor Medvedchuk, a US-sanctioned Ukrainian tycoon with close ties to Russian president Vladimir Putin (See Focus Ukraine coverage of the issue here and here).

The latest decisions mark a notable departure from Kyiv’s previously reactive responses and invite closer attention to the country’s sanctions policy, in particular its objectives, justification, and design, all of which will be critical for assessing the sanctions’ effectiveness. Flagging current problems can serve as an early warning of the misuse of sanctions in the future.  

Clear Policy Objectives and Communication

Sanctions are considered an exceptional instrument to be used in exceptional situations. Resorting to sanctions on every occasion as the state’s go-to tool undermines their credibility. This is especially detrimental in situations in which their use is indeed appropriate.

In the case of sanctions against the pro-Russian TV channels, the primary objective of the sanctions and strategic communication about the legal basis for their imposition got lost in translation. The sanctions were justified on grounds of national security, but whether the primary goal was to fight Russia’s disinformation campaign or to counter terrorism financing remains unclear. The mixed messaging and the failure to disclose an evidentiary basis for the sanctions cast a shadow on the transparency of the government’s actions. While many supported the government’s efforts to clamp down on the conduit of Russian misinformation and propaganda, the extrajudicial nature of these measures raised concerns about media pluralism. The move echoes the 2017 sanctions banning public access to Russian social media platforms, search engines, and news. Those sanctions similarly raised rule-of-law concerns and did not succeed in eliminating the threat of Russian propaganda in the national information space.  

The sanctions against both the pro-Russian TV channels and the Chinese investors appear to have been employed as a quick-fix tool: the targets’ assets were frozen without delay and the companies’ broadcast licenses were rescinded. The questions “why now” and “why those specific targets” remain unanswered, but Ukraine seems to have profited from riding on US moves. Earlier, in December, Washington had added Chinese companies to its military end-use list and sanctioned Kremlin-linked Ukrainian officials for elections interference. Following the US actions, it seems that Kyiv decided it could tackle its own domestic issues, while avoiding much international criticism.

While the sanctions had an immediate effect, judicial proceedings should not be delayed. The evidentiary standards required for the imposition of sanctions are lower than those required to launch a criminal investigation through the courts. And therein lies the danger: insofar as sanctions cannot ensure proper due process, slapping them on every problem is a slippery slope and can result in politicized decision-making. NSDC Secretary Oleksiy Danilov has already announced that further sanctions against Ukrainian parliamentarians and media are on the way. Last week, eight individuals, including Viktor Medvedchuk and his wife, Oksana Marchenko, were sanctioned for financing terrorism. Unless there is a criminal investigation, the robustness of the evidence will not be disclosed to the public.

The sanctioned owners of the Kremlin-linked TV channels have already filed a case with Ukraine’s Supreme Court. Even if they are unsuccessful domestically, the claimants can sue the Ukrainian government in the European Court of Human Rights to defend their due process and freedom of speech rights. If the government loses the case because of weak evidence, it would severely undermine respect for sanctions as a serious policy tool.

Sanctions Design

A robust and systematic approach to selecting designees is an important step in upholding the legitimacy of sanctions and predetermining their expected effectiveness. Since 2014, the design of the Ukrainian sanctions against Russia has been quite inconsistent and patchy. The proportionality of measures has lacked a clear logic: for some, the sanctions have been imposed for one, three, or five years, while for others they are permanent. The same problem extends to the sanctions types. On the Russia sanctions list, some individuals are targeted with visa bans, while others are additionally subjected to asset freezes. This contradicts international practice, where visa bans and asset freezes go hand-in-hand. Despite Kyiv’s hawkish rhetoric vis-à-vis Moscow, the economic sanctions against Russia remain selective and do not cover specific sectors. Paradoxically, the first-ever sectoral sanctions have been imposed against Nicaragua, not against Russia.

Comprehensive Approach

To work properly, sanctions should be an integrated part of a wider framework accompanied by other policy instruments directed at the same objective. Hybrid threats require comprehensive strategy more than traditional threats do. Disinformation, cyber threats, and terrorism financing can be addressed by introducing sanctions, but their success is critically reliant on the development of a whole-of-government approach.

To fight disinformation, sanctions threats can be a powerful deterrent for the perpetrators, but sanctions should be part of a comprehensive strategy toward Russia’s hybrid warfare and need to be used in conjunction with stricter media regulation, training for media literacy, and closer cooperation with the private sector. To counter terrorism, financial sanctions can be applied to nonstate actors involved in coercive and subversive activities that do not meet the threshold of warfare. However, sanctions serve here as a preventive or disruptive tool and should be complemented by administrative and criminal proceedings. To combat cybersecurity threats, robust export controls can prevent the import of goods and technology used for conducting hostile cyber activities, but should be complemented by building up resilient critical infrastructure. Other tools of economic statecraft such as robust investment screening can be a more subtle way to address unwanted geoeconomic influences while keeping political tensions to a minimum.

It is too early to say whether the latest episodes of sanctions are already an indicator of sanctions’ misuse. Sanctions have only recently become a major instrument in President Zelensky's toolkit for ensuring national security. Their use should not, however, become a pretext for failure to address domestic squabbles or delaying judicial reforms. Kyiv’s more assertive use of sanctions should invite a rigorous revamp of the government’s policy, with clear policy objectives, strategic communication, and a comprehensive approach.

The opinions expressed in this article are those solely of the authors and do not reflect the views of the Kennan Institute.