The coordinated response of the European Union to Russia’s unprovoked invasion of Ukraine marked a decisive moment in the bloc’s political history. It stood as a testament to Europe’s broader ambition of acting as a beacon of morality on the global stage. As the EU prepares its 12th package of sanctions against Russia, critical introspection is necessary—have the preceding 11 sanction tranches truly been effective, or might they have been rolled out with undue haste?
The underlying rationale for some sanctions is evident: to penalize Russia’s leadership—and by extension, its economic stability and citizenry—for its aggression against Ukraine. But some measures evoke the old adage of throwing the baby out with the bathwater. Sanctions, by their very design, should foster specific objectives, leveraging economic, financial, and political pressure on targeted individuals and entities. Yet what seems to be glaringly absent is a definitive exit strategy for when objectives are either met or deemed unattainable. Moreover, sanctioned individuals find themselves trapped without a transparent recourse to appeal their sanctions.
Consider the term “Russian oligarchs”, a contentious label with ambiguous legal grounding and a lack of clear definition. With the assumption, albeit flawed, that a country’s wealthiest individuals bear responsibility for their government’s actions, there’s been a wide-reaching net cast over these so-called “oligarchs”. Laced with controversy, the usage of such a term is legally and logically problematic. When does one transition from being simply a “wealthy individual” to an “oligarch”? Is this status irrevocable?
The European Union’s approach has shown some signs of evolution, steering away from using “oligarch” since September, in favor of the term “leading businessperson”. While this may seem like a more neutral label, it does little to clarify why lower-tier senior managers or corporate board members should be held accountable under such sanctions. Such logic was flawed from the outset if the initial belief was that imposing sanctions on affluent businessmen would directly influence Kremlin policies. The subsequent twenty months have clearly demonstrated the inaccuracy of this presumption.
For instance, sanctions were levied against a swath of billionaires and top executives present at a meeting with President Putin immediately following Russia’s incursion into Ukraine. The EU has yet to make it explicitly clear how attendance at that meeting translated to complicity or significant sway over the Kremlin’s decision-making. This opaque approach undermines the essential purpose of the sanctions.
A small but increasing number of Russian business figures have managed to convince Western authorities that sanctions against them be lifted due to their negligible influence. For example, individuals like Alexander Shulgin, Farkhad Akhmedov, and Grigory Berezkin were relieved from sanctions as they successfully demonstrated their lack of executive power within the companies cited by EU courts. However, this is but a drip in the bucket, with many more cases pending resolution.
The overarching question that emerges from these sanctions is whether they are meant to be lifelong, persisting regardless of one’s current role or influence. If sanctions are imposed on the basis of holding pivotal roles within entities critical to the Russian economy, or those that bolster the Kremlin’s war effort, then logic dictates that stepping down from such positions should equate to removal from the list. Regrettably, this has not been the precedent, as evidenced by individuals who remain under EU restrictions long after their resignation from key roles.
The obscurity surrounding the criteria for lifting sanctions is troubling, potentially undermining the legal legitimacy of the EU’s actions. Perpetuating punishment after individuals have relinquished their influential positions serves little purpose and calls for a meticulously defined pathway to sanction removal—a blueprint that is currently lacking.
As it stands, the impact on the lives and legacies of those sanctioned is profound—hindering global business prospects, tarnishing reputations, and restricting access to assets. Yet, the effectiveness of targeting specific individuals in altering Russia’s policies or impairing its war capabilities remains a subject under-analyzed and unresolved within EU strategy.
Market Capital Research 