Thursday, August 25, 2016


Explainer: How The International Sanctions Game Is Played

  • Yury Kovalchuk is the single largest shareholder of Bank Rossiya. The U.S. Treasury has described him as "the personal banker for senior officials of the Russian Federation including Putin."
  • Sergei Ivanov is the chief of staff of President Putin's executive office.
  • Sergei Mironov, a member of the State Duma and leader of the A Just Russia party, called for Russian intervention in Ukraine and initiated legislation to speed up the process of obtaining Russian citizenship for Ukrainians.
  • Sergei Naryshkin is the chairman of the State Duma and a member of the National Security Council of the Russian Federation.
  • Arkady Rotenberg, a construction billionaire and Vladimir Putin’s former judo sparring partner, has made billions of dollars in contracts for Gazprom and the Sochi Winter Olympics awarded to him by the Russian president. He once told "The Financial Times" he thought Putin was “sent to our country from God.”
  • Boris Rotenberg co-owns, with elder brother Arkady, a major supplier of construction services to Russian gas giant Gazprom. He is president of the FC Dynamo Moscow soccer club.
  • Igor Sergun is the head of Russia’s GRU military intelligence service and deputy chief of the General Staff.
  • Gennady Timchenko is one of the founders of Gunvor, a major commodity trading company involved in the oil and energy markets. The U.S. Treasury asserts that Gunvor’s activities "have been linked to Putin" and that "Putin has investments in Gunvor and may have access to Gunvor funds" -- a claim Gunvor management was quick to deny.
  • Vladimir Yakunin is the head of the state-owned company Russian Railways and a close Putin confidant.
  • Sergei Zheleznyak is the deputy speaker of the Russian State Duma.
PHOTO GALLERY: Some of the powerful Russians hit by the latest U.S. sanctions.

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The United States and the European Union are imposing targeted economic sanctions -- and threatening even broader measures -- against Russia for its incursion into Ukraine. RFE/RL takes a look at some basics of the art of sanctioning.

Who has the authority to impose sanctions?

Russia insists that unilateral sanctions violate international law.

"Unilateral sanctions have never brought about anything good. They are illegitimate and have no international legal basis," Foreign Minister Sergei Lavrov said on March 20 to the Russian Duma.

"The [UN] Security Council is the only body that can make decisions about coercive measures toward sovereign states. No such decision has been made by it regarding the Russian Federation and the Ukrainian leadership represented by [ousted Ukrainian] President [Viktor] Yanukovych."

At the same time, Russia has repeatedly imposed trade barriers and restrictions on many countries, particularly ones like Ukraine, Moldova, and Georgia that have pursued aggressive European-integration policies.

What role does the World Trade Organization (WTO) play?

Russia joined the WTO in 2012, and the United States and all EU member states are also members. The EU itself is also a member of the WTO.

Although the WTO is intended to facilitate international trade, its rules, the General Agreement on Tariffs and Trade (GATT), include provisions that enable countries to establish trade restrictions for "national security reasons."

"Under Article 21 of the GATT, there is an exception for national-security reasons. This is generally been interpreted as the provision under which any economic sanctions would fall," says Stephen Woolcock, an associate professor of international relations at the London School of Economics.

Russia could, however, challenge any sanctions through WTO dispute-settlement mechanisms. And, theoretically, the WTO could overturn sanctions that were determined to be in violation of GATT rules.

Such a turn of events is considered highly unlikely as long as sanctions remain at the level of targeted measures against individuals. If the West moves to broader sanctions aimed at the Russian economy, which U.S. President Barack Obama has said could happen, Russia might have more grounds to seek redress.

But Woolcock notes that sanctions have been imposed against WTO members in the past and none has been successfully challenged within the organization.

The WTO has no mechanism for sanctioning members or expelling them. Some countries have left of their own accord, however.

Some analysts have argued that the WTO could also be used to punish Moscow, as members could file complaints against Russia for some of its controversial trade practices. In July, for instance, the EU announced it would challenge a Russian law that imposes a fee on foreign car producers for scrapping used vehicles in Russia.

Do the sanctions extend to the family members of targeted individuals?

Not automatically, says Ian Bond, director of foreign policy at the London-based Center for European Reform and a veteran British diplomat. "They won't automatically extend to relatives, but they will, for example, extend to shell companies where the EU or the U.S. can identify that the controlling interest is held by a person who is subject to sanctions," he says.

It has been reported, for instance, that Russian oil trader Gennady Timchenko sold his stake in Swiss-based Gunvor to his business partner on the eve of the announcement of sanctions against him. Bond says financial authorities will certainly investigate that alleged sale and could rule that Timchenko continues to benefit from Gunvor's assets.

If EU or U.S. financial authorities can prove that a relative is merely holding assets that benefit a sanctioned individual, those assets could also be targeted.

Expanding the targeted sanctions to family members could be done as an additional measure of targeted sanctions before the West moves to broader sanctions against the Russian economy.

Why hasn't Russian President Vladimir Putin been sanctioned?

Sanctions against a sitting head of state are extremely rare and are generally reserved only for rulers that Western countries would like to see removed, such as Zimbabwean President Robert Mugabe or the former ruling military junta in Burma.

Ian Bond says doing so is the "nuclear option" of targeted sanctions. "And I guess that everybody is trying not to go for steps that are really at the top of the list of things that could be done," he adds. "There is still a lot more that could go wrong, a lot more ways in which Russia could interfere in Ukraine and make the situation worse."

What about possible sanctions against Russian state journalists and publicists such as Sergei Markov or Aleksandr Dugin, who have been actively justifying Russia's intervention in Ukraine?

Bond says sanctions could be imposed upon such people if the West determines they are actively promoting violence or disseminating hate speech. It is, however, an issue on which Europe and the United States might not be able to agree.

"I realize that is very difficult territory particularly for the U.S. because of its very strong attachment to the First Amendment" of the U.S. Constitution, which guarantees freedom of speech," Bond says. "It is in some ways less of an issue for Europeans because certainly in countries like Germany, for very good historical reasons, they have pretty strong laws on how far you are allowed to go."

The latest round of EU sanctions includes Dmitry Kiselyov, the head of the Russian state news agency Rossia Segodnya. The EU document describes Kiselyov as a "central figure of the government propaganda machine supporting the deployment of Russian forces in Ukraine."

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