As Russia’s war against Ukraine nears its second anniversary and the EU is finalizing what is its 12th sanctions package meant to hurt the Russian economy and force the Kremlin to abandon its “special military operation”, it is increasingly clear that mass inclusion of those who were involved in Russian business in many different capacities, regardless of their influence on the government’s decisions, may have been a hasty and ill-conceived decision.
While sanctioning Russia’s military industrial complex or key allies of President Vladimir Putin among the country’s elite may be justified as a means to force Moscow to change course on Ukraine, dozens of those called “leading businesspeople” were apparently sanctioned ‘in bulk’ and are much harder to justify as many such designations were based on flimsy reasoning and come across as group punishment.
For instance, on February 24, 2022, the day Russia sent its forces to Ukraine, President Putin called a high-profile meeting with Russia’s business.
The meeting’s participants included a wide and diverse group of people – from long-time Kremlin insiders and heads of biggest state-owned corporations like Rosneft’s Igor Sechin, Gazprom’s Alexey Miller and CEO of Sberbank Herman Gref to billionaires Petr Aven, Alexey Mordashov or Vagit Alekperov.
In addition, the meeting was attended by CEOs of private companies, like Tigran Khudaverdyan from IT company Yandex, Dmitry Konov from petrochemical producer Sibur, Alexander Shulgin from e-commerce giant Ozon or Vladimir Rashevsky from fertilizer maker Eurochem.
All of the participants in that meeting later ended up on EU sanctions list, for some taking part in it was specifically listed as the reason for their designation.
Apparently, it looks like participation in such a meeting was itself a self-excusing trigger to designate a person without detailed analysis of whether this would serve the sanctions regime purposes.
Many were classified as “oligarchs” even though the term is extremely vague and can’t be used as a catchy blanket term for a very wealthy Russian individual – something the Western media has been doing for decades.
It is clear to anyone familiar with Russian business and politics by just looking at that list that it features people with very different levels of influence on the Kremlin’s decision making.
For the EU policymakers, however, the very fact of taking part and listening to President Putin’s rationale for his attack on Ukraine is somehow grounds for sanctions.
Meeting someone, even if it is President Putin, does not mean fully embracing his views and policies, there was no joint statement from that meeting to suggest everyone was “on the same page”.
In the case of managers, rather than billionaire business owners, the inherent sanctioning logic is at its weakest: how exactly sanctioning a CEO of a private company can help achieve peace in Ukraine?
It is hard to see how top managers like Konov or Shulgin, essentially paid employees, could influence the Kremlin’s policies in that regard.
As billionaire Mikhail Fridman, whose net worth Forbes estimates at $12.6 billion, said in a Bloomberg interview in March 2022, “If the people who are in charge in the EU believe that because of sanctions, I could approach Mr. Putin and tell him to stop the war, and it will work, then I’m afraid we’re all in big trouble.”
If this is how Russia’s 9th richest man sees the situation, what can be said about hired managers with a tiny fraction of Fridman’s wealth and political connections?
The EU appears to have realized that its initial sanctions reasoning may have been too far-reaching and vague and, for instance, in September stopped labeling Russian businessmen as “oligarchs” and has switched to using the term “a leading businessperson”. While this a step in the right direction in categorizing owners of Russia’s biggest companies, it fails to address the inherent logic of punishing CEOs and other top managers. What’s worse, there is no clear roadmap as to what one needs to do to clear a sanctions designation. The EU is quick to sanction people while offering no clear way out.
In September, Ozon’s former CEO Shulgin successfully overturned EU sanctions against him, after proving he longer qualified for sanctions after his resignation from his management role in 2022. In addition, the court concluded that Shulgin’s attendance of the February 24 meeting with Putin did not in itself justify his inclusion to the sanctions list.
So far this remains an isolated case even though, logically speaking, resigning from a top management role should trigger removal of sanctions as a sanctioned individual can no longer be called a “leading businessperson”.
Not according to the EU, as it continues extending sanctions against people like Sibur’s Konov or Yandex’s Khudaverdyan, even though both resigned from their positions more than a year and a half ago and the logic of Shulgin’s court decision applies to them in equal measure.
EU’s goal to punish Russia for its actions in Ukraine is noble, but the application of its powerful sanctions weapons leaves a lot to be desired and may ultimately undermine EU’s own moral high ground in this brutal conflict.
This apparent lack of sanctions logic and consistency is potentially raising serious human rights questions: EU restrictions are a huge blow to one’s business reputation, severely undermining a designated individual’s career prospects, as well as cutting access to assets and financial services.
With dozens of Russian businesspeople currently contesting their designation as sanctioned individuals it remains to be seen if EU courts take their side and continue overturning EU’s sanctions decisions.
