The European Union’s response to Russia’s invasion of Ukraine on 24 February 2022 included the unilateral adoption of a series of extensive sanctions packages.
Building on the approach that had already been adopted by the EU in 2014, following the annexation by Russia of the Ukrainian peninsula of Crimea, these new sanctions packages went further.
This time round, the EU targeted not just agents whose actions could be attributed to the Russian Federation, but also those who are known as Russian businesspersons, effectively freezing their EU-held assets. The stated aim was to exert pressure on the Russian government.
The EU justified targeting leading businesspersons by citing a ‘relationship of mutual benefit and support’ between them and the Russian government. The approach rested on two key presumptions: first, that these businesspersons could genuinely influence the Russian government and, second, that the sanctions would provide a strong incentive for them to do so. However, more than three years into the war, it’s time to critically re-evaluate this strategy’s rationality, effectiveness and compatibility with core rule of law values.
Rule of law principles
A fundamental question is whether imposing sanctions on persons ‘doing business in Russia’ aligns with the EU’s strong commitment to core rule of law values, particularly certainty, predictability and consistency. Examining the evolution across time of the legal basis for these restrictive measures reveals concerning trends.
In fact, what began in 2014 as a targeted set of countermeasures aimed primarily at Russian state agents rapidly morphed, after 2022, into an increasingly vague standard potentially applicable to virtually any private individual. Council Decision 2014/145 of 17 March 2014 initially focused on ‘natural persons responsible for actions which undermine or threaten the territorial integrity, sovereignty and independence of Ukraine, and natural or legal persons, entities or bodies associated with them’.
However, this restrained approach quickly gave way, after February 2022, to the formulation of a much more open-ended standard. Council Decision 2022/329 of 25 February 2022 permitted individual sanctions against ‘leading businesspersons or legal persons, entities or bodies involved in economic sectors providing a substantial source of revenue to the Government of the Russian Federation’.
This considerably vaguer standard was then interpreted expansively by the General Court of the EU. In several cases, the Court ruled that it was sufficient for the legality of sanctions that the ‘leading businessperson’ is involved in a business operating in an economic sector that provides ‘substantial source of revenue’, irrespective of whether the specific businesses generated substantial revenue for Russia. Any sector might become such a target, and the revenue may be indirect—even extending to VAT, which is ultimately paid by the end consumer for the entity’s goods.
Even this vague and expansive standard was dropped after June 2023. The EU now targets ‘leading businesspersons operating in Russia and their immediate family members’ regardless of whether they operate in a sector providing substantial revenue to the Russian State or not. Back then, the sanctions also began to target any other ‘businesspersons operating in economic sectors providing a substantial source of revenue’ to the Russian government.
Paradoxically, while EU authorities spend billions targeting ‘leading’ and, apparently, ordinary and unremarkable businesspersons, mending the wounds from disrupted economic links, and maintaining frozen sanctioned assets, Western companies continue operating in Russia and remitting taxes to the Russian state. For the EU, it amounts to funding Putin’s war machine. According to Leave Russia, over 2,300 Western companies (out of 4,100 present at the outbreak of war) remain in Russia as of 2025. And their tax contributions rise year on year.
From a strictly legal point of view, this evolution is likely to bring controversy and arbitrary decision-making. For one thing, the definition of potentially targeted businesspersons has become increasingly indistinct. For another, the expansion of the EU’s sanctions, endorsed by the General Court, grants EU authorities is potentially unlimited legal discretion.
As things stand, almost anyone the Council deems a ‘leading businessperson’ can be targeted including those individuals who are not so prominent, stay far out of politics or do not support the war at all. Essentially, the Council now has the discretion to impose and maintain individual sanctions on a greater number of Russians who are doing private business, own small and mid-size firms supplying bigger clients or simply pay taxes into the budget.
Inconsistent application and disregard for court rulings
One might retort that the increasing indeterminacy of the legal framework could perhaps be mitigated through consistent application of these—admittedly extremely vague—criteria.
However, a glance at specific cases reveals various inconsistencies. For example, the EU Council has already introduced sanctions for participation in a company engaged in the planting of coniferous trees, even if that decision was subsequently annulled by the General Court.
There are more outstanding examples. Consider two major Russian metals magnates: Alexei Mordashov, who was sanctioned, and Vladimir Lisin, who was not. Both have comparable wealth, and despite their similar prominence, no clear rationale has been given for this disparity. Same happened to other sanctioned billionaires. For instance, the delisting of Azeri businessman Farkhad Akhmedov contrasts with the ongoing sanctioning of Alisher Usmanov of Uzbek origin. While Ahmedov left Russia after the beginning of the war, Usmanov has since long retired and focused on Uzbekistan. These examples demonstrate the failure to treat like cases alike, in other words—non-discrimination, thereby flouting a core rule of law guarantee.
More recently, the Council has disregarded two separate rulings issued by the General Court, in which it stated that Dmitry Pumpyansky should no longer be considered as a leading Russian businessman because he had ceased to be a beneficiary in the companies he had founded. Despite the rulings, Pumpyansky’s designation was renewed.
Sanctions’ failure to achieve their objectives
Flouting core rule of law principles, to which the EU remains firmly committed in most other areas, is a serious strategic mistake. However, it is far from the only one. Since 2022, it has become increasingly obvious that the sanctions are simply not achieving their objectives.
The explanation is straightforward: the targeted businesspersons lack the ability to influence President Putin’s foreign policy decisions. The original idea that they could—and would even attempt—to exert such influence, being deprived of trips to Europe and European assets, is a notion that remains profoundly naive.
The EU’s mass sanctions are, in fact, arguably having the opposite effect to the intended one: feeling trapped and unable to do business or even be employed outside Russia, wealthy elites are returning to Russia and transferring their assets and resources there. On a similar note, thousands of ordinary migrants who left their country in the early years of the war are now returning, many of them disillusioned with the EU member states’ legal systems, which treat Russians selectively.
These unintended effects call the rationality of the EU’s policy into question. Actors often make mistakes in pursuing their goals. Still, rational actors attempt to correct these errors by changing course. The EU’s sanctions fundamentally misunderstood the complex relationship between business and government in Russia. Consequently, the EU failed to achieve its objectives with their help. It was initially believed that the targeted individuals could exert some kind of influence over Vladimir Putin’s foreign policy. Reality has shown that they simply lack such leverage.
The high price of an unproductive policy
The price the EU pays for insisting on such an unproductive policy is high in legal, moral and strategic terms.
Legally, the application and upholding of increasingly vague sanction practices is detrimental to the values the EU rightly cherishes. Morally, setting aside successive court rulings and targeting arbitrarily and, in fact, indefinitely individuals diminishes the EU’s status as a leader in good governance. Strategically, the EU’s policy leads to results opposite to those intended, stabilising the Russian Federation internally by uniting Russian political and business elites, whilst perversely incentivising them to strengthen their ties with the Kremlin.
If these, per impossibile, had been the sanctions’ intended outcomes, EU authorities would deserve credit. Since, however, they are not, the sanctions policy needs fundamental re-evaluation and rethinking.
