Following the Russian Federation’s invasion of Ukraine on 24 February 2022, the European Union implemented a series of extensive sanctions packages. These sanctions expanded upon the framework previously established in 2014, which had been adopted in response to the Russian annexation of Crimea.
The 2022 response represented a significant escalation in both scope and severity. A key feature of this new phase was the extension of sanctions beyond state actors to include prominent Russian businesspersons. This resulted in the freezing of their assets within the EU, with the stated objective of exerting pressure on the Russian government.
The new sanctions regime was thus designed with specific strategic objectives: to apply significant economic and political pressure on the Russian political establishment and to incentivise key figures to disassociate from it. The main rationale for designating private individuals rested on the assertion of a ‘relationship of mutual benefit and support’ between the business community and the Russian state.
Three core assumptions were made. First, that the designated business leaders possessed substantive influence over the Russian government’s decision-making processes. Second, that the imposition of restrictive measures would incentivise the targeted individuals to leverage their influence to pile up pressure on President Putin to stop the aggression. Third, that the harsh measures imposed were to be formulated and implemented in a way consistent with rule of law values, which have been instrumental to the EU’s very raison d’ être since its inception.
It is not difficult to discern that, given the stakes, responding in a way that would be both forceful and legal was a delicate and potentially risky balancing exercise. The precarious balance between efficiency and legality was significantly dependent on the premise that the measures would be well-targeted and ‘surgical’. They would create clear consequences for proximity to the Kremlin while theoretically allowing for a different pathway for those who chose to sever such ties.
Today, more than three years after the initial shock provoked by the February 2022 full-scale Russian invasion, signs of a mismatch between the intended function of the sanctions on private individuals and their real-world consequences are increasing at an alarming rate.
A significant aspect of this mismatch is well exemplified by the cases of the sanctions targeting former Russian business executives. While not widely commented, such cases exhibit inconsistencies within the EU’s framework. Targeted individuals include people such as Mr Dmitry Konov and other managers with similar profile. These were not high-profile ‘oligarchs’ with extensive political ties to the Kremlin. Instead, they represent a class of professional managers that were working for important entities.
Moreover, they took steps to dissociate themselves from them entities shortly after the Russian invasion of Ukraine. Closer examination of such cases shows that the EU’s current approach to delisting individuals who have disassociated from such entities is problematic. It is procedurally inconsistent, undermines the regime’s strategic efficacy, and may inadvertently confer advantages to the Russian government. In short, the EU’s approach increasingly appears unfit for purpose and incapable of achieving its stated objectives.
Inconsistent delisting policies
The first and most obvious issue is the inconsistency in the application of the EU’s sanctions regime, which, a limine, spawn suspicions of arbitrariness. In some cases, the affected persons resigned in the spring of 2022 from their executive positions and severed all professional ties with sanctioned entities. However, despite these actions, and despite challenging the measures before the General Court of the EU, these individuals remain, as of this moment, designated under the EU’s restrictive measures.
On the other hand, the situation of those who remained in sanctions lists contrasts sharply with the delisting of other individuals under circumstances which appear to be materially similar. These include cases such as Alexander Shulgin, former CEO of Ozon, and Vladimir Rashevsky, formerly of EuroChem. There is no indication as to what explains the divergence in outcomes. The absence of a standardised, transparent methodology for de-designation, leads to what can be perceived as an arbitrary application of the EU’s policy.
To add to the above, the inconsistency poses a fundamental challenge to the incentive structure of the sanctions policy. If complete and verifiable disengagement from economically important entities does not predictably lead to de-designation, the motivation for other individuals in similar positions to alter their conduct is significantly diminished.
In fact, it might well produce the exact opposite outcome to the one originally intended. Economic and managerial elites with an initially peripheral relation to state power are compelled into greater alignment with the Russian government. And those who once stepped down and decided to refrain from putting their skills and talents in the service of the Russian economy may simply return after noting that their sacrifices were to no avail. The realisation of the EU’s strategic goals is thereby directly hampered.
A further consequence of the absence of a clear, determinate and consistent delisting mechanism consists in the gradual erosion of potential channels for EU influence. The unavailability of a viable pathway for delisting communicates to an entire class of Russian professionals and entrepreneurs that disengagement is futile. This effectively forecloses the possibility of leveraging influence within Russia’s educated, economically active class. This, however, is a group that might otherwise have been receptive to a mediating role in the conflict. By eliminating this ‘off-ramp’, the policy inadvertently reinforces the Kremlin’s narrative of Western (and EU) intransigence and simplifies its efforts to retain critical human capital.
An effective sanctions policy necessitates a clear distinction between purely punitive measures, which should be avoided as both counter-productive and legally suspect, and strategic instruments carefully designed to modify behaviour. Perpetual designation in sanctions lists without recourse for individuals who have demonstrably altered their circumstances, transforms the EU’s sanctions policy from a tool of influence into one of permanent, and potentially irrational, exclusion.
The establishment of a formalized, transparent, and verifiable pathway to delisting is therefore essential for the credibility and strategic function of the EU’s individual sanctions regime. Such a mechanism should differentiate between core political figures and professional managers. Even more importantly, it should set out clear criteria for re-evaluation based on definitive actions of disassociation.
Moreover, a formalised delisting pathway would also significantly aid the task of judicial review of sanctions measures undertaken by the EU’s courts. The latter would be able to supervise, if needed, the revision of designations based on the application of updated and clearly defined criteria rather than on the basis of ad hoc judicial decision-making. Accordingly, institutional integrity would be preserved while policy coherence would be enhanced.
The continued designation of individuals who resigned from their positions and distanced themselves, such as the case Mr Konov, who stepped down from Sibur and Alrosa but remains on sanctions lists, when other similar profiles were seemingly arbitrarily delisted, is a good illustration. It represents a test case for the strategic and legal maturity of the EU’s sanctions regime. The issue does not reduce to individual legal challenges. It concerns the more general question whether sanctions are to function as a punitive instrument or as a sophisticated and dynamic foreign policy tool. A policy that rewards verifiable disengagement sends a potent strategic message and enhances the EU’s leverage. Conversely, an inflexible framework that fails to recognise and adapt to changed circumstances risks becoming a static and, ultimately, counterproductive measure.
