On the Fifth Anniversary of Sanctions Legislation.

Five years have passed since Ukraine introduced, through Law No. 1644-VII of August 14, 2014, a special framework for sanctions imposed by the state for political purposes. In accordance with the law, numerous agencies have submitted many proposals to the National Security and Defense Council over the years, and the Council’s own decisions—approved by presidential decrees—have been adopted on multiple occasions.

The experience gained shows that, despite the overall success of sanctions as a tool for weakening the aggressor’s economic and defense capabilities and as a form of political and legal assessment of the actions of individual representatives of the enemy, there remain more questions than answers in this area.

A well-known and high-profile example was the mass inclusion on sanctions lists of Ukrainian citizens who were Crimean collaborators, contrary to the provision that Law No. 1644-VII applies exclusively to foreigners. Less well-known are the cases of individuals with the exact same names as enemy nationals—including Ukrainians—being erroneously included on these lists; these individuals have now become victims of the careless approach taken by those who compiled the initial lists. In addition, many individuals subject to sanctions are challenging—with varying degrees of success—in Ukrainian courts either the very fact of their inclusion on the lists or the mechanisms by which sanctions are applied against them.

As someone who is personally included on two types of sanctions lists maintained by the aggressor state, and with experience participating in “sanctions-related” court proceedings on behalf of Ukrainian government agencies, I will take the liberty of outlining the main obvious and hidden challenges of Ukraine’s sanctions policy.

First, Law No. 1644-VII completely lacks any provisions regarding an effective mechanism for controlling and monitoring the implementation of the imposed sanctions. At the same time, all sanctions decrees place responsibility for such oversight on the Secretary of the National Security and Defense Council, who currently has no specific legislative authority in this area (!!!). Of course, under such conditions, all that remains is to write stern letters and hold extensive meetings, but their effectiveness will obviously be close to zero.

Furthermore, the current situation of “responsibility without authority” leads to all sorts of attempts by the NSDC Secretariat to shift responsibility in the sanctions sphere onto someone else—even if it is the 8th OSMD, which is closest to Bolbochan, just so it has nothing to do with the current sanctions crisis. But the paradox lies in the fact that no other universal and authorized body, apart from the National Security and Defense Council (NSDC), which could confirm the existence of threats to national security and defense posed by a specific entity, and that would have the authority to synthesize the positions of such diverse bodies as the National Bank, Parliament, the Security Service of Ukraine (SBU), and executive authorities on this issue simply does not exist in Ukraine. Transferring the NSDC’s current functions to anyone else would essentially mean the collapse of the legal basis for the country’s sanctions policy and the final transformation of sanctions lists into paper boats convenient for the enemy, which secret and open advocates of complete capitulation are happily teaching our society to build.

Second, Ukraine completely lacks an effective mechanism for holding parties accountable for violations of the requirements of “sanctions” Law No. 1644-VII, as well as the decrees and decisions of the National Security and Defense Council adopted to implement it. Therefore, any entity that violates sanctions (for example, by entering into a prohibited agreement with a sanctioned entity) or facilitates such a violation through its actions or deliberate inaction, currently faces no form of liability, not even disciplinary action. This applies to both government officials and the business sector.

Third, two of the three entities responsible for implementing sanctions policy in Ukraine, namely the Cabinet of Ministers and the Security Service of Ukraine (SBU), have failed over the past five years to adopt subordinate procedural regulations that would define for themselves the means of implementing Law No. 1644-VII. Both the formal and practical reasons here are simple—“they simply lack the authority to define their own authority”—that is, we are seeing a classic Ukrainian tendency among high-ranking officials to do whatever it takes to, in reality, do nothing and make no changes.

However, the National Bank has been a welcome exception here; its current Board Resolution No. 654 of October 1, 2015, regulates the application of sanctions in the financial sector, has been successfully implemented for four years now, and has proven to be a document quite resilient to hostile lawsuits. Apparently, in the Security Service of Ukraine (SBU)—not to mention the Cabinet of Ministers—there are traditionally far fewer decisive and strong-willed officials than in the public finance sector, which, in fact, does not surprise me at all.

Fourth, there is no mechanism to incentivize entities submitting sanction lists to ensure their thorough review before submission to the National Security and Defense Council Secretariat, nor is there any incentive for Secretariat representatives to ensure their thorough verification and review. Currently, the worst that can happen to those responsible for such preparation is that their proposals are not included in the final text of the NSDC decision; at the same time, even factual errors in this text pose no consequences for those responsible. Furthermore, sanctions proposals were often prepared in a rush to meet the deadline for the next NSDC meeting, while at other times they were left pending for years, awaiting a substantive decision. Naturally, this creates enormous corruption risks both at the initial stage of compiling the lists—to ensure that certain entities are “left out”—and during the adjustment of lists already approved by the NSDC.

A classic example was the situation where a number of sanctioned entities, which had been included in the National Security and Defense Council’s decision of May 2, 2018, disappeared from the lists in the subsequent decision of June 21, 2018, or faced less sanctions pressure. And, of course, malicious tongues claim that the well-being of certain officials at the Ministry of Temporary Occupied Territories, especially those who love to attend all sorts of meetings on sanctions and demand that the “control key” to sanctions policy be handed over to the Ministry of Capitulation, is, as Poderevyansky says, …steadily increasing. Especially during simple manipulations of all sorts of drafts of various sanctions lists circulating within the Ministry of Tota.

And a separate significant risk remains the classic bureaucratic inefficiency in the context of legal proceedings initiated with the aim of removing individuals from sanctions lists or exempting their property from the sanctions freeze. Today, these matters fall under the jurisdiction of local administrative courts, and such proceedings pose a number of challenges—countering corruption risks (the Russians spare no expense when it comes to funding the Ukrainian judiciary in these cases), effectively representing the state’s position in court, and compiling the diverse case law resulting from such proceedings.

Nor should we forget the problem of a lack of coordination between domestic, foreign, and international sanctions, since there are no effective mechanisms in this area even at the political level, and the Ministry of Foreign Affairs of the Ukrainian SSR named after P.O. Poroshenko has, of course, been unable to address them during the five years of war.

Does all this mean that sanctions should be abandoned, or that they should be reduced to a mere symbolic gesture for Western partners? Of course not. Because there is a clear and straightforward solution to this situation, and adhering to it now depends solely on the political will of the new Ukrainian government.

For example, I do not believe it would be difficult at this time to make targeted amendments to the relevant law No. 1644-VII. First and foremost, these amendments should concern the direct delegation of special rule-making powers to the Government, the Security Service of Ukraine (SBU), and the National Bank. Within the timeframe specified by the amendments to the law, these bodies must be required by a new legislative provision to independently define, through their own acts, the procedures for implementing Law No. 1644-VII and the sanctions decrees regarding the enforcement of the imposed sanctions. Because if no initiatives in this area have emerged on Hrushevsky Street and Volodymyrska Street over the past five years, they must be urgently and forcibly introduced from outside. Corresponding technical amendments to the relevant laws on the government and the SBU, aimed at preventing the traditional “we simply don’t have the authority” excuse, would also be helpful.

It is also necessary to put an end to the practice of the Council of National Security and Defense, which has become a completely “toothless” institution (amid an interstate conflict!) The National Security and Defense Council, which in the pre-war years had turned into a retirement home for honorary pensioners, and which—even after five years of aggression—has still failed to become the intellectual and resolute heart of security and defense.

And this concerns not so much the current presence or absence of dozens of “Svyarchuks”—whether major or minor—in the offices at 8 Bolbochan Street, but rather a more systemic problem. The problem is that all NSDC decisions today are de facto merely advisory, since no legal liability for failing to implement them has been established in Ukraine. And this applies not only to decisions on sanctions. Therefore, it is worth granting the NSDC Secretariat and leadership the appropriate powers that, in Ukraine, are held by virtually everyone else—from the ombudsman’s officials to fisheries inspectors.

This pertains to the right of relevant officials to draw up administrative reports in cases where violations of sanctions restrictions are detected on the part of entities and other individuals specified in NSDC decisions, as well as with regard to officials who fail to comply with the provisions of NSDC decisions (I believe these acts are currently of greater significance than the requirements of a defense attorney, district prosecutor, or state enforcement officer, which are protected by law, unlike those of the National Security and Defense Council).

The relevant amendments to the Code of Administrative Offenses should provide for the adjudication of “sanctions-related” administrative offenses by courts, with substantial fines and the confiscation of instruments used to violate the sanctions regime (to minimize corruption risks for those drafting the reports).

The right to impose extrajudicial penalties on officials for failure to comply with NSDC decisions should generally be enshrined in the Code of Administrative Offenses specifically for the Secretary of the Council and his deputies (this is standard practice in administrative proceedings). After all, the point and purpose of such accountability would naturally lie not in a small administrative fine, but in the subsequent dismissal from office—triggered by that fine—for those who ignored NSDC decisions.

Furthermore, Law No. 1644-VII should be amended to include provisions allowing for the automatic termination—without an NSDC decision—of sanctions against individuals who have been included on the lists clearly by mistake and, in many cases, unlawfully. This applies first and foremost to Ukrainian citizens currently on the lists, as well as other individuals identified on the lists with gross errors in their personal data. Such authority could, for example, be granted to the Secretary of the National Security and Defense Council; the sole sufficient safeguard against risks should be the public nature of such technical lifting of sanctions.

It is also worth slightly refining the provisions of the Code of Administrative Procedure to centralize all cases related to the application of sanctions and appeals against the content of NSDC decisions in the Supreme Court of Ukraine and to ensure that such cases are heard under simplified proceedings, with the establishment of a reasonable and concise time limit for judicial appeals against sanctions.

And of course, in an ideal world, it would be good to conclude special intergovernmental agreements under which we would, on the basis of reciprocity, implement sanctions imposed by the U.S., Canada, or the EU. However, perhaps the new leadership of the Ministry of Foreign Affairs will at least initiate the relevant negotiations and consultations.

Of course, this will not relieve the National Security and Defense Council Secretariat of its responsibility—particularly regarding the need for comprehensive legal support for the current “sanctions” proceedings in administrative courts—and will create a new, broad scope of work.

But all laws in the world share one common feature—they guarantee nothing on their own. And their mere existence must be accompanied by the will, diligence, and competence of those who enforce them. I have modest hopes that, when it comes to sanctions, this is exactly what will happen someday.