International sanctions against Russia are to become a key lever to influence the aggressor. Our colleagues from KYIV NOT KIEV talked about it with Vladyslav Vlasiuk, sanctions advisor to the Office of the President of Ukraine, secretary of the International Working Group on Russian Sanctions, and deputy head of Task Force UA. He explained how the Yermak-McFaul Group works, why not even all European countries support introducing new sanctions packages against Russia, and who helps Russia evade sanctions.
How the the Yermak-McFaul Group works
The International Working Group on Russian Sanctions is also known to Ukrainians as the Yermak-McFaul Group and to Westerners as the Stanford Group. Who are its members, and what are its powers?
There are at least 50 international experts who are members of that Group. They’re experts in different areas, including energy, finance, trade, and the economy, with a solid reputation and a portfolio of different projects they've been involved in previously.
We've managed to release 12 papers, which are lengthy documents with policy recommendations on how to make sanctions against Russia more and more powerful. And then there are also some non-papers, statements, and sub products.
We've been working very closely with the Kyiv School of Economics, and became the major platform for discussions in the area of sanctions around the world, which we are very proud of.
Is there some kind of a filtering process through which experts’ recommendations go in order to be included in the official documents of the Group?
When there is an idea coming up from every single member of the Group, it is being discussed at the Zoom-call gathering. The rest of the Group participants would contribute their ideas to this potential concept paper. Every single paper is being crafted and developed by a very limited circle of people, who are just typing the paper in a Google Doc.
The final word is always on Ambassador McFaul. He is very experienced in shaping thoughts. So he would always kind of polish the final product, the paper, so it looked more shiny and was easier to read.
Every single paper has been signed by no less than 20 Group members,—and those names are very solid names. This is exactly why the ideas coming from the Group are the most comprehensive. Another good part about this way of developing the papers is that not a single expert is connected with any government, which brings all that freedom. It’s about being capable of pushing on the governments and speaking candidly about the ideas.
Is it possible to join the Group? And if so, how?
Of course. I think that every couple of weeks, another bright person joins the Group. Yesterday I just talked to another guy, who is originally from London and is an expert in the oil market. Very seasoned guy. He has already contributed some analysis on oil shipments. So I advocated before Michael McFaul for him to allow this guy to join. The decision will be made soon. This is the way for external people to join the Group.
What areas are chosen to implement anti-Russian sanctions
In April, the Group released the new Action Plan 2.0 to strengthen sanctions against Russia. The Action Plan consists of 12 sections. Is there some kind of prioritization of the working areas described in each of these sections, or are they equally important?
It is always hard for the authors to pick any of those as a priority or not. In my other capacity as part of the government, I've been pushing more for those sanctions, which would allow us to decrease the capacity of Russia on the battlefield. So this is kind of the primary area. And then it would be the economy, which is about denying Russia from getting more money. And the third area is about weakening Putin's regime, to which the propaganda contributes more. So we've always been pushing hard on the propagandists to be listed by the governments of our state partners.
Those would probably be the three main areas. But you have to push in all the possible directions because all the governments sometimes take different decisions on different potential opportunities.
So you can succeed with some ideas in one country but fail with another.
The first part of the interview with Vladyslav Vlasiuk, advisor to the Office of the President of Ukraine
Do the priorities of Ukraine's state sanction policy coincide with what you’ve just described?
Mostly yes. President Zelensky himself reiterated the point about the battlefield capacity, mostly about the missiles and drones, so he does care a lot about the lives of the people here in Ukraine. Given that, one of the greatest threats to civilians is caused by exact missiles. This is why the sanctions that would potentially stop this missile terror are among the highest priorities for him and for the Ukrainian government.
Denying the revenues, which are mostly about energy and gas, is a top priority.
The propagandists—I can surely say that propaganda is the top priority for President Zelensky, for [President’s Chief of Staff] Andrii Yermak, and for the government. These are almost the same priorities as the Intentional Group of experts decided.
Going back to the document itself, what is the process for the Action Plan 2.0, from its presentation to its implementation in the sanctions decisions of the partner countries and relevant organizations?
The implementation is all about communicating with partners. This is the most important part of my job, which is to communicate with the government officials of partner states and encourage them to move on with implementing more and more sanctions. My personal objective is to cause more and more pain to Russia in terms of sanctions, as much as possible. Last week, the Czech Republic introduced sanctions against a couple of Russian individuals. Among them is Yevtushenkov, a well-known tycoon who was also sanctioned in Ukraine.
If the guys in the Czech Republic are ready to implement some national sanctions against Russians, then I will approach them—and I did—and suggest more ideas on whom to sanction.
How many people are involved in communication with foreign partners?
Starting from President Zelensky himself, Andrii Yermak, the key Ministers, the Minister of Foreign Affairs, and myself. I guess this is it.
What countries help Russians evade sanctions
How well coordinated are the states in a so-called sanctions coalition when it comes to implementing restrictions against Russia?
The level of coordination is unprecedented. How often we communicate, how deeply, and how much credit and trust in each other we have—this is kind of unprecedented. This is kind of an easy area to coordinate because everyone within the sanction coalition, which is, I guess, 40 countries now, is more than ready to act to implement more sanctions against Russia.
On the other hand, of course, some countries, even within this coalition, are more hesitant about implementing some sanctions.
Is that for political reasons or economic ones?
I would say that this is mostly based on the economy. Different countries have historically had different ties and connections with Russia. For instance, it is quite easy for the United Kingdom to stop buying energy from Russia because they've never been buying almost any. And then for the European Union, it was a big victory to do the same ban for Russian oil and gas, given that their market was, I guess, 40 percent supplied by Russia. On the other hand, designating Russian oligarchs for the United Kingdom is a little bit more difficult than for the European Union. Why? Because probably historically, there have been a lot of oligarchs from Russia in London, including their opposition, which kind of made them a part of the establishment. And if you check on, let's say, Mr. Lisin, who is sanctioned by almost any jurisdiction but not in the UK.
Could you please name the countries that are contributing to the sanctions circumvention?
Given the trade data we've seen, it's obviously Kazakhstan, Armenia, Georgia, and Kyrgyzstan. If you narrow the trade to microelectronics, that would also be Serbia, Maldive Islands, Seychelle Islands, and Turkey.
Over the last year, the trade of EU-made products, items, or goods with Russia was quite the same [as in the previous years], just diverted from direct trade to re-export through third countries.
If you take the European Union, what we like is the unity that the EU shows about its support for Ukraine. What we don't like is that sometimes some EU member states are displaying a different degree of that support. If it is about passing the next sanction package, that would always be Hungary and some other countries, like Greece, Malta, and Cyprus, which are hesitant about agreeing on certain provisions to be included in a sanctions package.
At the EU level, there are talks of the creation of a unified sanctions body, or at least a position. Perhaps it makes sense to initiate a similar International body?
There is an idea of strengthening their capacity to monitor sanctions implementation at the EU level. They've introduced this position of the EU sanction official, which is Ambassador David O’Sullivan, who's a great guy. But then, the implementation of sanctions is still within the responsibility of the member states. So Brussels cannot tell anyone how to implement sanctions, which leads to different approaches within different member states. There are some hawkish countries and some that are more relaxed about implementing sanctions.
If it is Greece, they would have no problem with stopping the next sanction package adoption just because their oil tankers have been listed on some website with the international sponsors of war.
And even if we brought to them the evidence suggesting that at least 10 percent of all those shipments of oil made by the Greek companies were made in violation of the price cap or some other sanction measures, they would still be arguing and advocating for their companies.
This is the reality; every country can have its own economic interests, and it is understandable that they would protect those interests.At the same time, I would always respond that sometimes sanctions are more than just about the money.
As a victim of aggression, Ukraine is most interested in neutralizing Russia's ability to wage war. Therefore, the Ukrainian sanctions lists must be the most stringent, and form the basis for the sanctions decisions made by our partners. What should Ukraine do to sanction Russia better and receive this mirrored support from its international partners?
The quantity and quality of sanctions against Russia implemented in Ukraine are the highest. We've sanctioned, I guess, almost 9,000 individuals and entities from Russia here in Ukraine. This would be a display of trust and support if the partners synchronized all of the sanctions. We would always synchronize the sanctions implemented by other countries against Russia at our level. At the same time, we've been pushing quite hard on the partners to implement new ideas and sanctions.
The second part of the interview with Vladyslav Vlasiuk, advisor to the Office of the President of Ukraine
The International Group of Experts has recently released a report titled "Russia's military capacity and the role of imported components". It presents several conclusions. Firstly, international sanctions are indeed limiting Russia's ability to produce key weapon systems. But on the other hand, Western components are still finding their way into Russian weapons. Can you name the countries and the components?
There is no great secret to that.
Just in the cruise missiles that were produced in Russia—those are five models—there are at least 100 Western-made microelectronic parts.
80 percent of those are manufactured by U.S. companies, mostly the microchips.
This is not an easy effort to make to stop all that. Microchips are really small, and the supply chain of the microchips can be different. We totally agree with the point that these are not always freshly made parts; they could be stockpiled for years. On the other hand, we have people dying every day, and you just have to show more decisive action.
What actions do you expect?
Export control, introducing end-user certificates, and more aggressive outreach to the third countries that are reexporting those parts to Russia. We've also been thinking about more comprehensive trade bans against Russia, which would ban any items of certain codes completely, including microelectronics.
The 11th sanctions package from the EU now has a tool that allows the EU to implement sanctions against third countries or companies in third countries, which is quite unprecedented for the very idea of EU sanctions, making effective extraterritorial sanctions to be applied.
I praise the diplomatic efforts of the top officials of the EU and the UK since April. I think that in June and July, we will see a slightly different picture about the trade rates and re-export rates to third countries. But this is still not enough. We have to do more.
What the Task Force UA initiative does
You are a Deputy Head of the Task Force UA. What are its functions, and how do they differ from the ones of the Interagency Working Group on the Implementation of State Sanctions Policy?
The Task Force UA is an ad hoc gathering of different law enforcement agencies of Ukraine with the objective to trace, cease, and confiscate the assets of certain Russian individuals, with the twist that those assets must be foreign assets. The good examples of target persons for the Task Force UA would be Mr. Deripaska, Mr. Shelkov, or Mr. Yevtusenkov, and some Ukrainians also like Boguslayev and Zhivago. All those have been committing different economic crimes—not just economic but also state crimes—against Ukraine for years. They've got a lot of assets, not just within Ukrainian territory but also abroad, in Europe and the U.S. Ukraine now has all the reasons to investigate their actions and their activities. All of them have active criminal cases ongoing.
The objective of this Task Force UA effort is exactly to find, seize, and freeze the assets of those mentioned individuals abroad.
What is the most challenging stage in the confiscation process: the search, the argumentation for arrest, or actually proving the case after the confiscation?
Many situations involving the confiscation of assets, both private and sovereign assets of Russia, face legal challenges. Sanctions themselves are an administrative measure that cannot easily lead to the confiscation of assets; that is a criminal measure. Since the full-scale invasion, our key partners have started to implement the legislation allowing them to confiscate the private assets of certain individuals for certain crimes. Thus, Canada introduced legislation allowing them to confiscate some assets, while the U.S. can now confiscate individual assets for violating the sanctions. There is a draft bill in the European Commission that would also allow confiscation for violating sanctions.
In Ukraine, it is even easier—we can actually confiscate the assets of sanctioned individuals.
To increase our chances of confiscating the assets of certain private individuals, we've also been looking at certain criminal patterns or criminal offenses committed by those individuals. If it is money laundering, which is more or less the same crime in all the jurisdictions, and we think that within certain targets the money laundering did take place, the conviction for the commitment of money laundering in Ukraine would potentially effectively lead us to all the legal grounds for confiscating the assets.