Sanctions of His Majesty: How the law of Great Britain against russian assets brings Ukraine closer to victory
And what difficulties can arise in the implementation of these decisions in practice, so that Ukraine can obtain its rightful, but clearly insufficient $400 billion
The United Kingdom has adopted a new edition of sanctions against russia. The document was presented by the British Cabinet of Ministers on June 19, during an international conference in London devoted to the post-war recovery of Ukraine. At that time, the UK Foreign Office issued a press release stating that the sanctions against russia would remain in effect until compensation for the damage inflicted on Kyiv is paid.
Mind has studied the new package of sanction documents and highlighted the main points.
What are the main changes introduced by the law? Significant changes have been made to the existing laws on anti-russian sanctions. For example, the names of the occupied Ukrainian territories have been revised. Prior to these changes, the Sanctions Regulation aimed to "encourage russia to cease actions that destabilise Ukraine or undermine or threaten the territorial integrity, sovereignty, or independence of Ukraine".
Previously, the non-controlled territories of Ukraine were defined as "Crimea and the non-controlled government districts of the Donetsk and Lugansk oblasts," while the "non-controlled government districts of the Donetsk and Lugansk oblasts" were referred to as parts of the Donetsk and Lugansk oblasts of Ukraine in accordance with the Decree of the President of Ukraine dated February 7, 2019, No. 32/2019, respectively, pursuant to Article 1 of the Law of Ukraine dated January 18, 2018, No. 2268-VIII "On the Peculiarities of the State Policy to Ensure the State Sovereignty of Ukraine Over the Temporarily Occupied Areas in the Donetsk and Lugansk oblasts".
Now it is explicitly stated that these are Ukrainian territories. According to the memorandum, the "non-controlled government territories of the Kherson and Zaporizhzhia oblasts" are now included in the definition of "non-controlled government territories of Ukraine." The previous designation of "non-controlled government territories of the Donetsk and Lugansk oblasts" has also been removed.
Yaroslav Lomakin, the Director of consulting company Honest&Bright, considers these corrections to be significant. "It is important that British lawmakers have finally clarified that all occupied territories are lands not under anyone's control but Ukraine's. They are not simply territories of unclear ownership occupied by unknown parties," he says.
What is the amount of damages caused by russian aggression stated in the document? £400 billion. "The cost of Ukraine's recovery amounts to over £400 billion. The United Kingdom and G7 leaders made it clear on May 19, 2023, in Hiroshima that russia must pay for the damage it has caused," according to the Memorandum.
Is this amount sufficient for the country's recovery? It is unknown because the war is not yet over. Just over a year ago, at the beginning of the full-scale invasion, Oleg Ustenko, an advisor to President Volodymyr Zelensky, mentioned a payment amount of $300 billion to Ukraine. "In the plan for Ukraine's recovery, there is a pleasant item of receiving over $300 billion frozen of the russian central bank. They are already reserved for us," he said on March 12, 2022.
The amount of assets transferred to Ukraine should apparently correspond to the damages incurred in the war. How is it possible that the damage amounted to $300 billion in the first two weeks of the war, but only $100 billion for the next 15 months, which included battles for Kherson, thousands of shelling incidents on residential buildings, and the tragedy in Kakhovka? On the other hand, Ukraine is constantly receiving assistance, and a portion of the damages has already been compensated.
However, the amount appears to be underestimated. "After all major natural disasters, such as the earthquakes in New Zealand in 2010-2011, the tsunami in Japan in 2011, and the earthquake in Turkey, the insurance market faces the fact that ordinary insurance sums are insufficient to cover the damages. After significant and widespread destruction, the cost of construction materials significantly increases, and the cost of labour increases due to a shortage of builders and repairmen," says Vyacheslav Cherniakhovsky, the Director General of the Insurance Business Association.
He is convinced that during the post-war recovery of Ukraine, the prices for construction work will also increase significantly. Moreover, not all affected individuals have reported their losses yet since they cannot objectively assess the extent of property damage, and not all damaged or destroyed property is documented by the government. "But there will also be an assessment of the losses suffered by businesses, including both direct losses and lost profits, and so on. Therefore, it is premature to state the final amount for the cost of Ukraine's recovery," he says.
How was this amount derived then? According to one version, the $400 billion figure may be 'adjusted' to match the volume of frozen russian assets.
Therefore, this estimation is political rather than based on actual needs. And that is bad news for us because the russian lobby actively denies the possibility of transferring frozen reserves from the russian central bank to Ukraine and can exploit the lack of clear arguments against the interests of the Ukrainian people.
"No sanctions against russia will compel the current authorities in the kremlin to pay anything to Ukraine. Payments in favour of Ukraine are only possible after a change of power in moscow. How can we expect payments from russia when we are not even receiving compensations from the EU and the USA, which have frozen hundreds of billions of russian state funds?" asks analyst Maksym Kukhar.
"Only russia's defeat in the war can initiate the process of compensating Ukraine," believes financial expert Danylo Monin.
Who controls the enforcement of sanctions? The question raises practical implementation of the requirements of the United Kingdom, even in terms of trade with the aggressor.
Yes, sanctions prohibit trading certain groups of goods in the occupied territories. For example, weapons and high-tech products. However, in practice, it is very hard to control this, even with the additional efforts of Interpol and intelligence agencies.
"Amidst smuggling, drug trafficking, human trafficking, and other criminal activities, catching those importing prohibited chips and other goods at the borders is not the best idea. But these restrictions are the building blocks of sanctions," says activist Anton Shvets. "Now anyone trading with the russian federation will have to find an intermediary. In addition, it establishes the position that the occupied territories are considered Ukrainian and supplying goods there bypassing Ukraine is prohibited. Let me remind you that in Western law, the norm 'everything not forbidden is allowed' applies."
According to him, since the formulation of the sanction legislation was previously vague, the direct prohibition did not apply.
Anyway, much will now depend on the decisions of corporations and the work of civil society – investigative journalists, as well as law enforcement agencies. "Every manufacturer understands that once activists, Ukrainian sanction authorities, intelligence agencies of any country, or a think tank find the manufacturer's equipment in the occupied territories, the British bureaucracy will simply suffocate that manufacturer with inspections and fines," believes Shvets. And the size of punitive measures against sanctions violators can amount to multimillion-pound sums.
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