Sanctions play a major role in the response to Russia’s invasion of Ukraine. The United Nations (UN) has not imposed sanctions, but an important number of states have done so. They have imposed a wide array of restrictions and the number of targeted – or ‘designated’ – persons is unprecedented.
The public has been captivated by the freezing of oligarchs’ assets. There is ongoing discussion about seizing them to provide compensation for war damage. Debate continues about how far to ban oil and gas imports.
One aspect of the sanctions has received far less attention, even though it can exacerbate the effect of the conflict on civilians. Some of the trade restrictions and financial sanctions pose immediate and concrete challenges to the capacity of humanitarian organizations to work in Ukraine and in neighbouring states.
Trade sanctions imposed by the European Union (EU) and UK prohibit the export or supply of certain goods and technology in the transport, telecommunications, energy, and oil or mineral exploration sectors to non-government-controlled areas of the Donetsk or Luhansk oblasts, or for use there.
Restricted items include technical equipment which is necessary for humanitarian operations, such as water pumps and refrigerating equipment, but also far more mundane items such as vehicles for transport of persons and goods, and office equipment that are necessary for humanitarian organizations trying to work in the region.
Designations can reduce options for support
Financial sanctions also raise problems. Some are immediately apparent. Significantly for humanitarian operations, the two de facto republics of Donetsk and Luhansk are designated by the EU, the UK, and the US. Consequently, it is prohibited to make funds or assets available to them directly or indirectly.
This prohibition covers the payment of any taxes, licences, and other fees to these authorities, as well as the provision of assets to ministries under their control in the course of humanitarian operations, such as ministries of health and education.
Designations of other entities may also be relevant, such as Russian ‘state enterprises’ which operate in these areas and are the sole providers of commodities necessary for humanitarian response, such as heating fuel.
These are the designations which most obviously impact humanitarian response. However, more than 1,000 persons and entities have been designated and humanitarian organizations must avoid purchasing goods and services from them.
Risk-averse commercial partners
Commercial actors – such as banks, insurers, freight companies and commodity providers – whose services are required by humanitarian organizations must also comply with the sanctions. Experience shows that the due diligence measures adopted by humanitarian organizations do not always allay concerns of risk-averse sectors such as banks.
Fears of violating the sanctions, coupled with the fact humanitarian organizations are rarely profitable clients, have led them to severely restrict the services they provide.
This is not the first occasion the problem has arisen. What is different in relation to Ukraine is the number of designated persons and the ‘sanctions packages’ adopted in quick succession. As compliance officers struggle to keep abreast, their institutions become even more risk-averse.
For UK banks, the situation is exacerbated by the adoption of the Economic Crime (Transparency and Enforcement) Act 2022. This amends existing rules by removing the requirement for the UK Treasury to prove knowledge or reasonable cause to suspect that a transaction violated sanctions, imposing strict liability for sanctions violations.
Time for the UK to follow others
The EU, the US, Switzerland, and other states which have imposed sanctions have sought to mitigate their adverse effects by including safeguards for humanitarian action. Although the UK has largely replicated the measures adopted by the EU in terms of restrictions and designations, it lags behind in including such safeguards.
The UK trade restrictions and financial sanctions do not include exceptions for humanitarian action. While several general licences have been issued, none relate to humanitarian operations.
Instead, the UK measures foresee only the possibility of applying for specific licences – from the Treasury in the case of financial sanctions and the Department of International Trade for trade restrictions. But obtaining specific licences is a time-consuming process which is simply not appropriate for emergency response.
If the UK is to show it is serious about responding to the immense needs caused by the invasion it must introduce appropriate safeguards in its sanctions – either in the form of exceptions or general licences.
What matters is they cover all key humanitarian organizations responding to the Ukraine crisis that are subject to UK sanctions – either because they are UK persons or because their funding agreements with the UK government require them to comply with UK measures.
These include UN agencies, funds and programmes, components of the International Red Cross and Red Crescent Movement, and non-governmental organizations (NGOs) responding to the crisis in Ukraine and neighbouring states. The provision must also clearly extend to commercial entities which provide necessary services for humanitarian operations.
Given the UK recently adopted an exception along similar lines in relation to the Afghanistan sanctions, there is a valuable precedent for Ukraine.