Vladislav Vlasyuk: We have concerns about our partners due to their indecisiveness regarding sanctions against Russia.

The interview with the President of Ukraine’s Commissioner for Sanctions Policy, Vladyslav Vasyuk, discusses why sanctions against Russia have not yielded the expected results, the necessary measures to achieve these results, and the influence of Ukraine on the sanctions policies of partner countries.

Russia is utilizing an opaque network of tankers to circumvent international sanctions and continue exporting oil, which remains a key source of funding for its military actions. Last week, the European Parliament urged EU countries to impose stricter restrictions on companies facilitating the operations of Russia's shadow fleet. While Ukraine insists on sanctions against key intermediaries, particularly Coral Energy, the international response has been limited.

In an interview with RBC-Ukraine, Vladyslav Vasyuk discusses the challenges of sanctions policy and its impact on the Russian economy, the mechanisms through which Ukraine collaborates with partners on sanctions, and the assessment of efforts in this area.

– In 2022, when sanctions began to be imposed, there were high hopes that they would either prevent Russia from intensifying military actions or significantly reduce them. Russia was also apprehensively awaiting each new sanctions package. In your opinion, has the attitude towards sanctions changed among those who impose them and those they are directed against?

– It turned out to be much more complicated than desired, in every sense. Was there a shock result, or did Russia manage to sidestep the sanctions? Yes, it did. Is there an impact? Yes, there is an impact, both in specific figures and in the state of the Russian economy. Just a few weeks ago, Putin himself mentioned that they are facing problems due to sanctions.

A major issue for us, in general, is that the Russian economy is very large and globally integrated; you cannot simply cut it off like Iran and North Korea.

Ultimately, there is a second problem: in fact, Iran and North Korea are not entirely isolated either. If we face the truth, Ukraine has encountered the consequences of non-compliance with sanctions against Iran and North Korea as well.

– I understand that the expectations regarding the effects of sanctions in 2022 and 2023 were overstated?

– Rather, there was an underestimation of the resilience of the Russian economy. That’s one. And two – the willingness of Russians to endure. Everyone thought that once we impose sanctions, they would say, “How is this fair? Why should we suffer? We will take to the streets, and our regime will reconsider.” But that didn’t happen. They are indifferent – they tightened their belts, rallied around their leader, and it’s all fine. The fact that their economy hardly cooperates with Europe doesn’t bother them either. This was underestimated.

– Which sector in Russia has been most affected by sanctions?

– The more technological and complex the sector, the more destructive consequences it has faced due to sanctions. The aircraft industry has reached a standstill. It was not very developed to begin with, but there were plans, and they were building aircraft. The machinery industry is nearly non-existent. The only thing they are doing now is assembling Chinese cars. The woodworking industry has nearly collapsed due to the closure of European markets. This is what has suffered significantly. Software development has also been impacted. Despite all efforts towards import substitution, they have not succeeded with software.

However, they have not faced the same fate with oil. Oil production has not declined. The first reason is that they are pouring money into this sector because they continue to sell oil. Plus, I would say that the sanctions aimed at oil companies (technologies, equipment, refining) have not worked at all. Production continues – and that’s a problem.

– Since your last comment to RBC-Ukraine regarding sanctions against Russia's shadow tanker fleet, many events have occurred: public resonance, statements from key EU politicians, as well as President Zelensky regarding the need for sanctions against companies that are pivotal in supporting the operations of Russia's shadow fleet, particularly Coral Energy (new name 2Rivers). Why, despite all the statements, has Ukraine still not imposed sanctions against this company?

– I would divide this question into two parts. Regarding the shadow tanker fleet. The overall complexity is that the market for maritime oil and liquefied gas transportation, as it turns out, is completely opaque. Any insurance can be used, any flag can be flown. The rules of free movement on the open sea apply – and it turns out that you cannot verify or restrict anything. A tanker may be under sanctions but can freely navigate the Danish strait.

The second question is what could have been done but the EU did not do. I am talking about the transfer of tankers from companies because at least 40% of Russian oil is transported by "Greek" tankers. There are many companies that own tankers – some are under sanctions, such as Gatik Ship Management or the Russian Sovcomflot. Some are not yet under sanctions.

– Why are they not under sanctions yet?

– I believe we can implement this very quickly (referring to Coral Energy). As of today, nearly 100 tankers are under sanctions from partners. We cannot legally sanction tankers yet, but we plan to rectify this situation.

Vladyslav Vasyuk, the President of Ukraine’s Commissioner for Sanctions Policy (Photo: Vitaliy Nosach. RBC-Ukraine)

There are about fifty companies operating fleets under sanctions from partners worldwide. Some are also under sanctions from Ukraine, such as Sovcomflot. Regarding Coral Energy, I don’t think it’s a problem to consider imposing sanctions in the near future. Regarding the tanker fleet, the key is to have a unified sanctions approach – the USA, EU, UK, Japan, and Ukraine. The more we can apply similar sanctions to companies, ships, and add additional requirements for entering ports, as well as for insurance, pilotage, and brokerage services, the more it will restrict Russia.

– Are there any obstacles to imposing sanctions on our side, as you mentioned?

– Just like any sanctions against companies in foreign jurisdictions. The first question is the availability of real information with evidence of illegal activities. The second is understanding that the effect of sanctions will be real. We do not want to impose sanctions that will remain merely on paper.

– Are there currently grounds for sanctions on these two points?

– Work is ongoing on these two matters. We are trying to move as synchronously as possible with partners on the main fronts, and among them, the shadow tanker fleet is number one.

– The European Parliament approved a resolution calling for more "targeted" measures against Russia's shadow fleet. Will this affect our sanctions policy? Will it accelerate the sanctioning of shadow fleet companies?

– How do we work? We say, look, there is a vulnerable spot in the Russian economy, and we need to hit it. We provide specific information, for example, that they earn 8-10 billion from oil exports – and this is just the difference between the price cap and the price at which they sell it. Here is the general theme, here are the figures, and here are the main players. We prepare material and start persuading partners of the need for sanctions. At some point, when we understand that this issue is ready for implementation, we elevate it to the highest level. And then the communication and media effect of Ukrainian sanctions works optimally to achieve results. This entire process has a particular logic and sequence.

– And here I recall the issue of sanctions on oil supplies. We are urging partners to impose sanctions on oil supplies and refining, while we ourselves do not impose sanctions on oil transit through Ukraine. How is that?

– This is an uncomfortable question for me because it...

– Is it political?

– It does not directly relate to the sanctions track. This is a question for our government, the European Union.

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Vladyslav Vasyuk, the President of Ukraine’s Commissioner for Sanctions Policy (Photo: Vitaliy Nosach. RBC-Ukraine)

Sanctions can only be a tool if there are corresponding decisions. In Europe, there is a rejection of Russian oil, except for pipeline oil, and of Russian gas. Transit is outside the sanctions.

– We made a decision on sanctions against the company Lukoil.

– When these decisions were made, they did not affect transit, and we proved this to our partners.

– Then why were they made?

– To impact the relevant sector’s Russian enterprises.

– But the impact was almost negligible. They started re-registering oil and selling it further.

– Ukraine has now imposed sanctions on 12,000 entities, most of which are Russian. Information about our sanctions is communicated to partners, and if we implement a decision, they can do so too.

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