Time for Western Sanctions Against Ukraine

By Walter Derzko

Several human rights watch groups are now calling on Western leaders to impose travel and financial sanctions on 14 Ukrainian officials who violated human rights and are engaged in political persecution. (UNIAN, June 10)  This follows earlier demands by Wolodymyr Yavoriwsky and other oppositionists, who called on Western countries to get tough and impose targeted sanctions against the members of the Government and Ukraine’s top oligarchic clans. (http://bit.ly/kR7Sos). Oddly enough, to date, the Svoboda Party has been strangely silent, not joining the call. You’d think they’d be first in line.

Opposition leader Yulia Tymoshenko promises to file more lawsuits in several other countries against President Viktor Yanukovych’s criminal entourage.  The first case, already accepted by a New York court involving intermediary RosUkrEnergo and its co-owner Dmytro Firtash, falls within the competence of American justice. “This is related to America because the money that was laundered by RosUkrEnergo came from the International Monetary Fund, the budget of which is formed mostly by American taxpayers,” she explained.  “We turned to the courts under the laws of America and they will get these corruptioneers and look into where every kopeck went that was taken from the State Budget of Ukraine and simultaneously the International Monetary Fund,” she added.

President Yanukovych has signed a decree writing off the debts of private Ukrainian energy companies. (UT1, June 2). It’s an absolute outrage, since the sum surpasses US $3 billion of IMF-borrowed money that was essentially gifted to friends and relatives, without impunity. Most Ukrainians buy energy from and pay utility bills to Oblgaz and Oblenergo, but these corrupt structures don’t pay for consumed gas and electricity, but launder these public funds directly to offshore holdings. Owners of these intermediaries include Firtash, Kolomojsky, Surkis, and several Russians (Babakov - the Russian Deputy Speaker, and Vekselberg).

It would be interesting to speculate who else could be a target for sanctions.

If the political will exists, sanctions can be easily imposed by the EU just for the show trials and persecutions against Yulia Tymoshenko and Yurij Lutsenko, who has been illegally imprisoned in pre-trial detention since December 2010. Section 27 of a PACE report released May 31, supports this: “Recently, the Prosecutor General opened criminal cases against a number of former government officials belonging to the opposition, including against Ms. Tymoshenko for ‘excess of authority’ and ‘abuse of office’. We stress that no-one should be above the law, especially government officials, but the fact that only former government officials [who] belong to the opposition are charged, [and that] could indicate political revenge or selective justice, would be unacceptable if that were the case. These concerns seem to be reinforced by the fact that the charges do not allege corruption, but rather challenge the correctness of political decisions taken by the former government officials when in office, which, in effect, would amount to criminalising political decisions.” (http://assembly.coe.int/committeeDocs/2011/amondoc16rev2011.pdf)

Sanctions and Embargos in Different Shapes and Sizes.

The top Ukrainian foreign policy objective in the past year has been to secure visa-free travel to a number of countries, so that Ukrainian oligarchs can have “free” unencumbered access to their assets in Europe and Cyprus. Co-Chairman of the Euronest Parliamentary Assembly Borys Tarasiuk believes that Ukraine’s activities in the Euronest PA will help introduce visa-free travel for Ukrainian citizens to the EU. While this is a noble objective, it will not affect the lives of ordinary Ukrainians, who can’t afford to travel to Europe on weekend shopping jaunts. All one has to do is sit in Frankfurt International Airport’s departure lounge to Donetsk and Dnipropetrovsk and watch these satisfied cross-border, nouveau riche consumers, loaded with shopping bags from Morocco, Geneva, London or Paris. In the past six months alone, Ukraine has announced or is in the process of negotiating visa-free travel to Serbia, Macedonia, EU in general, Argentina, Brunei, and Israel. A fresh travel embargo against Ukrainian oligarchs would devastate the wives and children of these kleptogarchs.

Sanctions against coal exports are rumoured. Exports are handled by the government, and by the businesses of Yuriy Ivanyushchenko such as Donbassholding, Lugansk Coal Company, UGK-2000, and others (while Renat Akhmetov’s role in coal is rapidly declining). Sanctions against Khlib-Invest, also owned by Ivanyushchenko to control grain trading have also been proposed.

Europe has signalled that sanctions may be applied to steel exports, and that would hurt Akhmetov’s SCM. The Russian controlled Customs Union intends to introduce restrictions/anti-dumping measures on Ukrainian metallurgy products as of July 1.

Targeting these two oligarchs alone - Ivanyushchenko and Akhmetov - would cut off the bulk of the funding to and financially devastate the Party of Regions, collapsing the Yanukovych regime. This would be the game-changing event in Ukrainian politics. But in the end, Ukrainians can’t rely on the West to solely fight their internal battles. They need to step up to the plate and demonstrate conclusively to the world what type of government they really desire.