Ukraine’s Russia sanctions target Putin’s inner circle

UkraineAlert by Anders Åslund

While international attention tends to focus on the anti-Russian sanctions imposed by the West, Ukraine and Russia are locked in their own cycle of increasingly harsh sanctions measures that plays an important role in the ongoing seven-year hybrid war between the two countries. Russia typically initiates these exchanges, but eventually Ukraine responds.

On June 24, Ukrainian President Volodymyr Zelenskyy signed off on expanded and extended sanctions against Russia that target 538 people and 540 entities. The same day, Zelenskyy issued another decree sanctioning 55 Russian state financial institutions. These measures are without doubt the most severe any country has imposed on Russia since the start of the current crisis in 2014.

Russia has traditionally led the way with sanctions measures in the post-Soviet world. This is only natural given the dominant regional role of the Russian economy and Moscow’s aggressive attitude towards its closest neighbors.

In the early post-Soviet era, Russian sanctions were often a matter of sheer protectionism. The former Soviet republics established free trade in 1992, but only in principle. Whenever Ukrainian companies successfully captured Russian markets, Moscow responded with tough protectionist measures, either by imposing import prohibitions or introducing high anti-dumping tariffs. Typical Ukrainian victims of these tactics included sugar, vodka, tobacco, steel, and steel pipes.

As a much weaker commercial partner, Ukraine tended to plead compassion rather than threatening retaliation. Whenever a thaw occurred in Russian-Ukrainian relations, some protectionist measures would be removed.

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