Russia publishes sanctions list against Ukrainian firms, individuals

The Russian government published on Nov. 1 its list of
economic sanctions that target 322 Ukrainian citizens and 68 enterprises. The
sanctions call for freezing their bank accounts, financial
securities, and real assets. Those targeted also can’t transfer capital to and
from Russian territory. The list consists of leading Ukrainian entrepreneurs,
politicians and state officials. The Russian sanctions came in response to a
June order by Ukrainian President Poroshenko to impose sanctions against 30
Russian enterprises and 14 individuals.

Among the leading entrepreneurs targeted (and their
businesses) are Kernel (KER PW, KERPW) Board Chairman Andriy Verevskyy,
Ferrexpo (FXPO LN, FXPOLN) CEO Kostynatyn Zhevago, MHP (MHPC LI, MPHSA) CEO
Yuriy Kosyuk, Interpipe (INPIP) owner Victor Pinchuk, and Konstantin
Grigorishin, the owner of power engineering and power distribution assets.

Entrepreneurs not included in the list are owner of
SCM (including DTEK and Metinvest) Rinat Akhmetov (SCM CEO Oleg Popov and
Metinvest CEO Yuriy Ryzhenkov were included), Privat Group owner Igor
Kolomoisky (partner Gennady Bogolyubov was included), Smart Holding owner Vadim
Novinsky (Smart CEO Oleksiy Pertin was included), Astarta (AST PW) key owner
and CEO Viktor Ivanchyk, Avangardco (AVINPU) and ULF (UKRLAN) owner Oleg
Bakhmatyuk, power distribution magnate Hryhoriy Surkis and natural gas trader
Dmytro Firtash.

Zenon Zawada: Among the
businesses targeted, we see some minor impact on the business of sunflower oil
producer and grain trader Kernel, which received USD 7.8 mln in income last
year – from a Russian port it partially owns. The sanctions will further hurt
the business of Interpipe, but not by much after Russia hiked import duties for railcar wheels in January.
That is likely to have further cut away at Russia’s 15-20% share of Interpipe’s
2017 revenue.

With this list, the Kremlin is clearly delineating for
the public who are its enemies among the Ukrainian political and business
elite. Noticeably, it excludes Ukraine’s leading Russian-oriented politicians
and oligarchs, including billionaire Vadim Novinsky, Motor Sich Chairman
Viacheslav Boguslayev, Opposition Bloc Head Yuriy Boyko, Akhmetov ally MP
Oleksandr Vilkul and gas trader Dmytro Firtash.

However, there are a few notable exceptions to this
rule. The list also does not include President Poroshenko and his ally,
billionaire Rinat Akhmetov. Instead, it includes the president’s eldest son,
Oleksiy. The list also excludes other top officials, such as Prime Minister
Volodymyr Groysman and Foreign Minister Pavlo Klimkin. But it includes leading
presidential contender Yulia Tymoshenko.

We believe this is a deliberate Kremlin tactic to give
Poroshenko’s leading opponent, Yulia Tymoshenko, an electoral boost. She will
waste no time in using this list to prove that Poroshenko is the truly Kremlin
ally, rather than her. (It’s widely suspected that Poroshenko has tacit
business agreements with Putin, and that both are profiting from the war.)

But in reality, Tymoshenko has already begun to try
to expand her electoral base to Russian-oriented voters by softening her support for NATO. And the Kremlin would rather see Tymoshenko as
president than Poroshenko, if only for the fact that she has demonstrated
herself to be more flexible in her political approach (rather than Poroshenko’s
firm commitment to Euro-Atlantic integration, at least on paper).