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A Note About the Sanctions Against Russia

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COMMENTARY

by Lawrence Herman
CGAI Fellow

February 25, 2020


Anyone following the appalling Russian aggression in Ukraine will likely be accessing news media updates on Canada’s sanctions, plus those on the Prime Minister’s and the Global Affairs’ websites:

The sanctions are applied under the Special Economic Measures Act, a law that gives the federal cabinet almost unlimited authority to issue sanctions against countries, persons, enterprises and business transactions in response to international crises and to amend these as events unfold.

In the latest developments, Canada, in concert with its allies, has now applied sanctions on Vladimir Putin and his cronies as well as on the Russian central bank, and has removed Russian banking access to the SWIFT system of interbank communications.

Because sanctions constantly evolve, keeping abreast and digging into the details is important. But there are some general points to help explain how Canada’s Russian sanctions work:

  • First, the prohibitions apply to dealings by anyone in Canada as well as to Canadians outside of Canada. That includes any Canadian companies operating abroad that do business with Russia.
  • Second, as noted, they target both Russian individuals, including Putin and his close associates, as well as a vast number of commercial entities - in addition to banks - listed in the Regulations. That list can be extended or reduced by Government order as things on the ground change.
  • Third, they have broad reach in prohibiting not only commercial transactions but also any facilitation of those transactions, including third-party financial and other services.
  • Fourth, they include blanket prohibitions on dealings in specific sectors – like oil exploration and production and debt and other financings involving any of these persons or business entities.

Together with Russian sanctions, Canada has a set of sanctions covering any dealings in the Crimea as well as in the Donetsk and Luhansk regions of Ukraine:

With Russian forces now overrunning major parts of the country, one assumes that these will be extended to cover larger regions of Ukraine.

Canada also has sanctions on Belarus, which must be added to the package. These follow the same format as Canada’s Russian sanctions:

This note is highly simplified. For Canadians with any commercial involvement in both Russia and Ukraine, the message is that for years to come doing business with Russia and Russians, whether in Russia or in Ukraine, will involve serious challenges.


Lawrence Herman, a former Canadian diplomat and counsel at Herman & Associates, is a CGAI fellow and a senior fellow of the C.D. Howe Institute in Toronto.


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