Part 1. Sanctions are serious international political and economy events that will last for a long time, but you have to learn how to live with them.

February 2024

I would like to warn you right away that we are in no way supporters of flagrant violations of sanctions and illegal circumvention of sanctions rules. Rather, I would characterize our position as building a model for companies to operate under sanctions, using multiple legal gaps in them and methods of monitoring their implementation, the absence of a unified field for their enforcement, implementation and control over them. Also, an important factor in working under sanctions is the possibility of obtaining various permits to work with sanctioned companies and goods, obtaining deferments for the implementation of sanctions, etc.

The first thing that needs to be clearly understood is that sanctions are serious international political and economy events that will last for a very, very long time. The adoption of sanctions in the West is a very complex, painfully compromise and long process. But this should not mislead anyone into thinking that sanctions are being introduced half-heartedly. Rather, on the contrary, the long development of sanctions, taking into account various compromises between the government, regulators and local players who are also affected by these sanctions, suggests that sanctions are a well-thought-out mechanism that is introduced for a very, very long period of time. Undoubtedly, there are rare exceptions, but in general, I would characterize the ratio of the time of adoption of sanctions (sub-process of adoption of sanctions) and the time of action of sanctions, especially those approved by legislative bodies, as on average one to fifteen, or even twenty. I mean that if sanctions are painfully discussed and adopted within a year, then they will be in effect for fifteen years, and possibly longer. A very indicative example in this sense is the Jackson-Vanik amendment, which I often cite as one of the examples. This is a 1974 amendment to the Trade Act (the USA) that restricts trade with countries that discourage emigration and also violate other human rights. It was proposed by Congressmen Henry Jackson and Charles Vanik. The amendment prohibits the provision of most favored nation trade treatment, government loans and credit guarantees to countries that violate or seriously restrict the rights of their citizens to emigrate. The amendment also provides for the application of discriminatory tariffs and fees to goods imported into the United States from countries with non-market economies.

This norm was introduced due to restrictions on emigration from the USSR, mainly Jews traveling to Israel; later it also applied to other countries - China, Vietnam, Albania. This measure existed for 38 years in relation to the USSR and subsequently Russia, and was formally abolished only in 2012. In 1985, with the beginning of the perestroika process, citizens of the USSR and especially Jews began to actively leave the USSR. But only after the formal legislative abolition of restrictions on emigration from the USSR since 1989, the United States annually imposed a moratorium on the action of these sanctions against the USSR and then the CIS countries, however, the amendment was not legally repealed and continued to hang like a sword of Damocles over the entire American-Soviet and subsequently US-Russian trade. Currently, the amendment still formally continues to apply to a number of countries, including the former USSR: Azerbaijan, Belarus, Kazakhstan, Tajikistan, Turkmenistan and Uzbekistan.

How difficult it is to finally lift the imposed sanctions, especially in the United States, is evidenced by the fact that back in January 2002, US President George W. Bush proposed to Congress to completely terminate the sanctions amendment against Russia and eight other CIS countries, but this proposal was categorically rejected by American Congress. And only in November 2012, the lower house of the US Congress approved a bill that included the repeal of the Jackson-Vanik amendment, and only due to the fact that part of the sanctions (though not very significant) was rewritten into a provision on the imposition of sanctions on the “Magnitsky list”.

I dwelled in detail on this, perhaps a very extreme example, to give an understanding of how long the regime of modern sanctions imposed against Russia and some other countries of the former USSR by external players and especially the United States may last.

If we are based on the above statement and example, which are true with a probability approaching 100%, then it becomes obvious that companies affected by the sanctions in one way or another will not be able to change the situation with some momentary decisions and measures. For further confident development, they will most likely require long-term strategies for working in a sanctioned regime and specialists capable of implementing these strategies.

About the author.

Dmitry Belik, began his work and business career in the former USSR, built several successful businesses during the years of the cooperative movement and the beginning of perestroika, then worked for almost thirty years in various mid- and high-level managerial positions in Western companies, where he managed representative offices of corporations in Russia, countries of the former USSR and Eastern Europe. Among the places of work were such positions as deputy head of the representative office of Newbridge Networks (https://en.wikipedia.org/wiki/Newbridge_Networks), head of the representative office of Wesley Clover International (https://www.wesleyclover.com/), head of the representative office and CEO of the joint venture managing the Mitel Networks business in Russia, the countries of the former USSR and Eastern Europe (https://www.mitel.com/)