Prime Minister Dmitry Medvedev signed a government decree introducing special economic measures against 322 Ukrainian citizens and 68 companies, the Government press service said on Thursday, TASS reported.

"Special economic measures are introduced in relation to individuals and legal entities of Ukraine, which include freezing non-cash funds, non-documentary securities and property in Russia and banning transfer of funds (withdrawal of capital) outside Russia. Sanctions will be extended to 322 individuals and 68 legal entities," the Russian government said.

The list of the sanctioned individuals includes the Ukrainian president’s son Alexei Poroshenko, Ukraine's Minister of Internal Affairs Arsen Avakov, Head of Naftogaz of Ukraine Andrei Kobolev, Head of the General Staff of the Armed Forces of Ukraine Viktor Muzhenko, Prosecutor General of Ukraine Yuriy Lutsenko, Defense Minister Stepan Poltorak, Speaker of the Verkhovna Rada Andrei Paruby, Deputy Head of the Presidential Administration Konstantin Yeliseyev, ultra-nationalists Oleg Tyagnibok and Dmitri Yarosh, ex-premier of Ukraine Arseniy Yatsenyuk, leader of the Batkivshchyna (Motherland) party Yulia Timoshenko.

These restrictions also are also being imposed on judges of the Constitutional Court of Ukraine, lawmakers of the Verkhovna Rada of Ukraine of the 8th convocation, major Ukrainian businessmen, officials of the presidential administration of Ukraine, heads of executive authorities and large Ukrainian companies, and legal entities controlled by Ukraine’s top businessmen, the statement said.

Enterprises of the chemical and mining industry of Ukraine form the majority of the list of 68 legal entities that fell under the counter sanctions. Among those are s Azot, Dniproazot, Ukrhimenergo, Glikohim, Mezhdurechensk Mining and Processing Plant, United Mining-Chemical Company and its branches, and a number of other enterprises.

Russia's countermeasures are aimed at countering Kiev’s unfriendly actions against Russian citizens and companies and can be lifted if Ukraine lifts its sanctions, the Russian Government stated.

Thus, Russia’s countermeasures "are aimed at countering unfriendly actions against Russian citizens and legal entities from Ukraine and normalizing bilateral relations." "The Russian government reserves the right to cancel special economic measures if Ukraine abolishes its restrictive measures imposed on Russian citizens and legal entities," the government said.

Precautionary measures

The Ministry of Industry and Trade and the Ministry of Economic Development of Russia must prevent negative impact on Russian companies of response measures against Ukraine.

"The Ministry of Industry and Trade and the Ministry of Economic Development of the Russian Federation should ensure the balance on the commodity markets and prevent negative impact of special economic measures ... on the activities of Russian organizations," the government resolution published on the Russian government’s official website said.

According to the statement, the Russian government could issue temporary permits to authorize certain operations of companies under the restrictions.

According to the Russian Federal Customs Service, trade turnover between Russia and Ukraine in 2017 increased by 25.6% to $12.9 bln. Growth of mutual trade was observed in the first time since 2012. Thus, in 2017, Russian exports to Ukraine grew in all key product groups. Imports also grew in all product groups, with the exception of wood.

The Russian-Ukrainian trade relations peaked in 2011, when the volume of mutual trade amounted to $50.6 bln. Since 2012, the trade began to gradually decline and reached its minimum in 2016, dropping to $10.26 bln. Because of a prolonged decline in mutual trade, in 2017 Ukraine occupied only 14th place in the Russian foreign trade. Whereas Russia, despite the sanctions regime introduced by Ukraine since 2014, according to the State Statistics Service of Ukraine, remains its main trading partner with a 12.4% share in foreign trade.

According to the data of the Russian Central Bank, direct investments by residents of Ukraine and Russia in each other’s economies has been in decline since 2016. At the end of 2016, there was an inflow of direct investment from Ukraine to Russia of $270 mln. At the same time, Russian companies invested $3.4 bln in Ukraine.

In January-June 2017, Ukraine’s investments in Russia amounted to $285 mln (+21%). At the same time, Russia's investments in Ukraine in the reporting period reached $3.4 bln (+10%).

Presidential decree

On October 22, Russian President Vladimir Putin signed a decree on special economic measures in response to the anti-Russian sanctions of Ukraine. The decree notes that this decision was made "in response to Ukraine’s unfriendly actions, which are contrary to the international law and imply introduction of restrictive measures against citizens and legal entities of the Russian Federation", as well as "in order to protect national interests."

Prime Minister Medvedev clarified later, countersanctions "would not apply to Ukrainians in general," but will concern "only those Ukrainian citizens who harm the interests of the Russian Federation and take actions aimed at causing damage to Russia." The list will also include legal entities registered under the laws of Ukraine, which are in any way controlled by citizens under countersanctions.

Ukraine’s sanctions against Russia

In February 2014, Ukraine introduced sanctions against 1,228 individuals and 468 legal entities, including Russian government officials, politicians, company heads and reporters, some Donbass residents, the Almaz-Antey concern, Gazprombank and Aeroflot.

In 2017, Ukraine also introduced sanctions against Russian internet and media companies, such as Mail.ru Group, Yandex, VKontakte and Odnoklassniki.

On June 21, 2018, Ukrainian President Pyotr Poroshenko signed a decree on expanding sanctions against Russian individuals and legal entities. The updated list included six political parties of Russia: the United Russia, the Communist Party of the Russian Federation, the Liberal Democratic Party of Russia, the Rodina party, the Democratic Party of Russia, and the Agrarian Party of Russia. The list also includes the Central Election Commission and its head Ella Pamfilova, the Electoral Commission of Crimea and members of territorial commissions at various levels.