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Available online at www.sciencedirect.com ScienceDirect Procedia Economics and Finance 36 ( 2016 ) 89 95 1st International Conference on Applied Economics and Business, ICAEB 2015 Reinvestigation of the West's sanctions against Russia in the crisis of Ukraine and Russia's reaction Sajjad Bagheri a, Hamid Reza Akbarpour b, * a PhD student, International Law Department, Islamic Azad University, Qeshm International Branch, Qeshm, Iran b PhD student, Young Researchers and Elite Club, Shiraz Branch, Islamic Azad University, Shiraz, Iran Abstract Sanctions are such measures that are used before resorting to force and war. Sanction has been used repeatedly throughout the history. But the frequency of the use of sanction, as a tool to change the behavior of a regime or even a regime change, significantly increased after World War. But the most widespread and newest use of sanctions is between the West and Russia in Ukraine's crisis. In this crisis, America and European Union are trying to change Russia's behavior by imposing large volume of commercial and financial embargo and sanctions against individuals. On the other hand, Russia tries to deal with Western sanctions by imposing sanctions on Europe's citrus as well as European officials. In general, there is an obstacle, called the right of veto, for consensus on the sanctions against Russia and on the other hand, the other multilateral and unilateral sanctions outside the mechanism of the Charter is not contraindicated, but they cannot be imposed unlimitedly and regardless of imperative laws, the general principles of law, the specific rules of the Charter, human rights and humanitarian law. However, in this crisis, the political umbrella has made it actually difficult to apply definitive legal opinion. 2016 2015 The Authors. Published by by Elsevier B.V. B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer-review under responsibility of SCIJOUR-Scientific Journals Publisher. Peer-review under responsibility of SCIJOUR-Scientific Journals Publisher Keywords: Ukraine' crisis; economic sanction; Russia, America;European Union 1. Introduction Sanctions are coercive measures that are imposed by a country or groups of countries against a country that has violated international laws or accepted moral standards. The purpose of sanction imposer(s) is to make the offender country to cease its actions, or at least to put an end to its unacceptable behavior by negotiating (Aghabakhshi and * Corresponding author. Tel.: + 989172221141 E-mail address: Hamidakbarpour172@gmail.com 2212-5671 2016 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer-review under responsibility of SCIJOUR-Scientific Journals Publisher doi:10.1016/s2212-5671(16)30019-3

90 Sajjad Bagheri and Hamid Reza Akbarpour / Procedia Economics and Finance 36 ( 2016 ) 89 95 Afsharirad, 1995). Sanction has a very long history, but its application was more after World War II (Anonymous, 2006). Some of them are Britain's sanctions against Iran in the oil movement, embargo of Cuba by the United States, oil embargo of Netherlands, Britain, United States and France by Arab countries in Arabs' war in 1973 with Israel, which resulted in the quadrupling of oil prices, or trade, sports, and capital sanctions of the Soviet Union from the West (which also covered the 1980 Olympics) as a result of the invasion and occupation of Afghanistan. In the course of the twenty-first century and after the events of September eleven, another wave of sanctions was commenced and most of them were imposed on Iran, due to its nuclear case. 2. The concept of sanction Sanction is sometimes used in a sense of boycott. Boycott in political sciences is a protest activity in the form of refraining to do something such as election boycott and sanction is a penalty aimed to make the sanctioned country to obey the rule like sanctions against Iran (Shabestan News, 2012). The concept of economic sanctions is more important because of its more application. In fact, economic sanction is the lack of trade and economic exchange of different countries with a country in order to punish due to political and military reasons (Dehkhoda, 1982). In other words, it is the use of economic instruments to achieve political ends. Economic sanctions can be a boon to the war since they do not use force and violence. In legal doctrine, John Galtung defines economic sanctions as "actions initiated by one or more international actors against one or more others in order to punish the receivers by depriving them of some value and/or to make the receivers comply with certain norms the senders deem important" (Haddadi, 2003). In general, the nature of economic sanctions is not to create difficult situation against the people of a country and, in principle, is to change behavior and change policy of a government (Zarif and Mirzaee, 1997). 3. Types of sanction Sanctions are generally divided into two categories of unilateral sanctions and multilateral sanctions (Abbasifard, 2007). In terms of content, sanctions are divided into two categories of economic and non-economic. Non-economic sanctions usually begin before economic sanctions and they aim to persuade the desired country to change its policy. Non-economic sanction is different depending on the nature of the subject, but it can include one of the these factors: cancellation of multilateral meetings, refraining to grant visas, reducing the level of political representation, preventing the membership of the desired country in international organizations, opposition to the hosting of the desired country for international meetings (Eshrafi, 2010). But the most important type of sanctions is economic sanctions. Economic sanctions have been defined as lack of trade and economic exchange of different countries with a country in order to punish due to political and military reasons; in other words, it is the use of economic instruments to achieve political ends (Dehkhoda, 1982). Economic sanctions are often considered as an alternative to war. The purpose of economic relations is all types of economic relations, including trade and financial. Different countries use limited economic sanctions for political purposes against the target countries. Before sanctions against Iraq in 1990, United Nations have used all-out sanctions twice, one of them was against Rhodesia in 1966 and the other was all-out arms embargo against South Africa in 1977 (Abbasi, 2007). Economic sanctions are either n the form of trade barriers or financial restrictions. If the country sending sanctions impose financial sanctions against the target country, halting investment and pressure on financial transactions is put on its agenda to reach its goal and if it aims to impose trade sanctions, the economy of the target country will be crippled by stopping the import and export. In trade sanction, countries are asked to stop their trade transactions with the target country. Trade sanctions were imposed on Iran and if any country violates this prohibition, it will be treated badly. In financial sanctions, trade transactions are not directly intended and trade transactions are displaced through controlling financial resources and are controlled as a result of exchange (Ghanbarloo, 2008). There is another classification of economic sanctions. The case that sanction is just related to the relations between the two countries, so that a country refuses to have transactions or exchange services or other economic and social relations with another country, is called primary sanction that has a limited scope. But a country may sometimes expand its sanctions' scope and halt trade and financial relation with countries that have a relationship with the target (the sanctioned) country, which is called secondary

Sajjad Bagheri and Hamid Reza Akbarpour / Procedia Economics and Finance 36 ( 2016 ) 89 95 91 sanction and has a scope far beyond the primary sanctions; like America's D'Amato Act against Iran for countries and organizations that have trade and business relations with Iran. Cutting off these ties is as a punishment (Timmerman, 1997). 4. Sanction from the perspective of international law In the current world, where relations are bound together, the international community uses the tool of sanction when needed. According to paragraph 1 of Article I of the UN Charter, one of the main objectives of this organization is to "to maintain international peace and security, and to that end: to take effective collective measures for the prevention and removal of threats to the peace, and for the suppression of acts of aggression or other breaches of the peace, and to bring about by peaceful means, and in conformity with the principles of justice and international law, adjustment or settlement of international disputes or situations which might lead to a breach of the peace." One of these peaceful ways is sanction and the Security Council is its responsible. According to Article 41 of the Charter, the Security Council may decide what measures to implement that do not involve the use of armed force and it can ask UN members to engage in such practices. These measures may include stopping all or part of economic relations, rail, sea, air, postal, telegraphic, radio and other means of communication, and the severance of diplomatic relations. At first, it may seem that the Council is not obliged to comply with international law in determining threat to international peace and security and action against it; however, despite that the charter does not iterate that Council's obliged to observe international law in this area, international law has been implicitly mentioned as the basis of norms of the Charter in the reports of San Francisco Conference. So the Security Council is not without limits on the issue of sanctions and sanctions should be based on international law. Article 25 of the UN Charter is the main reason for fans of limitations for Security Council in issuing sanction resolutions. Article 25 of the UN Charter says: "the Members of the United Nations agree to accept and carry out the decisions of the Security Council in accordance with the present Charter." Accordingly, governments may seek exoneration of council's decisions that have been issued outside the scope of its responsibility. Therefore, under Chapter VII of the Charter, the Security Council is required to comply with international law when imposing economic sanctions. Council's limitations include general principles of international law, imperative laws, specific rules of the charter and principles of human rights and humanitarian law (Fsrokh Seyri, 2008). There are several theories in the doctrine of international law on sanctions. There is an argument that the countries have sovereignty and they have ultimately freedom of action in developing their foreign policy and relations with other countries. The theory states that the responsibilities and duties of a government toward its country are prioritized over responsibilities and duties of the country toward other countries and international community. Proponents of this view emphasize the 1803 resolution dated fourteen December 1996 on the principle of sovereignty of states over natural resources, Article I of the second paragraph of Economic, Social and Cultural Covenant says that all nations are able freely use their natural resources and wealth without prejudicing the obligations arising out of international economic cooperation based on mutual interests and international law to achieve their goals. There are other views on international law, one of which is neutral theory. Proponents of this theory allow direct economic war by one country against another one, but they aim to minimize harmful effects on third parties. In fact, they allow the primary sanction and consider limitations for secondary sanctions, which is the difference of this theory with the previous one. There is also another view that considers different types of sanctions illegal. This theory that is called legal prohibition is more up-to-date than previous theories and is more compatible with human rights and is rooted in political classical liberal economic theories. Proponents of this theory are serious defenders of free trade; therefore, they consider any deliberate disruption in the normal flow of economic transactions causing damage to the global economy. Many jurists have confirmed this theory. These jurists believe that countries' attempt to impose economic sanctions against other states does not have any legal basis. Among the reasons offered by developing countries is that paragraph 4 of Article 2 of the UN Charter on the commitment of its members to refrain from the use of force is not only military force, but it also includes economic and political force. On the other hand, the 1970 Declaration on Principles of International Law Governing Friendly Relations also asks states to refrain from the use of force in international relations in military or political relations, or in any other way.

92 Sajjad Bagheri and Hamid Reza Akbarpour / Procedia Economics and Finance 36 ( 2016 ) 89 95 Article 32 of the Charter on economic rights and responsibilities declares that none of the states can use economic, political, or any other type of measures to force other states in order to obey them in the exercise of its sovereignty or encourage such acts (Zahrani, 1997). 5. Ukraine's crisis One of the issues that always arise after the collapse of the USSR is the problem of Ukraine and the conflict of parties involved in the country. Ukrainian internal crisis is the result of long-standing rivalry and fighting between pro-russian and pro-west parties and political factions to seize full power and drive away the rivals from the scene, which has tensioned the relationship between Moscow and Washington. Russia and America accuse each other of intervening in the internal affairs of Ukraine, not respecting sovereignty and territorial integrity and supporting all political groups and parties that are their fan. But the new crisis in Ukraine outbroke since early 2014 with the President's removal of power and seizing government buildings in Kiev. It should be noted that Viktor Yanukovych eventually fled to Russia. But the matter came to a head when Crimea peninsula joined Russia as a federal member by a referendum. Following the Malaysian plane crash, the tension and conflict between Russia and the West started. Finally, following the 2014 presidential elections, 48-year-old Ukrainian billionaire businessman, Petro Poroshenko, won the majority in the first round. Ukraine's new president said in his speech that he didn't recognize any referendum and he wouldn't accept Crimea's occupation and separation from Ukraine under any circumstances. The pro-russian separatist forces in many cities of Donetsk and Lugansk regions prevented people from voting (Zamani, 2013). The controversy and conflict between Russian forces and Ukrainian troops under the guise of President Poroshenko caused the other countries to be involved in this conflict and it became a conflict between Russia and the West. 6. Imposing sanction on Russia West adopted two policies in the Ukrainian crisis. First was the threat of NATO to military response in case of a military attack from Russia to Ukraine and second was the policy of economic sanctions and political isolation of Moscow in the international community. Ukraine's crisis has embrangled EU and has had a direct effect on the major member countries of the Union. In EU, most governments often flee to accept the heavy costs of managing this crisis. German Chancellor, Angela Merkel, openly said that they she didn't support the military arrival of NATO in this crisis. Britain and France, although, condemned Putin's government in their political positions, but they protested to NATO's Secretary General to boost defense spending by NATO in order to curb Russia. West's behaviors indicate that they seek to plague Russia in military and security crises in the surrounding area in order to keep them away from their ultra-peripheral environment. Therefore, they accused Russia of trying to separate the eastern regions of Ukraine and in this way, imposed sanctions against Moscow (Mohammadi, 2014). Before the sanctions, the meeting of the foreign ministers of Germany, Great Britain, France, Russia and America was held in Paris to escape the conflict and the crisis in Ukraine, but there was no result. Lavrov did not participate in the meeting which was attended by Foreign Minister of Ukraine. As a result, Lavrov left Paris meeting ahead of his peers. As a result, Europe Union froze the assets of 18 people in the Ukraine, who were involved in the violence against protesters last month. EU's Commission also announced that 11 billion euros financial assistance will be given to Ukraine (Radio Zamaneh, 2013). The leaders of the seven major industrialized countries suspended Russia's membership in the group of "G8". According to them, if Russia changes its approach, it can regain its position. After the emergency meeting of the group that was held at the request of President Barack Obama, it was declared that the major eight industrialized nations' meeting in Sochi in June 2014 was canceled and the meeting will be held without the participation of Russia in Brussels. In response to the suspension of Russia's membership in the group of "G8", Lavrov said that it is not a great tragedy if Moscow is dismissed from the "G-8". Barack Obama warned Russia that if it continues to attack on national sovereignty of Ukraine, it will face more sanctions and he said that the US and its European allies are ready to hit the Russian economy, even if the economic sanctions are against them. UN General Assembly has declared the referendum of the Crimean Peninsula to amend the Russia illegal and announced their support for the territorial integrity of Ukraine (Shargh newspaper, 2014). The first sanctions were imposed in March

Sajjad Bagheri and Hamid Reza Akbarpour / Procedia Economics and Finance 36 ( 2016 ) 89 95 93 2014 and in the wake of Barack Obama's executive order. At that time, the President of America issued three executive orders. These decrees obliged the Department of the Treasury to sanction specific individuals and entire sectors of the Russian economy, including financial, energy, mining and metals, engineering and defense services. According to Executive Order No. 13660 on March 6 that considered events in Ukraine as a threat to America's national security, the property of some senior officials of Ukraine was blocked and transactions with them were prohibited. Due to the presence of Russian troops in the Crimea as a threat to security, stability and integrity of the Ukrainian border, new sanctions were imposed against Russia with the issuance of Executive Order No. 13661 on March 16. In Executive Order No. 13662 on March 20, the president of America imposed sanctions against financial, energy, mining and metals, engineering and defense services of Russia. Following these executive orders, the Treasury Department of America announced the list of the relevant individuals and companies. At the same time with America, EU also expanded sanctions against Russia. On March 17 and on March 21, 12 other officials were sanctioned by EU. On July 16, the Treasury Department of America declared a notification regarding activities in the area of financial services, energy, armaments and violators of national sovereignty of Ukraine. Two financial institutions were subject to sanctions; Gazprom Bank, Russia's third largest bank and financial arm of Gazprom and also VEB, a bank whose origins can be traced back to 1922. Novatek, Russia's second largest gas producer and Rosneft, Russia's largest oil company were also sanctioned. In addition to the above mentioned companies, a large number of other companies and four Russian public officials were in the list of the sanctions. The sanctions, directly or indirectly, had a special focus on the oil and the Bank sector of Russia (Anonymous, 2014). But sanctions peaked in July 2014. New restrictions included a ban on citizens or residents of America to deal with three Russian banks. America sanctioned VTV Bank, Russia's Agricultural Bank, Bank of Moscow and Russia's United Shipbuilding Corporation. By these interpretations, all the major banks in Russia, with more than 50 percent owned by the government of the country, were subject to America's sanctions. But the boycott Russia, America and Europe not only serves America with this policy. In sanctioning Russia, America is not alone and Europe acts in accordance with this policy of America. In fact, new sanctions of America and Europe were imposed after the agreement of the leaders of America, Germany, Italy, Great Britain and France at a telephone conference on "the need to punish Russia for further intervention in Ukraine". The new sanctions include energy, defense and finance, which include banks and armaments, etc. (BBC News, 2014). The conflict between the West and Russia had many consequences for the international system ad as a result, on February 12, 2015, the leaders of Germany, France, Ukraine and Russia agreed on a ceasefire in East Ukraine to resolve the crisis in Ukraine. The agreement was achieved after hours of intense negotiations among the leaders of these countries in Minsk 2, the capital of Belarus. An important part of this agreement is a cease-fire that began two days after signing it (General Administration of news and the interpretation of cross-border broadcasting, 2015a). The withdrawal of heavy weapons from the zone of conflict and amendment of the constitution of Ukraine to decentralize central state's power were other important provisions of the Minsk 2 Agreement. But the agreement was much wonky and was repeatedly violated by both sides. In addition to concerns of violating the cease-fire in East Ukraine, the withdrawal of heavy weapons from the zone of conflict and amendment of the constitution of the country faced serious ambiguities. These issues have caused serious doubts about the fate of the Minsk Agreement. But there is a very serious question that whether the implementation of the agreement is possible or not when the relationship between Ukraine and West is becoming worse more than ever (General Administration of news and the interpretation of cross-border broadcasting, 2015b). One of the main reasons for this deterioration is widespread mistrust between the West and Russia. This mistrust was evident several days after Minsk 2 agreement. While a few days had passed ceasefire, EU released the new list of sanctions against the Russian authorities and separatists of East Ukraine. According to the EU's sanctions, the assets of 19 individuals and 9 companies were detained and travel bans were imposed against them. The two Russia's deputy defense ministers were also subject to this sanction (Etelaat newspaper, 2014). 7. Russia's reaction to West's sanctions In response to the economic sanctions of the West, Russia has also adopted the strategies that most of these measures are as follows:

94 Sajjad Bagheri and Hamid Reza Akbarpour / Procedia Economics and Finance 36 ( 2016 ) 89 95 Food embargo On August 6th 2015, with the adoption of retaliatory measures, Russia forbade the import of food and agricultural products from the countries sanctioning Russia including EU members (Fazli, 2015). Russia then extended these sanctions and based on the new list of the food sanctions, imports from Albania, Montenegro, Iceland, Liechtenstein and Ukraine were also banned (Khordad news, 2015). The importance of these sanctions is determined when we know that Russia spent almost $ 26 billion in 2013 on food, which is on the sanctions list. Certainly, the greatest impact is on EU's agricultural economy, because Russia, after America, is its second largest agricultural market. Russia also resorted to neighboring countries and Latin America, particularly Brazil, as an alternative to Western countries in importing in order to supply the amount of food needed (Namazi and Rouhani, 2015). Sanctioning individuals The sanction, in fact, is in response to the sanctions that targeted the Russian authorities. In fact, the sanctions are the parallel move of Russia against the West. Accordingly, Russia sanctioned a number of people in the government and politicians of America. The list released by Russia included three advisors of Obama and several members of parliament, including John McCain, Republican Senator, Benjamin Rhodes, and Harry Reid and John Boehner (Islamic Republic of Iran Broadcasting, 2013). But the real and effective reaction of Russia in opposition to the sanctions against authorities peaked by sanctioning 89 European officials. The names of Europe's Parliamentary officials, senior military and security and intelligence officials were on this list. Also, "Andrew Parker", head of "MI5", "Nick Houghton," the head of the armed forces, "Malcolm Rifkind," former defense minister, and "Nick Clegg," former Deputy Prime Minister and leader of the Liberal Democrats, are among English authorities that are listed on Russia's sanctions list. The sanctions also included officials from other parts of Europe, such as "Uwe Corsepius", Secretary General of the Council of EU, and "Karel Schwarzenberg," former Foreign Minister of the Czech Republic and some officials of other countries were also on the list of persons banned from traveling to Russia (General Administration of news and the interpretation of cross-border broadcasting, 2015c). Except for two major reactions from the Russian government in opposition to the West sanctions, Russia has employed several other strategies as a secondary solution. Some of these strategies include: Strengthening the bilateral currency swap agreement and dropping dollar from Russia's export and import Reducing the share of dollar and euro in energy trading exchanges Selling dollar reserves and changing them to gold by the Central Bank of Russia Establishing a fund to support businesses affected by sanctions Development of relations with non-european countries, particularly China and Latin American countries (Namazi and Rouhani, 2015). 8. Conclusion Sanctions are one of the most important and most attractive ways for deference of the targeted country. Security Council's sanctions that are issued on the basis of Article 41 of the Charter are the proof of this claim. But bilateral and multilateral sanctions outside the UN framework have many applications. With the onset of the crisis in Ukraine and entrance of the West and Russia to the conflict, once again the leverage of sanctions has been concerned by the parties. The sanctions were imposed against Russia by America and Europe with the annexation of Crimea to Russia. The sanctions continued to extents that were followed by harmonized sanctions of America and EU. On the other hand, in the meantime, third countries became associated with America and Europe, because of the economic interests. Although in the international law, sanctions are not unlimited in and out of the framework of Security Council and they should observe conditions such as human rights, but the existence of Russia in the Security Council and having the right of veto has made it practically impossible to impose all-out sanctions. Of course, Russia has also imposed sanctions against America and Europe with fewer dimensions in response to the sanctions. It seems that due to the lack of transparency and high political tasks in the Ukraine's crises, making decisions about what was the bases for parties' decision to use sanction and whether they have observed constrictive factors or not is ambiguous.

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