Sanctions and the “Art of Smart”

It’s an old trick from listening to focus groups. Count how many times people use the same word when talking. Usually, it’s a reasonable indicator of what’s important to them, what they’re thinking about, or what they’re feeling.

In speaking to Oleksii Makeiev, Ukraine’s Ambassador and Special Envoy for Sanctions, I stopped counting one particular word as our conversation went on: “smart”.

Makeiev’s job is to work with Ukraine’s Western democratic allies and the international community to develop punitive sanctions against the Russian Federation. He uses the word a lot.

Reporting to Ukraine’s Foreign Minister Dmytro Kuleba, Makeiev has been a career diplomat for 26 years and is as deft at that nuanced craft as you might imagine. He was there in the room for 17 hours when the Minsk Agreement, which probably bought Ukraine time to prepare for this invasion, was being negotiated.

And Makeiev is also a patriot, democrat, thinker, and dad who knows when to speak with clarity and directness.

By coincidence, on February 24 when Russia’s expanded invasion commenced, Makeiev was to give a presentation in Brussels to European peers. After raising relevant issues with them for years, he said to the high-powered gathering:

“This morning, I spoke to my wife and daughter in Kyiv and they said that as of 4am there are bombs falling on my country. Now, do you remember what Ukraine has been saying? ‘Don’t wait. Introduce sanctions. Show strength to stop Putin before it’s too late.’”

But here we are. Going forward and now that Ukraine has the West’s attention, what can Makeiev count on to achieve results, I wonder. He notes:

“The most important feature of diplomacy is trust. That is partly about being clear and honest. Its when you lie that you are no longer effective. And the whole point of being a diplomat is to be effective for one’s country.”

Trust seems to be the cornerstone of Ukraine’s strategy on sanctions. Not just to be ‘consulted’ by allies on what might work, but to be a trusted partner who is at the G7 and other top tables, early and often, as policy is co-designed and implemented in a “smart” way.

Hence, Makeiev has spent the last 80 plus days, literally from February 24th, in Europe’s diplomatic venues. His objective has essentially been to enshrine “smart sanctions”. If the facts are that the Russian Federation is approaching default, that five regional governors have resigned to avoid designation, and that the military is struggling to re-supply, then strong strides have been made to that objective.

For Makeiev, smart sanctions consist of smart coordination, smart targeting and smart communications.

Smart coordination means getting different countries with very different economies and political cultures to have complementary measures. What’s imperative is an international approach that eliminates loopholes for the designated individuals or the blocked companies who underpin Russia’s capacity to aggressively deploy its military.

I took the 15 announcements that the US State Department has made with regard to sanctions since February 24th and compared its total suite to that of America’s allies. The ducks are in a remarkably straight row when it comes to everything from travel bans to banking blockages to going after the families of key Putin regime figures. Anyone who has been within cooee of a government bureaucracy knows how hard it is to get consistency across one’s own government – no less more than a dozen foreign ones. It takes supreme smarts, among much else.

Makeiev describes sanctions as “the last peaceful means that keep you from the battlefield itself.” But they are much like weapons, be they Javelins and Stingers, in that precision is key to their use. Smart targeting makes a difference and sometimes it’s not obvious. According to Makeiev, you get there by applying the principle of ‘follow the money’, which Makeiev credits former US diplomat and State Department sanctions coordinator Dan Fried with introducing.

For example, at Ukraine’s suggestion, U.S. and other sanctions have eliminated Russia’s purchasing of the little-known chemical catalysts that are necessary for the fuel production that funds two-thirds of the Russian economy.

Some targets, worth billions, are not so niche. I ask Makeiev if sanctions that end Europe’s purchase of Russian fossil fuels are possible. He answers: “Definitely. Major changes are at hand. One month ago, no one could imagine a ban on oil. Now, it is being actively pursued.”

Diplomats are sometimes accused of working in purified air and protective of their distance from politics and electors. It’s hard to pretend, though, that economic sanctions against a significant economy don’t have blowback in terms of costs and thereby popular support and ultimately votes.

Here, Makeiev counsels his colleagues to pursue smart communications or to be honest and open with their societies. Are they acting sufficiently, I ask, and he answers: “Not yet, but they’re starting to realise the importance. It needs to be honestly explained to voters that the cost of inaction or status quo is higher than that of sanctions. And that goes for responsible business too.”

I let the Ambassador know that Canva, an Australian software hipster success story with a stated value of “being good humans”, is being publicly questioned about its stance on the war. Its graphic design product appears to still be available to Russian clients. Makeiev comments:

“We have been frankly surprised, but positively, at the number of companies that see what responsible business is about and have closed their operations in Russia. You cannot trade in blood. it will cost you a lot more if you continue. You don’t want to be the equivalent of the companies that profited from Nazism. In terms of being true to commitments, I have asked the Kyiv School of Economics to undertake an analysis and they’re to report to me. We will go after [non-compliance].”

Kyiv’s man on sanctions lets me know that he’s soon headed back home for the first time in a long time. In Kyiv, after the total defeat of Russian forces on its outskirts, the chestnut trees of spring are blooming and the trendy cafes are booming. Makeiev can return here safe in the knowledge that he has done some very smart things not only for his hometown and his people, but for global democracy.

Such compliance monitoring is also an example of creative public administration by Makeiev. Including the officials at the Ukrainian Ministry for Foreign Affairs working on sanctions, there is now a broader team of some 200 researchers and academics including from Stanford University, policy experts, businesspeople, digital strategists and others contributing to Ukraine’s sanctions approach.