Sanctions in a globalised economy

We are living in a globalised age. Whilst the developed economies of the world are usually keen for markets to open and remain open for business, sanctions represents a unique instance where otherwise open economies may be forcibly closed from investors and the global economy at large. In Cyprus, the Russia and Iran sanctions regimes represent cases in point on this.


Cyprus has, of course, always sought to foster positive and business-friendly relations with Russia. Russia has, in return, contributed significant levels of foreign direct investment into the Republic. However sanctions emanating from the EU and, more recently, the US pose serious questions for such relations. All signs indicate that the Cyprus government and competent authorities seek to ensure full compliance with EU obligations but implementation can be harder to ensure where the economy and business-interests have become so intertwined; in many ways Russian sanctions are to Cyprus what Brexit is to the UK, a requirement on business to analyse every aspect of dealings to ensure full compliance with a new economic order. 

The current crop of EU sanctions on Russia reached its zenith shortly following the shooting down of MH 17 over Eastern Ukraine in July 2014. From that time the EU (and others) imposed:

  • Asset freezes and travel bans on those seen as responsible for the Maidan deaths in Ukraine, including former President Yanukovych himself (EU Regulation 208/2014);
  • Asset freezes and travel bans on those seen as responsible in Russia for the annexation of Crimea (EU Regulation 269/2014);
  • Blacklisting all EU-Crimea business activity (EU Regulation 692/2014); and
  • Imposing ‘sectoral sanctions’ on Russian state owned enterprises, as well as Artic and shale oil development (EU Regulation 833/2014).

Under President Obama, the US broadly followed the above approach. However, since the Republican take-over of Congress, the US position on Russia has become more hawkish, most evident in the blacklisting of numerous high-profile Russian businessmen by OFAC on 6 April 2018 (US Countering America’s Adversaries Through Sanctions Act). This renewed push by the US will have consequences for Cyprus-Russia relations, owing to the continued prominence of our US-dominated global banking and finance regime.  Clearly it has never been more important for institutions to seek and obtain appropriate advice and representation.


In many ways Iran is the opposite of Russia, as far as sanctions are concerned. For years, the Islamic Republic was held back by crippling UN and Western sanctions from developing normal business relations in its neighbourhood. Then a breakthrough came in 2015, following the signing of the historic Joint Comprehensive Plan of Action (JCPOA). In Europe, this was legislated through significant reduction of sanctions contained in EU Regulation 267/2012 and was re-introduced to the global economy following decades in the wilderness. Cyprus was, indeed, on the cutting edge of these developments. 

The exiting of the US from the JCPOA by the Trump regime signals a divergence of the approach between the US and EU. Whereas the US is keen to re-impose sanctions for participating in Iranian business, Europe is, by contrast, keen to prevent such measures from taking effect; it is keen to preserve the JCPOA as best it can. This is most evident in the recent announcement by the European Commission that it will move to implement a ‘blocking regulation’, protecting EU persons from the impact of US extra-territorial sanctions on Iran.

In the world of international business, it has never been more important for institutions, both public and private, to ensure they have their bases covered as far as sanctions compliance is concerned.

This article was originally published in Greek, on