To sanction or not? Will Ukraine’s National Security Council act?

The next chapter of the legal confrontation between TIU Canada and the oligarch Igor Kolomoisky over the illegal termination of TIU’s access to Ukraine’s electricity grid commences on July 26 in Kyiv’s Northern District Appellate Court.

On this date, the case has a chance to be finally decided. However, it can also be sent back to the lower court, where essentially, the litigation process would have to start from the beginning. There is no basis of certainty because, after almost eight years of attempts at judicial reform in Ukraine, there is always the possibility that corrupting influences may affect the determination of any court case.

In the process of adjudicating this case, an intriguing sub-plot has arisen; that being that the disconnection of TIU’s solar producing farm from the electricity grid was a deliberate act that affects Ukraine’s energy security and stability. Thus, this scenario has not only made this case a cautionary tale as to the treatment of foreign investors In Ukraine’s courts, but also an issue as to how the government will react to an internal threat challenging its authority in the energy sector in a time of war.

One course that has suggested itself to the government is its right to impose sanctions informed by national security concerns. 

A decision to sanction Kolomoisky and his affiliated companies will provide the Zelensky government with a victory over an oligarch who has neither shown respect for the country’s laws and who has shown no respect or fealty to the country’s long-stated policy of trying to establish energy security as a key component to Ukraine’s national security. He has made various deals with Russian business entities during the war.

Government action, on national security grounds, will be a sign of strength and determination that it can act decisively on national security grounds for the protection of the country’s interest. In addition, such action will provide proof that it has the courage to differentiate between national and individual economic interests.

Furthermore, it will illustrate that it has adequately learned the historic lessons of not tolerating “energy blackmail” as had often happened in the past.

At the same time, it would establish a benchmark that would act as a precedent for future government decisions, lest the temptation to backslide into an era of manipulated energy markets attempts to return.

This said, the government should wait for the upcoming judicial ruling even though the court is dealing with issues that are not specifically issues of national security.

Nonetheless, the decision to invoke the powers to act on national security grounds are definitely within the purview of the powers granted to the National Security Council by established law and precedent. So If the Council chooses to act, and there seems to be a growing consensus that it should, it must consider the following:

  1. Does the illegal disconnection and termination of a major electric producing source constitute a breach of national security?
  2. Should sanctions be imposed on an entity that it deems to have acted contrary to the country’s national security interest in a time of war?
  3. How will the decision to sanction contribute to, and enhance, the national security of Ukraine?
  4. What would be the ramifications if the National Security Council fail to act?

Yes, the disconnection of TIU’s solar production by Kolomoisky controlled entities was an act of transgression against Ukraine’s national security during a time of war. The National Security Council should investigate, if it has not started already, using the precedents of its sanctions against fellow oligarchs, Viktor Medvechuk and Dmitry Firtash, as a guideline.

Sanctions against Kolomoisky and his affiliated companies must be imposed if they have breached national security interests in a time of war. Not doing so, would be a sign of tolerance by the government of traitorous behavior. 

Failure to take action by the Council would reveal indecision, taking action would reveal clarity and political will by the government against those who would work to undermine the country’s resolve during military conflict. It would show that the government is not recalcitrant to take definitive action, not only against an influential oligarch, but against all those who continually flaunt Ukraine’s laws and who continue to trade with the enemy. 

Not acting would send a message that it is all right to pursue economic interests with enemies of the state and that Ukraine is unwilling to punish those who deliberately collaborate with those who kill Ukraine’s soldiers. 

Not acting is a sign of weakness. In a region where only the exercise of power is respected, it would clearly illustrate that the government of Ukraine remains frail.

The decision of the Council to sanction would also contribute to establishing a long-overdue and new narrative for the fledgling government in its most recent and overt confrontation with the country’s oligarchs. It would weaken the arguments of skeptics who allege that the government’s recent introduction of the “oligarchs” bill is just a “populist” effort to show that the government actually wants to reduce the influence of oligarchs on the country’s governing process and policy.

The renewables sector was started primarily to be but one mechanism to secure energy security for Ukraine. If it was to establish a basis for national security, Ukraine had to free itself from being manipulated by Russian hydrocarbon interests and those within the country who profited from these energy schemes. 

In addition, the renewables sector was to become a major vehicle for attracting direct foreign investment to Ukraine. In this effort, it succeeded. However, oligarchs, in addition to Chinese interests, benefited from the prostitution of the political process overseeing this process towards a free market in the renewables sector. Foreign investors heeded the call, only to be entangled in unfulfilled government promises and the actual threats and commensurate actions of being raided.

At this moment, the government has the opportunity to restore investor confidence, its own integrity and the trust of its partners in the West if it is prepared to act decisively against internal threats to its national security.

Ukraine’s Western partners are closely observing how the country’s legal and security institutions are behaving and whether Ukraine’s authorities are willing to act decisively.

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