Russia Sanctions - an explainer

On Wednesday Parliament unanimously passed a law allowing for sanctions in relation to Russia’s illegal invasion of Ukraine. 

Here is a little background and information about the law. 

In the audio linked below you can hear MPs discussing the legislation.

Why is this law specific to this conflict?

New Zealand has previously participated in United Nations-led sanctions against countries, but have not done so independently.

But UN action is impossible in the current conflict because Russia has a veto power at the Security Council. The Russian Sanctions Bill actually notes "absense of sufficient United Nations Security Council action" as causative.

Why not before?

When it was last in Government the National Party worked on developing a general capacity for New Zealand to create sanctions independently of International bodies (autonomously) but never legislated for it. Their Foreign Affairs Spokesperson Gerry Brownlee put that bill forward as a member's bill in this current Parliament but it was recently voted down.

The Labour Government wants to avoid being in a position where (because we have legally allowed for the possibility), every time the United States or other allies have a beef with another country, group or individual and decide sanctions are a good idea (which happens quite often), they can pressure us into joining in. (The US alone currently has sanctions against seven countries as well as individuals from 21 countries.)

What does the sanctions bill do?

The possibilities are very broad. 

The bill allows for regulations to be made to take action against a wide range of possible people or organisations, even charities. It isn’t specific about who or how - that’s for the regulations. 

It does however specify deporting non-residents, and (other than travel restrictions) defines a sanction as a prohibition or restriction on assets or services.

What assets or services are covered?

It covers pretty much anything. It includes any assets, either tangible or intangible (with a specific nod to cryptocurrency in case anyone is confused). Services cover almost anything else from advice and training through computer code to banking. It specifically includes military activity but it also throws out a wide blanket - you can’t get much broader than “a service that facilitates or is provided in relation to, any activity”. 

Are there any restrictions on who or what it can apply to? 

Not really, other than deportation not extending to people with residency. It covers any person, asset or service to or from any country making the threats. 

It encompasses anything that currently has strategic relevance or connection to such a country - or has had in the past, or will have in the future. So really anything then.

The law specifically includes the families or associates of the sanctioned as included, avoiding a loophole that has sometimes rendered other countries’ sanctions a bit toothless. 

‘This isn’t my super-yacht, it belongs to my mother’s manicurist.’ That might seem silly but under earlier sanctions regimes assets have been moved to family members, or even further afield. For example, the palatial Black Sea estate widely believed to be Putin’s was for a long time held in the name of a dentist friend. 

How will they find out who owns or does what?

The bill allows for information to be gained from pretty much anywhere and includes a list of laws from which the resulting data is included. It encompasses government agencies from the Overseas Investment Commission, to the IRD; from gambling to investment and from charities and to crimes.

How will we know who or what has been included?

There will be a public register of who is covered.

This appears to have more than just an informative purpose. It is also to aid the arrival of information to the Government from those who can help including banks to lawyers. Basically, it’s an invitation to dish the dirt on individuals.

Do you have to help with ‘dirt dishing’?

The bill includes a "duty to report suspicions" which is directed at those in possession or control of assets or services covered by a sanction.  

While the bill notes that nothing in that section "requires a lawyer to disclose any privileged communication", it immediately goes on to assure "persons making reports" that their identity will be protected.

It goes even further, offering immunity from civil or criminal liability for things done or not done (within reason), in order to comply with the sanction law.

To help with that prompting, there are also very stiff penalties (ranging from fines to up to seven years in prison) for hiding, avoiding, omitting etc.

How powerful is the sanctions law?

In short - very.

If you want to see just how much leeway the Government now has to apply sanctions, consider the threshold the bill includes for action. At its most basic level a "response is appropriate if the Minister considers it demonstrates New Zealand's condemnation of the threat."

That might seem broad but it avoids the inevitable mire of legal action that would result from a threshold that required those punished be demonstrably connected to the invasion or the current Russian leadership. ‘What me? But I’ve never heard of Youcrane or met Mr Poutine, is that his name? I wouldn’t know.’

And just in case there's some tool or lever missing from its immense capacity the law also provides for the making of further regulations "providing for anything incidental that is necessary for carrying out, or giving full effect to, this Act."

Not just that but regulations can be made under the law that modify, extend, disapply, exempt from, or even suspend provision of any other legislation. 

The Government is very obviously not performing any empty kabuki theatre with this sanctions law, it is making damn sure that no legal maneuvering will prevent it from acting.