Russia could hit some 360 Ukrainian companies and 50 individuals with sanctions under the terms of a draft sanction package in the Duma aimed at Ukraine in a tit-for-tat retaliation to impending new “crushing” sanctions that could be imposed on Russia by the US this autumn, news agencies said on October 30 citing unnamed sources. 

The scope of the prepared sanctions suggests that Kremlin could hold Ukraine to ransom if the US ratchets up its increasing tough sanctions regime proposed by US lawmakers, using Ukraine, Europe's poorest economy, as leverage in a proxy economic war between the two rivals.

The names of the companies on the list have not been disclosed, but unnamed sources told Tass that the list will seek to undermine many outspoken Russian critics in Ukraine and expose their business ties in Russia, which could be embarrassing with crucial presidential and parliamentary elections slated fro 2019.

Previous reports suggested that under the directive from President Vladimir Putin, the government has been preparing a sanctions package that could include banning of certain imports, money transfers, assets freezes, and limitations on cross-border operations. A ban on money transfers could be especially painful as in addition to significant trade and business ties, some 3mn Ukrainians live and work in Russia, regularly sending money home to their poorer relatives at home.

Earlier this summer Russia extended an embargo on imports of certain food products from Ukraine until the end of 2019. Despite the war between the two countries Russia remains Ukraine’s second biggest trade partner with a trade turnover of some $6bn a year that has been growing in the last year.

From January through to July, Ukraine’s exports to Russia increased 21% this year, to $3.2bn y/y according to Russia’s Federal Customs Service. Over the same seven months, Russia’s exports to Ukraine increased by 26% y/y, to $5.1bn.

Russia could also ban transit exports from Ukraine to Central and Eastern Asia through its territory. The new presidential decree stipulates that sanctions can be cancelled should Ukraine revokes its own sanctions against Russian nationals and companies. 

Ukrainian sanctions on Russia have been updated numerous times and now include over 1,700 individuals and over 750 companies. In 2017 Ukraine sanctioned Russian state banks, including branches of Sberbank and VTB on its territory.