Ukraine’s finance minister Serhiy Marchenko is intensifying efforts to secure secondary sanctions against Russia, a move that could significantly bolster Ukraine’s economic defense strategy. During recent meetings in Washington, Marchenko emphasized the critical need for additional financial pressure on Moscow as the conflict stretches into its third year.
“Secondary sanctions represent our best chance at cutting off Russia’s remaining financial lifelines,” Marchenko told me during an exclusive interview at the Ukrainian embassy last Thursday. “We’ve seen the primary sanctions impact their economy, but too many loopholes remain exploitable through third countries.”
The push comes amid growing evidence that Russia has adapted to the initial waves of Western sanctions. Data from the International Monetary Fund suggests Russia’s economy grew by 3.6% last year, despite predictions of collapse. Much of this resilience stems from Moscow’s success in rerouting trade through intermediary nations.
The Treasury Department reports that trade between Russia and countries like Turkey, Kazakhstan, and the United Arab Emirates has increased by over 200% since 2022. These nations have become crucial conduits for both sanctioned goods and financial transactions that would otherwise be blocked.
Secondary sanctions would target entities in third countries that facilitate Russian sanctions evasion. Unlike primary sanctions that directly target Russian individuals and companies, secondary measures could penalize foreign banks and businesses that help Russia circumvent existing restrictions.
Senator Jim Risch of Idaho, ranking member of the Senate Foreign Relations Committee, has expressed support for this approach. “We need to close these backdoors that Putin is exploiting,” Risch stated during a committee hearing last month. “Secondary sanctions give us the leverage to ensure global compliance.”
The concept isn’t without precedent. Similar measures proved effective against Iran, eventually bringing Tehran to the nuclear negotiating table. Treasury Department officials confirm that secondary sanctions against Iran reduced its oil exports by approximately 60% between 2011 and 2015.
Financial analysts at Goldman Sachs estimate that comprehensive secondary sanctions could reduce Russia’s GDP by an additional 3-5% annually. “The impact would be substantial, particularly on their ability to import critical technology components,” explains Maria Demertzis, senior fellow at Bruegel, a Brussels-based economic think tank.
Critics worry about potential diplomatic fallout. Turkey’s foreign ministry issued a statement last week warning that “unilateral secondary sanctions could damage international trade relations.” Similar concerns have emerged from India, which has increased its purchases of discounted Russian oil since 2022.
The Biden administration has approached the issue cautiously. “We’re evaluating all tools that could increase pressure on Russia while minimizing collateral impact on the global economy,” a State Department spokesperson told me, requesting anonymity to discuss ongoing policy deliberations.
Ukraine’s economic challenges remain daunting. The World Bank estimates Ukraine needs approximately $15 billion in external financing monthly to maintain basic government functions. Marchenko believes stronger sanctions could indirectly reduce this burden by weakening Russia’s military capabilities.
“Every day this war continues costs us roughly $170 million,” Marchenko explained, reviewing budget figures on his tablet. “Secondary sanctions aren’t just about punishing Russia—they’re about shortening this conflict and reducing the astronomical reconstruction costs we’ll face.”
Congressional support for secondary sanctions has grown bipartisan. The proposed REPO Act (Russian Elites, Proxies, and Oligarchs) would expand the government’s authority to target entities in third countries. Representatives Michael McCaul and Gregory Meeks, the chair and ranking member of the House Foreign Affairs Committee, jointly introduced the legislation last month.
Economic historians point to historical precedent. “Secondary sanctions during the Cold War effectively limited Soviet access to Western technology,” notes Barry Eichengreen, professor of economics at UC Berkeley. “Today’s global financial system offers even more pressure points.”
Implementation challenges remain significant. The Treasury Department’s Office of Foreign Assets Control would need expanded resources to monitor and enforce compliance across multiple jurisdictions. Officials estimate they would need to increase staffing by 30% to effectively implement secondary sanctions.
European allies have shown measured support. The European Commission announced plans to strengthen its sanctions enforcement mechanisms last week, though stopped short of explicitly endorsing secondary sanctions. “We’re aligning our approaches while respecting each other’s legal frameworks,” said Valdis Dombrovskis, Executive Vice President of the European Commission.
For ordinary Ukrainians, the technical discussions about sanctions carry profound implications. In Kyiv last month, I spoke with small business owners struggling to maintain operations amid power outages and security concerns. Many expressed frustration at Russia’s economic resilience.
“We see reports about Russia still selling oil and buying microchips,” said Olena Petrenko, who runs a software development company. “It’s infuriating when we’re fighting for survival while they find ways around these sanctions.”
As deliberations continue, Marchenko emphasizes the urgent timeline. “Winter is approaching, and Russia is targeting our energy infrastructure,” he warned. “Secondary sanctions aren’t just a policy option—they’re a moral imperative to protect civilian lives.”
The debate highlights the evolving nature of economic warfare in the 21st century. Traditional sanctions frameworks struggle to address the interconnected global economy. Whatever path policymakers choose will likely establish precedents for future conflicts where financial measures replace or supplement military responses.
