Ukraine has a list of ‘war sponsors.’ But how exactly does it work?

When it comes to foreign policy, name-shaming can be a mighty force.

Since Russia launched the full-scale invasion of Ukraine, the authorities in Kyiv have made remarkable use of finger-pointing to expose those considered to be an accessory to Vladimir Putin’s attempted revisionism of European history.

Multinationals, CEOs, administrations, lawmakers, party leaders and heads of state have all been the target of Ukraine’s uncompromising censure. But the scolding strategy, which merges techniques of diplomacy, public relations and social media, has at times put Western allies in an evidently uncomfortable position, much to their chagrin.

This simmering tension has again come to the surface over Ukraine’s list of “international sponsors of war,” a compendium of foreign companies that, in Kyiv’s view, support the war through their decision to continue doing business in Russia, paying taxes to the central government and propping up the federal budget that bankrolls the military.

The firms and their top executives are accused of supplying “goods and services of critical purpose” that help perpetuate the invasion and “thereby financing terrorism,” an explosive indictment that would make any enterprise break out in a cold sweat.

Since its launch last summer, the list has grown in size and currently encompasses 102 individuals and 26 companies, 17 of which have links to the European Union.

One of them is OTP Bank, Hungary’s largest commercial bank, whose addition earlier this month triggered a furious response from Budapest. Péter Szijjártó, the country’s foreign affairs minister, called it “unacceptable” and “scandalous” and demanded its immediate withdrawal.

The bank, which serves over 2.4 million clients in Russia, is accused of recognising the so-called “people’s republics” in the occupied territories of Donetsk and Luhansk and providing “preferential credit terms” to the Russian armed forces, allegations denied by the company.

“OTP Group operates in compliance with all international sanctions and local laws in all its markets, including Russia,” a spokesperson for the company said in a statement, noting the bank’s 0.17% market share in Russia. “We consider our inclusion on the list to be unjustified.”

The row further escalated when the Hungarian government, in retaliation for the listing, used its veto power to block a new tranche of €500 million in EU military assistance for Ukraine. Budapest made it clear the hold-up will last as long as the bank remains designated.

The controversy forced Josep Borrell, the EU’s foreign policy chief, to mediate and reach out to his Ukrainian counterparts in a bid to appease Hungary’s rage and find a compromise. (The EU has neither endorsed nor disputed the list and has not provided any input to the Kyiv authorities.)

“We have to do everything we can in order to make the next package of military support for Ukraine being approved. If one member state has a difficulty, let’s discuss about it,” Borrell said.

A contentious selection

What is perhaps most remarkable about Ukraine’s list of “international sponsors of war” is the fact that it is absolutely devoid of legal power. Being on the list does not entail the freezing of assets, a travel ban, trade restrictions or any other consequence akin to a sanction.

The list, which is managed by Ukraine’s National Agency on Corruption Prevention (NACP), is essentially a name-shaming exercise designed to pile pressure and inflict a degree of reputational damage that is profound enough to make a foreign company cut all ties with the Russian Federation.

But the selection made by the NACP appears to be extraordinarily narrow – just 26 companies – compared to the vast reality on the ground: according to a study by Yale University, hundreds of firms maintain commercial operations in Russia in defiance of international condemnation.

Yale has found that 229 companies, including well-known brands like Italy’s Benetton and France’s Lacoste, keep “business as usual” inside the country, while an additional 175 corporations, such as Germany’s Bayer and the Netherlands’ ING Bank, are “buying time,” meaning they have paused new investment projects but still perform day-to-day transactions.

The Ukrainian list, which is predicated on the logic that doing business in Russia feeds into the federal budget and therefore finances the aggression, fails to reflect this widespread complacency, providing instead a hand-picked inventory.

By doing so, dozens – maybe hundreds – of companies still serving Russian clients are spared from the public ignominy of being labelled a “war sponsor” by a country under attack. Meanwhile, those who carry the scarlet letter are left scrambling to get it off their backs.

“There are no formal selection criteria,” a NACP spokesperson told Euronews.

However, the spokesperson explained, in practice the company should be of non-Russian origin, run a large-scale operation, have a well-known brand, be present in various jurisdictions and, most crucially, assist the war in an indirect manner.

“By paying taxes, supplying key goods or materials, taking part in propaganda or mobilisation campaigns, such company indirectly contributes to and keeps up Russia’s capacity to wage the war,” the spokesperson said.

This indirect link is the trickiest element behind the register: due to corporate secrecy and the opacity of the Russian state, it is difficult to draw a convincing line between doing business and subsidising a war.

The list’s official website offers only brief explanations for each designation, followed by a handful of media reports that describe the firm’s alleged wrongdoing. In some cases, the connection with the Russian Federation is not explicitly stated by NACP and is only understood if the reader visits the media reports.

Accusations and denials

As part of this article, Euronews contacted the 16 EU-based companies designated under the Ukrainian list. (A 17th company from Estonia proved unreachable.)

By the time of publication, seven of them had replied offering detailed statements in which they forcefully challenged the accusations and denounced the illegality of Russia’s invasion. An eighth company refused to comment on “commercial matters.”

Auchan, the French retailer that employs more than 350,000 people around the world, is among those facing Ukraine’s ire for continuing operations inside Russia through its subsidiary, Auchan Russia.

On its website, the NACP accuses the subsidiary of “supplying goods to the Russian military in the occupied Ukrainian territories under the guise of humanitarian aid to civilians and helping military enlistment offices recruit conscripts,” echoing the findings of an investigation carried out by Le Monde and The Insider.

A spokesperson for Auchan contested the claims, arguing the company “fully” respects international sanctions and has halted all investments in the 231 stores of its Russian subsidiary, which functions “in total autonomy.”

“Auchan Retail does not conduct, support or finance any ‘charitable’ collections for the Russian armed forces,” the spokesperson said. “At the same time, and this information is well known to the Ukrainian authorities, we have fully contributed to maintaining the food chain for the Ukrainian civilian population. We have never stopped operating our stores and digital services, including home delivery.”

Some of the listed EU companies, like the Vienna-based Raiffeisen Bank International (RBI), say they are in the process of leaving the Russian market, a move that, in theory, would absolve them from the dreaded label of “war sponsor.”

The Austrian lender, which is considered the most important Western bank in Russia thanks to a balance sheet worth almost €27 billion, was targeted by the NACP because it is allegedly servicing “fictitious companies” in Cyprus used by “oligarchs close to the Kremlin.”

A spokesperson for RBI says the group is dealing with “highly complex” market conditions and is assessing possible pathways to complete the sale of its Russian operations, a process that will likely involve huge losses. The wind-down is being closely monitored by the Austrian government, the European Central Bank and the US Treasury Department.

“Raiffeisenbank will maintain some banking operations in Russia to meet the conditions of its banking license, and support customers including those impacted by the reduction in business activity in Russia,” the spokesperson said. “The RBI Group has a responsibility to preserve the integrity of local operations in Russia, employing over 9,000 people.”

Other EU companies found themselves on the opposite end: they say they have entirely pulled out from the Russian market and nevertheless remain designated by Ukraine. That is the case of OpenWay, a Belgium-based software vendor, which insists it left the country in the spring of 2022.

The company was listed for having developed Mir, a card payment system meant to replace Visa and Mastercard in the aftermath of the illegal annexation of Crimea. The NACP argues OpenWay is unable to prevent its former clients from using Mir to bypass sanctions because its licensing agreements are “perpetual.”

The vendor disputes this connection, saying it no longer services Mir because Russia has “in-house developed software” to support the payment system for itself.

“Mir as a replacement for Visa and Mastercard is a complete failure. International acceptance is negligible and can hardly play any role in sanctions circumvention,” an OpenWay spokesperson said, noting they have asked the Ukrainian authorities to update the website “accordingly.”

According to the NACP, removal from the list is possible if firms cease all operations in Russia and provide a “realistic exit plan” that can be achieved in the short term. Asked about OpenWay’s request, a spokesperson said they were aware of media reports but had not received any official petition from the company.

“If we receive information that they have indeed left the Russian market, we will immediately remove them from the register,” the spokesperson said.