Lithuania has unilaterally imposed national asset freezes on Russian billionaires Alisher Usmanov and Mikhail Fridman, a decision that sharply diverges from the European Union’s recent move to lift its own sanctions on the prominent oligarchs. The freezes come approximately three weeks after the EU General Court ruled that the bloc’s council had not provided sufficient evidence to maintain sanctions against the two individuals.
The independent action by Vilnius underscores a growing tension within the EU regarding the bloc’s approach to Russian oligarchs, particularly in member states with strong geopolitical concerns about Moscow. While the EU’s top court’s decision was based on legal merits regarding the initial evidence for sanctions, Lithuania’s move reflects a sovereign position rooted in its national security and foreign policy objectives.
Alisher Usmanov, an Uzbek-born Russian metals and technology magnate, is the founder of USM Holdings, with extensive interests spanning mining, metals (Metalloinvest), and telecommunications (MegaFon). His estimated net worth places him among the wealthiest individuals globally, with significant assets previously under EU restriction.
Mikhail Fridman, a co-founder of Alfa Group, one of Russia’s largest financial and industrial conglomerates, also holds substantial investments through LetterOne, an international investment firm. Like Usmanov, Fridman was among the first wave of Russian oligarchs to be targeted by EU sanctions following the 2022 invasion of Ukraine.
Divergent Sanctions Regimes Challenge Financial Institutions
The EU’s General Court, based in Luxembourg, ruled in early October that the Council of the European Union had erred in extending sanctions against Usmanov and Fridman, citing an absence of sufficient evidence linking them to actions undermining Ukraine’s sovereignty. This ruling, while a legal victory for the billionaires, highlighted the complexities of maintaining a robust and legally defensible sanctions regime.
However, Lithuania’s national government has opted to maintain its own restrictions, likely leveraging domestic legislation related to national security or anti-money laundering. This legal distinction allows individual member states to impose measures independently of the overarching EU sanctions framework, provided such national actions do not contradict established EU law. Vilnius has historically taken a firm stance against Russian aggression and has been a vocal proponent of strong punitive measures against Moscow and its allies.
The immediate practical consequence of Lithuania’s decision is that any assets belonging to Usmanov or Fridman that are physically located or registered within Lithuania will remain frozen and inaccessible. This complicates their financial affairs and investment activities within the broader European economic area, despite the reprieve granted by the EU’s top judicial body.
For global financial institutions and compliance departments, such divergent national sanctions regimes present significant challenges. Banks and asset managers must navigate a fragmented legal landscape, ensuring compliance not only with EU-wide regulations but also with the specific national laws of each member state where their clients or assets are present. This adds layers of complexity and cost to international financial operations.
The decisions from both the EU court and the Lithuanian government set important precedents. The EU ruling reaffirms the need for robust evidence in imposing and maintaining sanctions, while Lithuania’s action demonstrates the continuing exercise of sovereign power by member states in areas deemed critical to national security. Observers will be watching to see if other EU countries, particularly those sharing a border with Russia, choose to follow Lithuania’s path, potentially further fragmenting the sanctions landscape for targeted individuals.
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