Can’t beat Russia? Ukraine’s banks say just sue it

KYIV, Ukraine — Crippling economic sanctions and widespread international condemnation are two ways the world has punished Russia for seizing Crimea.

Now two major Ukrainian banks are trying another tactic: They’re suing the Russian government for the financial losses they incurred after last year’s fast-track annexation of the Black Sea peninsula.

Privatbank — Ukraine’s largest bank — said Wednesday it had kicked off international arbitration proceedings to seek an unspecified amount of money from Russia after it was forced out of Crimea. Local media report the lender operated 337 branches in the region and accounted for about 30 percent of its deposits.

Hours earlier, Ukrainian Prime Minister Arseniy Yatsenyuk announced that state-run Oschadbank would demand $700 million in losses from Moscow through bilateral negotiations. Failing that, the bank said it would also look to international law.

The moves come more than a year after Russia annexed the disputed region from Ukraine. Russia was widely accused of a covert military invasion. And then a Crimean referendum ended up siding with Russia, although most of the world refused to recognize the result.

Yet despite the international outcry, the Kremlin has regularly insisted there’s no going back. On Thursday, Foreign Minister Sergei Lavrov told reporters the “question with Crimea … is closed.”

That’s partly why some doubt whether the two Ukrainian banks will have much luck. But if history is a judge, the banks might have reason for hope.

Last year, an international arbitration court in the Hague — the same court in which Privatbank’s case may be heard — ordered Moscow to pay $50 billion to former shareholders of the Yukos oil company. Russian officials nationalized Yukos after prosecuting former CEO Mikhail Khodorkovsky a decade ago.

True, Russia still hasn’t paid — but that forced European authorities to seize Russian assets abroad.

Some Ukrainian officials, like Serhiy Kunitsyn, a former Crimean prime minister, point to the Yukos victory as an example of how Ukraine might seek compensation for its banks.

In comments to local media, though, he acknowledged that winning any cases won’t be easy as long as Vladimir Putin is around.

“It is a long road,” Kunitsyn said, “but Putin also isn't eternal.”

It’s not the first time Ukraine has cried lawsuit against Russia.

Ukrainian President Petro Poroshenko insisted long ago his country would turn to the International Court of Justice over Russia’s seizure of Crimea. But Justice Minister Pavlo Petrenko told a Ukrainian magazine on Thursday the authorities haven’t yet appealed to the court, and are still in the midst of “pre-trial preparation.”