Executive and Legislative Developments
In response to Russia’s occupation of Crimea and continued attempts to destabilize Ukraine, the United States and other nations have ratcheted up economic sanctions against Russia. The sanctions announced on July 16, 2014 are “sectoral” sanctions meant to put pressure on the entire sectors of the Russian economy. How these sanctions are implemented and their impact on international businesses is discussed in this update.
As this update was being issued, U.S. and European officials and their allies sternly criticized Russia for its apparent role in downing of the Malaysian flight MH-17. They warned Russia of additional consequences if it does not immediately cease its support of the rebels and allow for international investigation of the MH-17 disaster, which indicates possibility of yet another round of sanctions. We will update this release as the events warrant.
Beginning on March 2014, President Obama issued three executive orders E.O. No. 13660 (March 6, 2014), E.O. No. 13661 (March 17, 2014) and E.O. No. 13662 (March 20, 2014). Taken together, these orders enable the Secretary of the Treasury to sanction specific individuals and entire sectors of Russian economy, including financial services, energy, metals and mining, engineering and defense.
In addition, on April 3, 2014, President Obama signed into law Public Law 113-95 entitled Support for the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act of 2014 (PL 113-95) which requires imposition of sanctions on the persons responsible for violence or undermining the peace, security, stability, sovereignty, or territorial integrity of Ukraine. The law also authorizes imposition of sanctions on the persons in Russia complicit in or responsible for significant corruption.
On April 28, 2014, the United States imposed targeted sanctions on a number of Russian individuals and entities and restricted licenses for certain U.S. exports to Russia. The Department of the Treasury imposed asset freezes and visa bans on seven Russian government officials and asset freezes on 17 companies. Further, the Department of Commerce has imposed additional restrictions on 13 of those companies by imposing a license requirement with a presumption of denial for the export, re-export or other foreign transfer of U.S.-origin items to the companies. Further, the Departments of Commerce and State have announced a tightened policy to deny export license applications for any high-technology items that could contribute to Russia’s military capabilities. Those Departments also will revoke any existing export licenses that meet such conditions.
Two of the sanctioned companies are not based in Russia—one is based in Cyprus and the other is based in Luxembourg (presumably each is owned or controlled by Russian government officials or members of the inner circle of President Putin).
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