Impositions of Sanctions on Russia
As the world grapples to absorb the shock waves caused by Russia’s brutal war of choice against Ukraine, the United States has taken swift action by issuing Executive Orders (EO), targeting President Vladimir Putin, his inner circle, Russian oligarchs, Russia’s banking sector, as well as technology development. Allies of the U.S. have also imposed severe financial sanctions in an effort to hinder the unprovoked aggression. The unification between countries to put intense pressure on Russia’s economy has been the quickest way to directly strike at those most responsible for Russia’s hostile actions against its neighbor. In retaliation, Russia responded in kind to the U.S. on March 15, 2022 by imposing sanctions on several American companies and brands doing business in the country and targeting American officials, now included on the country’s “stop list”.
The Ukraine-related sanctions against Russia started with a series of EOs first issued in 2014 by President Obama, continued by President Biden. A quick summary is noted below:
- EO 13660 authorized sanctions on individuals and entities responsible for violating the sovereignty and territorial integrity of Ukraine, or for stealing the assets of the Ukrainian people;
- EO 13661 found that the actions and policies of the Russian government with respect to Ukraine – including through the deployment of Russian military forces in the Crimea region of Ukraine – undermined democratic processes and institutions in Ukraine;
- EO 13662: OFAC issued Directives 1- 4 implementing sectoral sanctions against entities identified on the Sectoral Sanctions Identification List (SSI List) operating in certain sectors of the Russian economy such as financial services, energy, metals and mining, engineering and defense and related material;
- EO 13685: prohibits exportation, importation or any new investment in the Crimea region by a United States person, wherever located;
- EO 14065: effectively blocks all property and property interests implicated with Russian security council members and/or enablers of the Russian president, Vladimir Putin, prohibiting the making of any contribution or provision of funds, goods or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods or services from any such person;
- O. 14066: prohibits the importation of crude oil, petroleum energy products, liquefied natural gas, and coal products from Russia; and
- O. 14068; prohibits the importation of fish, seafood, alcoholic beverages, non-industrial diamonds.
Mostly recently, on April 6, 2022 President Biden continues to target Russian banks and elites with a new round of expansive sanctions by banning Americans from investing in Russia. The action prohibits new investment, including a ban on venture capital, mergers and certain services to any person located in the Russian Federation by U.S. persons, wherever located. Simultaneously, OFAC announced that it is adding Sberbank and Alpha-Bank, Russia’s largest financial institutions, to the Specially Designed Nationals List (SDN List). The newest round of sanctions maintains consistency with respect to commitments to ensure citizens are not underwriting the war.
Against the backdrop of the continuing war, some of the world’s most known brands have independently decided to pull out of Russia. Some notable examples include major retailers H&M, Nike, Ikea, along with major oil companies, including Exxon, BP and Shell. The speed in which these companies have taken independent action speaks to the business community’s attempt to unify in a time of crisis. For a comprehensive list of what companies have sanctioned Russia, the international news agency Reuters is maintaining a running list of the latest sanctions and actions taken against Russia by countries, major companies and organizations.
In terms of compliance, the imposition of sanctions on Russia have left many struggling to figure out how to comply with the broad sanctions. For companies the implications are costly, as they are left figuring out what goods they can continue to send to Russia and which types of licenses they may qualify for. While the penalties on Russia have moved through many stages, rapid changes will likely continue to ensue. Since the new rules can be complex to decipher, it is advised to seek legal advice with regards to any doubts concerning what transactions with Russia remain legal. With respect to the sanctions issued on the U.S. by Russia, guidance will be required from Russian experts to determine how to deal with US investments made in Russian territory before the war started.
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