Sanctions Update: Ukraine and Beyond (with Turza Comment)
The week of April 28, 2014 began with actions by the United States and Canada to impose targeted sanctions against additional Russian individuals and entities in connection with the crisis in Ukraine. The following day, the European Union and Japan followed suit (kind of), announcing sanctions against individuals but, significantly, not against entities. The announcement by Japan of sanctions against 23 Russian and Ukrainian individuals was the first of its kind by that country in connection with the situation in Ukraine, although the Japanese government has yet to release the names of the individuals targeted. A list of individuals and entities designated by all jurisdictions to date is available here.
Reaction to the new sanctions was generally quiet, as they represented only a small incremental increase in the pressure on the Russian government. The imposition of sector-based sanctions by the United States and Europe – a step that would have far more serious consequences for the economies of both Russia and the West – has been shelved for the time being. On Wednesday, Bob Corker (R-TN), the ranking member of the Senate Foreign Relations Committee, introduced legislation providing for the imposition of more aggressive sanctions against Russia, including measures directed against all Russian senior officials, the country's largest energy companies, and Russian financial institutions. (See April 30 post linked below.) While the draft legislation probably has little chance of becoming law – at least in the absence of a Russian invasion of eastern Ukraine – it serves to maintain pressure on President Obama to pursue a harder line in the face of perceived Russian intransigence (with or without parallel action by Europe).
On Friday, May 2, 2014, the Ukrainian government launched an offensive to retake government buildings and roadblocks manned by armed pro-Russian rebels in eastern Ukraine. Reports indicated that at least two Ukrainian helicopters were shot down by the rebels – indicating their possession of significant firepower – and that up to five people had been killed in violence across the region. President Putin's spokesman stated that the Ukrainian offensive had "effectively destroyed the last hope for the implementation of the [April 17] Geneva agreements," signed by Ukraine, Russia, the United States and the European Union, and Russia called for a meeting of the U.N. Security Council to discuss the deepening crisis. Meeting in Washington on May 2, 2012, President Obama and German Chancellor Angela Merkel warned Russia of "additional more-severe sanctions" if Moscow disrupts Ukrainian presidential elections.
Other (non-Ukrainian) Sanctions
In other sanctions-related news, on April 29, 2014 the Office of Foreign Assets Control ("OFAC") announced the designation of individuals and entities for aiding Iran's ballistic missile program and for helping Iran to avoid oil sector sanctions pursuant to Executive Orders 13382 and 13645, respectively. (See April 29 post linked below.) The designations included a number of Chinese companies associated with Karl Lee, whom the U.S. Government alleges to be "a known proliferator for Iran's ballistic missile program."
Finally, OFAC announced on May 1, 2014 the designation of Atiqullah Ahmady Mohammed Din, an alleged Afghan narcotics trafficker, under the Foreign Narcotics Kingpin Designation Act. According to a press release from the Department of the Treasury, Mohammad Din maintains contact with members of the former Taliban regime, and "is a major heroin and opium trafficker" in southern Afghanistan, operating two heroin labs in the region. OFAC also designated Mohammad Din's brother, Sadiq Ahmady, and four Afghanistan- and UAE-based entities controlled by the two men.
Turza Comment: The security situation in Ukraine deteriorated over the past week. The specter of a potential Russian invasion remains, and acting Ukrainian President Oleksandr Turchynov admitted on April 30 that his country's security forces were either unable to prevent unrest in eastern Ukraine, or were actively colluding with the pro-Russia rebels. Possibly in response to European hesitancy regarding more impactful sanctions against Russia, the United States and its allies have elected not to implement, at least for now, sector-based sanctions. Based on President Obama and Chancellor Merkel's comments on May 2, the trigger for these sanctions now appears to include disruption of Ukraine's upcoming presidential election. Should evidence of Russian meddling surface in the coming weeks, Western leaders would be presented with a difficult choice between punishing Russia for perceived aggression and avoiding significant collateral consequences on their own economies.
See: Russian and Ukrainian Individuals and Entities Affected by Sanctions; SDN List (updated May 1, 2014); Treasury Press Release.Related news: U.S. Senator Proposes New Legislation to Enact More Aggressive Sanctions against Russia (with Turza Comment) (April 30, 2014); Ukrainian and Iranian Sanctions Update (with Turza Comment) (April 29, 2014); U.S. Expands Ukraine-Related Sanctions (with Turza Comment) (April 28, 2014).See also: Cabinet Sanctions Page (accessible to Cabinet subscribers only). For more information, please contact Dale Turza.