More on Sanctions against Russia (with Turza Comment)
Pressure continues to mount on Russia and its Ukrainian allies following Russia's move to annex the Crimean peninsula, with Japan and Australia joining the United States, the European Union and Canada in announcing sanctions. Japan's foreign minister announced on Tuesday, March 18, that it was suspending talks with Russia on an investment deal and the relaxation of visa requirements, while Prime Minister Shinzo Abe warned on Wednesday that additional sanctions may follow. Meanwhile, Australia announced on Wednesday that it would impose travel bans and asset freezes against eight Russians and four Ukrainians – measures that were similar to those adopted by the United States, the European Union and Canada on Monday and Tuesday. The Australian government has not yet released the names of those who are to be covered by the sanctions.
Also on Wednesday, the Washington Foreign Law Society hosted a panel discussion with John Hughes (Acting Deputy Director, Office of Sanctions Policy and Implementation, Bureau of Economic and Business Affairs, U.S. Department of State), John E. Smith (Associate Director, Office of Foreign Assets Control, U.S. Department of Treasury) and Daniel Silverberg (National Security Advisor to House Minority Leader Steny Hoyer).
Participants stressed that Russia would face additional costs if it remained on its current path and that additional sanctions were likely to follow unless Russia reversed its annexation of Crimea. In addition to sanctions, measures in the export licensing arena could also be adopted to increase pressure on Russia. Executive Orders under which current U.S. sanctions have been implemented are very broadly worded, and provide authority for the administration to adopt sanctions with respect to any Russian official, as well as individuals and entities involved in the Russian arms industries, and the so-called "cronies" of senior Russian government officials. (See Executive Orders 13660 (Ukraine) and 13661 (Ukraine 2 - note newly issued number)). Participants commented that the Administration is mindful of the potential consequences that sanctions may have on U.S. commercial interests, and underscored aspects of the U.S.-Russian relationship - including cooperation on Iran, Syria, arms control and space - that could be jeopardized by the adoption of aggressive sanctions.
Regarding the discrepancies between the individuals named by the U.S., EU and Canadian sanctions lists, participants stated that those lists will likely converge over time, as was historically the case with list-based Iranian sanctions. Although the EU list currently includes more names than the U.S. list, this is likely to change over time.
Another panelist predicted that significant attention would be focused on Russia and Ukraine after Congress returns from recess next Monday. Recent comments from Senator McCain and others calling for a more hardline approach will be balanced with concerns for the potential impact of strong sanctions on U.S. businesses and other foreign policy goals. Factors such as the inclusion of IMF reforms in the current Senate bill - which are opposed by many Republicans - could also hinder any action on Capitol Hill. Drawing a comparison to the Iran sanctions passed by Congress in 2010, participants noted that those measures were the culmination of a five-year process that involved frequent dialogue with the Executive Branch.
James Treanor and Keith Gerver, associates in Cadwalader's Washington Office, have been monitoring the U.S. response to the Ukrainian situation.
Turza Comment:The message from the U.S. Government is that all options remain on the table (at least economically and diplomatically), including the expansion of sanctions under Executive Orders 13660 and 13661 and, potentially, the adoption of even broader and stronger sanctions. Additionally, unless Russia quits Crimea, it is almost inevitable that the President and/or Congress will take additional action to further increase the pressure on Russia. Undoubtedly, the Departments of Commerce and State are slow-rolling (if not holding) license applications for exports of civilian and dual-use items (Commerce) and munitions (State) to the Ukraine and Russia. The severity of future U.S. actions will likely depend on Russia's next move, with any perceived provocation in Eastern Ukraine or elsewhere sure to raise the stakes.