U.S. Imposes Further Sanctions on Russia (with Turza Comment)

Rising tensions in eastern Ukraine, where earlier this week pro-Russian demonstrators seized government buildings and called for a referendum on independence from Kiev, have led to renewed talk in Washington and Brussels of additional sanctions against Russian and Ukrainian individuals and entities and, potentially, against entire sectors of the Russian economy.

Notwithstanding the polemics, Western leaders have so far refrained from adopting any significant new sanctions. Only the United States enacted any new measures, announcing on April 11 travel bans and asset freezes against seven individuals, all of whom had previously been sanctioned by the European Union and/or Canada. The Office of Foreign Asset Control (OFAC) named these individuals, who are Crimean political and/or security leaders, to its Ukraine list under the authority of Executive Order 13660.

Also on April 11, the United States named Chernomorneftegaz to the Ukraine sanctions list - only the second entity designated by the U.S. Government in connection with the unrest in Ukraine. Press reports indicate that Chernomorneftegaz is the Crimean subsidiary of the Ukrainian state-owned Naftogaz oil and gas company. Chernomorneftegaz was seized by the breakaway Crimean parliament on March 18, 2014, and is now, according to the U.S. Department of the Treasury, "complicit in the misappropriation of state assets of Ukraine or of an economically significant entity in Ukraine." In a related move, the U.S. Department of Commerce announced on April 11 that it had added Chernomorneftegaz to its "Entity List," imposing license requirements for the "export, re-export, or in-country transfer of items subject to the Export Administration Regulations." The license requirements are imposed "with the presumption of denial."

Turza Comment:Today's action by the United States represents the first imposition of new sanctions in connection with the situation in Ukraine in three weeks. It does not, however, represent a significant escalation in comparison to the sanctions previously announced by the U.S. Government and its partners in Europe, Canada, and elsewhere. The addition of Chernomorneftegaz, the second entity named to the U.S. list, may represent the first step in efforts to target assets allegedly expropriated from the government of Ukraine. But absent further provocation from Russia, the move is unlikely to portend an imminent wave of sanctions against all or part of the Russian energy sector. Indeed, it is instructive that the entity was named under Executive Order 13660 (authorizing sanctions against persons involved in the expropriation of Ukrainian assets), rather than Executive Order 13662 (which authorizes broader sanctions against Russian industry). Meanwhile, the new individual designations announced on April 11 simply bring the U.S. list more closely in line with the previously announced EU, UK, and Canadian lists. (See Cadwalader's updated Russia and Ukraine Sanctions Tracker.)

See:Executive Order 13660; Executive Order 13662; SDN List of Amendments (as of April 11, 2014); Russian and Ukrainian Individuals and Entities Affected by Sanctions.See also: Cabinet Sanctions Materials (for Cabinet subscribers only).