On
August 2, 2017, the U.S. President Donald Trump has signed new
sanctions on Iran, Russia, and North Korea. For constitutional and
other reasons, he was not happy:
“I favor tough measures to punish and deter bad behavior by the
rogue regimes in Tehran and Pyongyang. I also support making clear
that America will not tolerate interference in our democratic
process, and that we will side with our allies and friends against
Russian subversion and destabilization.”
But, in the U.S. President’s view, “the Congress included a
number of clearly unconstitutional provisions”, relating to the
distribution of competences amongst U.S. constitutional institutions.
Donald Trump says, the bill “encroaches on the executive
branch’s authority to negotiate” and, probably most
importantly, “I built a truly great company worth many billions
of dollars. That is a big part of the reason I was elected. As
President, I can make far better deals with foreign countries than
Congress”.
Let’s
put the political controversy aside for a minute and look at what is
actually new about U.S. sanctions on Russia.
Why the U.S. burdens Russia with new sanctions
The U.S. Congress answers in its press release:
“Vladimir
Putin has actively undermined U.S. national security for years. Putin
has a long record of aggressive acts that threaten global stability.
[…] Left unchecked, Russia is sure to continue its aggression. […]
Putin and his
cronies must face serious consequences for these dangerous and
threatening acts.”
The
bill is more specific, imploring that “Russia undermines the
democratic processes and institutions in Ukraine and “Russian
President Vladimir Putin ordered an influence campaign in 2016 aimed
at the United States presidential election”.
Who undergoes which additional sanctions?
1. Modification of existing sanctions
As a reminder, the U.S. administration, until now, already
established four separate categories of sanctioned persons,
according to their degree of threat for the U.S.. The new bill
tightens the sanctions for each of those groups:
Prior Interdictions
|
New Interdictions
|
|
Category 1
|
No new equity and no new debt maturing after 30
days or more
|
No new equity and no new debt maturing after 14
days or more
|
Category 2
|
No new debt maturing after 90 days or more
|
No new debt maturing after 60 days or more
|
Category 3
|
No new debt maturing after 30 days or more
|
No modification of prior interdictions
|
Category 4
|
No provision of goods or services for the oil
exploration and production business if the project is a deepwater,
Artic offshore, or shale project situated in the Russian
Federation
|
No provision of goods or services for the oil
exploration and production business if the project is a deepwater,
Arctic offshore, or shale project and held at least at 33 % by the
sanctioned person
|
The most far-reaching modification seems to be in category 4. Indeed,
Russian upstream oil projects may, potentially, be sanctioned
word-wide.
2. Sanctions with respect to cybersecurity and human rights abuses
The U.S. President shall identify persons
-
who engage, on behalf of the Russian Government, in activities undermining the cybersecurity of any person or democratic institution;
-
who are responsible for committing human rights violations in any territory occupied or otherwise controlled by Russia.
He may than block assets of and exclude such person from the U.S.
territory.
3. Sanctions on the Russian intelligence & defense sector,
Russian pipelines, and privatizations of state-owned assets in Russia
The bill allows for new U.S. sanctions to be taken against
-
persons engaging in transactions with the intelligence or defense sectors of the Russian Governments;
-
a person who participates in the construction or maintenance of Russian energy export pipelines through providing goods, services, technology, information, and support to Russia in the amount of 1 MUSD for each individual support or 5 MUSD for cumulative transactions over 12 months;
-
people who invest at least 10 MUSD in a privatization in Russia which unduly benefits officials of the Russian federation or their associates or family members.
There is a long list describing of what such sanctions can consist
of:
-
No U.S. EXIM Bank assistance;
-
Refusal of export licenses;
-
Prohibit a U.S. financial institution to grant loans totaling at least 10 MUSD over any 12 months period;
-
Influence on international financial institutions (meaning multilaterals such as the IMF, IFC, EBRD, MIGA, and ADB) to avoid their financing;
-
No permission for the sanctioned person to act as primary dealer of U.S. Government debt instruments and prohibition to serve as a repository of U.S. Government funds;
-
Exclusion from U.S. Government procurement contracts;
-
Prohibition for the sanctioned party to participate in FOREX transactions which are subject to U.S. jurisdiction;
-
Suspension of banking transfers and payment flows which are subject to U.S. jurisdiction;
-
Ban on property transfers which are subject to U.S. jurisdiction;
-
Ban on investment in equity or debt of the sanctioned person;
-
Exclusion of executives and corporate officers of the sanctioned person.
In some cases, the U.S. President can waive sanctions if this is in
the national security interest of the USA.
4. Sanctions targeting Russian financial, material, or
technological support to the Government of Syria
In case this support relates to chemical, biological, nuclear, or
conventional weapons, ballistic or cruise missile capabilities, or
significant defense articles, the U.S. President can order the
blocking of property or exclude individuals from the U.S. territory.
However, he also has capacity to waive such sanctions if this is in
the national security interest of the USA.
All of the above still needs to be implemented in the weeks and
months to come. Signing the bill by the U.S. President is certainly
not the end of the story...
Resource:
Bill H.R. 3364 (Countering America’s Adversaries Through Sanctions
Act”) dated August 2, 2017
