On March 16, 2014, Crimea voted to secede from Ukraine and join Russia. In response, on March 17, 2014, U.S. President Barack Obama signed a new Executive Order (E.O.) that authorizes the imposition of sanctions against senior government officials of the Russian Federation and members of the Russian arms sector. The new E.O. expands on the Executive Order (E.O. 13660) issued by President Obama on March 6, 2014.
With the authority provided by these two executive orders, the U.S. government has broad discretionary power to impose sanctions on a very wide range of individuals and entities. So far, a total of 11 individuals have been subjected to sanctions. Seven persons have been sanctioned under the new E.O. and are now included on the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) list of Specially Designated Nationals (SDNs). In addition, pursuant to the March 6 Executive Order (E.O. 13660), OFAC has designated four Ukrainian persons on the SDN list, including two Crimean leaders and two former Ukrainian officials. If there are no developments that lead to a reduction of tensions, we can expect that more people and entities will be added to the SDN list and travel bans in the coming days.
At the same time, the European Union (EU) is moving ahead with its own measures. On March 18, 2014, the EU published a list of sanctions against 21 Russian and Ukrainian officials. The EU list includes the acting prime minister of Crimea, the speaker of Crimea’s parliament, three senior Russian commanders, and several senior Russian parliamentary officials. The EU list includes some, but not all, individuals sanctioned by the United States. Similarly, on March 17, Canada expanded its sanctions, bringing the total number of Russian and Ukrainian officials subject to Canadian sanctions to 24 and one entity (the Russian Unity Party).
On March 18, President Putin and Crimean leaders signed a treaty making Crimea part of Russia.
Legal Analysis of New U.S. Executive Order Sanctions
The new E.O. expands on the March 6 Executive Order (E.O. 13660). While E.O. 13660 targets individuals and entities that the United States determines to have undermined democracy, sovereignty, and the territorial integrity of Ukraine, it does not mention Russia specifically. In contrast, the new E.O. authorizes the imposition of sanctions against: (1) senior officials of the Russian government; (2) individuals or entities that operate in the arms sector in the Russian Federation; and (3) an individual or entity that is owned or controlled by, acts on behalf of, or provides material support to any senior Russian government official or person whose property is blocked pursuant to the new E.O.
Specifically, Section 1 of new E.O. requires the United States to block the property of seven Russian persons listed in the annex to the new E.O. and authorizes the U.S. to block the property of additional persons who the U.S. Secretary of the Treasury, in consultation with the U.S. Secretary of State, determines to fall into one of these four categories:
- Officials of the government of the Russian Federation, defined in Section 6(d) to include any political subdivision, agency, or instrumentality, including the Central Bank of the Russian Federation;
- Members of the arms or related materiel sector of the Russian Federation;
- Persons directly or indirectly owned or controlled by, or acting for or on behalf of, a senior official in the government of the Russian Federation or a person designated pursuant to the new E.O.; or
- Persons who materially assist, sponsor, or provide financial, material, or technological support for, or goods or services to or in support of a senior official in the government of the Russian Federation or a person designated pursuant to the new E.O.
Section 4 explains that sanctionable transactions include making any contribution or provision of funds, goods, or services by, to, or for the benefit of any person designated pursuant to the new E.O., as well as receiving any contribution or provision of funds, goods, or services from such a person.
Section 5 further prohibits any transactions that evade the new E.O., including conspiracies formed to evade the new E.O.
Section 2 authorizes the following sanctions against the above categories of persons:
- Asset blocking: Any person or entity meeting the above criteria may be designated as an SDN by OFAC; and
- Visa bans or revocations: The United States will deny visas to travel to the United States for persons who undertake any of the activities in Section 1, as well as revoke the visas of such persons already in the United States.
Following the release of the new E.O., President Obama issued a statement, saying that going forward, the United States’ response will depend on “whether Russia chooses to escalate or de-escalate the situation.” He noted that the United States will continue to collaborate with European leaders and suggested that further sanctions against Russia remain on the table. The President also said the administration will continue to work with Congress to provide Ukraine with the economic support it needs.
Congress is in recess this week, but Senate Majority Leader Harry Reid (D-Nevada) has scheduled a cloture vote on the Support for the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act of 2014 (S. 2124) when the Senate returns from recess on Monday, March 24. This legislation proposes $1 billion in loan guarantees to Ukraine and includes additional sanctions provisions.
overlapping global sanctions regimes
With the EU, United States, and Canada moving to impose sanctions against Russia in conjunction, and Russia reportedly preparing to respond with similar sanctions, it is important to understand the legal impact of overlapping global sanctions regimes with differing underlying statutory authorities and policy goals. For more information on the legal impact of overlapping global sanctions regimes, please contact Stephen McHale (firstname.lastname@example.org) or Daniel Waltz (email@example.com).
 As of this publication, the new Executive Order has not been assigned a number.
 The names of the seven persons were listed in the annex to the new Executive Order and are posted on the U.S. Treasury Department’s website available here.