Biden Lays Out Plans for More Russian Sanctions After Luhansk and Donetsk Sanctions Order
President Joe Biden announced in a speech Feb. 22 that the U.S. will impose a series of sanctions on Russia for its continued aggression against Ukraine. Biden promised sanctions "far beyond what was implemented in 2014," in response to Russian recognition of the Luhansk and Donetsk republics on Feb. 21, which he called a "flagrant violation of international law." According to a Feb. 21 press call, the White House anticipated the possibility and was prepared to respond immediately. A senior administration official noted the measures were in response to "Russia’s recognition gambit" and that they are distinct from "swift and severe economic measures" prepared should Russia "further invade Ukraine."
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Biden announced what he called the "first tranche" of sanctions. These include "full blocking sanctions" on VEB Bank and the Russian military bank as well as "comprehensive sanctions on Russia's sovereign debt" to cut off the Russian government from Western finances and prevent Russia from raising money in Western financial institutions or trading on its future debt. Biden also promised to begin sanctions on "Russian elites and their family members" and to continue escalating sanctions following any more aggressive action from Russia.
The administration began rolling out the sanctions package Feb. 22. OFAC updated its Specially Designated Nationals (SDN) list with several Russian financial institutions and linked persons and issued Russia General Licences 2 and 3 and updated its FAQ sections. The Treasury Department issued Directive 1A, also on Feb. 22, which prohibits transactions with the Russian Central Bank, the National Wealth Fund and the Ministry of Finance.
The moves came a day after Biden signed an executive order that blocked property of persons connected with "Russian efforts to undermine the sovereignty and territorial integrity of Ukraine" and prevents transactions and investment in "the so-called Donetsk People’s Republic (DNR) or Luhansk People’s Republic (LNR)". The order prohibits new investment in the DNR or LNR or such other regions of Ukraine as may be specified by the treasury secretary, the importation or export of any goods or services to or from covered regions, or any related financing or transaction.
Additionally, key personnel within the covered regions, especially military and civilian leaders, will have property in the U.S. blocked and it may not be transferred, paid, exported, withdrawn or otherwise dealt in; this also applies to individuals found by the secretaries of state and the treasury to have "materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of" anyone whose assets are blocked by the order. Americans are also prohibited from making new investments in the covered regions or facilitating transactions by a foreign person that would be prohibited if done by an American.
The order expands the scope of the national emergency declared in EO 13660 of March 2014 and expanded in EOs 13661 and 13662. It says that Russia’s recognition of the DNR and LNR regions of Ukraine contradicts Russia’s commitments under the Minsk agreements and further "threatens the peace, stability, sovereignty, and territorial integrity of Ukraine," thereby constituting an "unusual and extraordinary threat to national security." The Office of Foreign Assets Control of the Treasury issued Ukraine General License Numbers 17, 18, 19, 20, 21 and 22, also on Feb. 21 in service of the EO. These licenses lay out acceptable activities including purchase and sale of COVID-19 diagnosis and treatment equipment.
In a Feb. 22 alert, law firm Wiley said the EO "largely tracks U.S. measures on the Crimea area of Ukraine, effectively placing an embargo on the Covered Regions." The alert also said the Bureau of Industry and Security may also issue additional restrictions that track the new sanctions.