On Feb. 24, 2023, the White House announced a slate of additional sanctions against Russia, marking the one-year anniversary of the invasion of Ukraine. The additional sanctions follow President Biden’s recent travel to Kyiv and Poland and are coordinated with the Europeans and G7. The U.S. sanctions are comprehensive, covering sectors include financial services, tech, aerospace and defense, mining, energy, imports of Russian products, a listing of hundreds of Russian entities and individuals, as well as a number of third-party European, Middle Eastern and Asian entities that are supporting Russia’s military and economy and helping Russia to evade sanctions.
White House Targets Financial, Mining and Defense Industries with Sanctions
As part of the newly announced package, which was developed in coordination with other G7 leaders and the European Union, the State Department designated over 60 additional members of Russia’s government, including several cabinet ministers and dozens of regional governors responsible for overseeing Russia’s military conscription and recruitment. It also designated over 30 individuals and entities involved in Russian energy production, advanced technology development and intelligence collection, and in the operation and development of Russia’s nuclear weapons pursuant to Executive Order (E.O.) 14024, preventing them from transacting with U.S. entities. The Department of State also announced steps to impose visa restrictions on over 1,200 members of Russia’s military for their enablement of Russia’s military campaign.
Concurrently, the Department of the Treasury imposed sanctions on several key financial institutions, including additional banks such as Credit Bank of Moscow Public Joint Stock Company, Russia’s largest non-state public bank, that support Russia’s economy, dozens of Russian entities in the defense and aerospace sectors, several companies involved in Russia’s minerals and mining industry, targeting sanctions evaders, and designations of individuals supporting the Russian economy and war efforts.
For a full list of the sanctions implemented by the State Department and the Department of the Treasury, please click here.
In addition, the Department of Commerce announced higher 232 tariffs on imports of Russian aluminum, including a 200% tariff on aluminum and aluminum derivative products produced in Russia, set to come into effect on March 10, and raising duties on a majority of other metals and metal products to 70%, among other tariff increases. The Department of Commerce also issued four rules imposing additional export restrictions on Russia, as well as Belarus, Iran and a number of third-country entities. These new export restrictions are aimed at limiting Russia’s access to military equipment, as well as its trade with Iran, Belarus and third-country entities, including entities in China. They are also aimed at restricted exports of certain goods deemed to be useful for Russia’s use of Iranian UAVs, targeting a number of entities that contribute to Russia’s defense industrial base.
EU Sanctions Discussions Delayed
The EU is in the process of preparing its own round of additional Russia sanctions to mark the one-year mark, which had previously been intended for release on Feb. 24. However, negotiations stalled due to Poland’s objections over restrictions on synthetic rubber imports. The Polish government reportedly is amenable to a sanctions package similar to the one recently proposed, pushing for the EU to strengthen the controls on rubber imports instead of weakening them. However, as diplomatic negotiations scheduled for the morning of Feb. 24 have not led to a broader consensus, it is unclear whether the EU will be able to implement a sanctions package to coincide with the anniversary of the conflict.
Group of Seven Commits to Implementing Further Russia Sanctions
President Biden met with other G7 leaders in a virtual summit on Feb. 24 and the group reaffirmed “unwavering support” for Ukraine. The G7 affirmed commitment to imposing a new coordinated economic sanctions package to prevent Russia from accessing inputs that support its military and manufacturing sectors, noting that the sanctions would target Russian advanced materials, industrial machinery, tools and construction equipment. It also committed to implementing sanctions against additional Russian financial institutions and Russian diamonds, noting its member states would closely monitor and attempt to minimize the spillover impacts of these restrictions on other countries around the world. Lastly, the G7 committed to implementing a variety of measures to prevent Russia from circumventing the sanctions, including the establishment of an Enforcement Coordination Mechanism to prevent Russia from accessing G7 economies and implementing additional transit and service bans on Russian entities.
As the war in Ukraine drags on, the United States, Europe and the G7 are likely to continue to impose additional sanctions on Russia and those entities and individuals supporting the regime. Brownstein’s international practice is closely monitoring these developments and is available to discuss with clients and potential clients the implications of these, and existing sanctions, on businesses.
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