Overview of the U.S. and EU Sanctions on Russia

Публикация посвящена усиленному режиму экономических санкций, введенных США и Европейским Союзом против России в связи с ее неправомерными действиями в Крыму и континентальной Украине в конце сентября 2014 года. Новые санкции вполне можно отнести к категории секторальных, поскольку они касаются весьма важных секторов экономики, как-то: энергетика, оборонная промышленность, финансовый рынок.

Introduction
Over the past six months, the United States and the European
Union have coordinated efforts through sanctions and trade controls to respond
to Russian activity in Crimea and Ukraine. Following a long series of incremental
changes to the sanctions and trade controls by the respective government
authorities (which are described in detail in our regular client alerts ]), this alert
provides a summary of the state of U.S. and EU sanctions on Russia as of
September 24, 2014.
As described in more detail below, there is a high level of consistency between
the sanctions and trade controls to include a similar approach to: asset freezes;
controls on financing directed at the oil, gas, energy, and defense industries;
restrictions on access to capital markets; controls on goods and services for the
Russian military and other military end users in Russia; and controls on certain
dual use items. However, there continue to be some nuanced differences
between the two approaches, including variance in the persons subject to
asset blocks, differences on the controls applicable to imports and investments
in infrastructure, and how the specific prohibitions are implemented by the
respective government agencies.
United States The U.S. sanctions on Russia are focused on the financial
services, energy, and defense industries. The sanctions contain a variety of
targeted prohibitions that have increasingly expanded the scope of the sanctions
program, to include:
• Designating or blocking certain Russian individuals and entities, and an
important change in the Office of Foreign Assets Control (“OFAC”) policy on
entities owned by blocked persons

Limiting the availability of debt financing for certain Russian financial

institutions

Prohibiting the provision of goods, services, and technology in support of

certain activities relating to the exploration or production of oil or gas in

Russia, its claimed maritime area, or “extending from its territory”

Restrictions on the supply of certain items (a) to the Russian military or

other military end-users in Russia; and (b) for use in oil or gas exploration or

production in Russia, including Arctic offshore locations or shale formations

Restrictive licensing policies for export activities involving Russian-made

defense articles (including spacecraft) and defense articles intended for

end-use in Russia

The sanctions include both economic measures administered by OFAC and export

controls administered by the U.S. Department of Commerce, Bureau of Industry

and Security (“BIS”), and the U.S. Department of State, Directorate of Defense

Trade Controls (“DDTC”).

The current status of these controls is addressed in more detail below:

1. OFAC Sanctions On July 16, 2014 and September 12, 2014, OFAC issued

a series of Directives imposing targeted sanctions upon key elements of the

Russian economy. Each Directive governs activities between U.S. persons

(to include any person within the United States) and those persons listed on

the Sectoral Sanctions Identifications (“SSI”) List. The SSI List is organized

according to the four Directives. See http://www.treasury.gov/resource-center/

sanctions/SDN-List/Pages/ssi_list.aspx. Unlike the Specially Designated

Nationals (“SDN”) List, which includes blocked persons and prohibits

substantially all activity with so-called SDNs, the SSI List designations result in

prohibitions that are limited to those activities targeted by the Directives.

As an aside, OFAC also recently revised its policy on entities that are owned

by SDNs and SSI List persons to extend the designations to entities owned 50

percent or more by one or more persons on the SDN or SSI List.

The four Directives are as follows:

• Directive 1 targets the financial services sector of the Russian economy.

This directive prohibits engaging in transactions in, providing financing for,

or otherwise dealing in new debt with a maturity of longer than 30 days, or

equity for persons identified on the SSI List under Directive 1.

• Directive 2 targets Russia’s energy sector of the Russian economy by

prohibiting transactions in, provision of financing for, and other dealings in

new debt with a maturity of longer than 90 days for persons identified on

the SSI List under Directive 2. equity for persons identified on the SSI List

under Directive 1.

• Directive 3 targets the Russian defense and related material sector by

prohibiting all transactions in, provision of financing for, and other dealings

in new debt of longer than 30 days for persons identified on the SSI List

under Directive 3.

• Directive 4 expands on the sanctions targeting the Russian energy sector

by prohibiting “the provision, exportation, or reexportation, directly or

indirectly, of goods, services (except for financial services), or technology in

support of exploration or production for deepwater, Arctic offshore, or shale

projects that have the potential to produce oil in the Russian Federation, or

in maritime area claimed by the Russian Federation and extending from its

territory” that involve any person identified on the SSI List under Directive

OFAC has also issued General Licenses authorizing certain transactions

relating to derivative products (relevant to SSI List entities under Directives

1-3) and a short wind-down period (relevant to Directive 4).

2. Commercial and Dual-Use Controls (the Export Administration

Regulations) On August 6, 2014, BIS amended the Export Administration

Regulations (“EAR”) to include the “Russian Industry Sector Sanctions” as

section 746.5. These sanctions impose a license requirement for the export to

Russia of certain items if the exporter, reexporter, or transferor knows that the

item “will be used directly or indirectly in exploration for, or production of, oil or

gas in Russian deepwater (greater than 500 feet) or Arctic offshore locations or

shale formations in Russia, or are unable to determine whether the item will be

used in such projects.” The items subject to this license requirement include

items classified under the following Commerce Control List ECCNs: 0A998,

1C992, 3A229, 3A231, 3A232, 6A991, 8A992, 8D999, as well as EAR99 items

identified in Supplement No. 2 to Part 746.

3. Military/Defense Controls (the International Traffic in Arms Regulations)

On March 27, 2014, DDTC placed a hold on the issuance of International

Traffic in Arms Regulations (“ITAR”) licenses for the export of defense

articles and defense services to Russia. Subsequently, on April 28, 2014,

DDTC changed its hold on licenses to a policy of denial for defense articles

or defense services to Russia or occupied Crimea. DDTC also began the

process of revoking existing licenses for defense articles and services. DDTC

is currently reviewing defense article export licenses on a case-by-case basis

to determine the export’s contribution to Russia’s military.

European Union As tensions rose in the Ukraine and Crimea, and in the absence

of de-escalatory steps by the Russian Federation, the EU began imposing

sanctions in March 2014. As with the sanctions imposed by the United States,

these have expanded in scope to include:

Sanctions targeting individuals and entities through travel bans and

asset freezes

Measures dealing with access to the capital markets for specified financial

and defense institutions

Restrictions on the export of dual-use goods and technologies

Restrictions on dealing with technologies listed on the Common Military List

Restrictions on dealing with goods and services related to the oil industry

Below is a summary of the current restrictions:

1. Travel Bans and Asset Freezes In March, the EU introduced measures to

restrict the travel and freeze the assets of individuals and entities responsible

for actions undermining or threatening the sovereignty of the Ukraine (by

Council Regulation (EU) No 269/2014). At that time, 21 names were added

to the list. The list has twice since been updated, to include an additional 36

names (by Council Implementing Regulation (EU) No 284/2014 and Council

Implementing Regulation (EU) No 961/2014). The individuals subject to

restrictions under the U.S. and EU regimes have not always been consistent,

and so it is necessary to separately track the individuals restricted.

2. Access to Capital Markets and Loans As in the United States, the EU

has imposed restrictions on financial dealings with certain named entities

operating in the Russian financial and defense industries. While these

restrictions fall short of an absolute prohibition on dealings with such entities,

they do place substantial limitations on transactions involving transferable

securities and money market instruments when issued by them.

“Transferable securities” is widely defined and includes shares in companies;

other securities equivalent to shares in companies, partnerships or other

entities; and bonds or other forms of securitized debt, such as depositary

receipts. In addition, any securities giving the right to acquire or sell any

such instrument are covered. Similarly, “money market instruments” includes

classes of instruments that are normally dealt in on the money market,

particularly treasury bills, certificates of deposit and commercial papers.

A mirroring provision was introduced in September dealing with such

securities or instruments with a maturity exceeding 30 days when issued by

certain defense companies and crude oil and petroleum transport companies.

The entities covered by this prohibition are set out fully in our client alert

available here. [client alert 14-241]

In addition to the above, it is prohibited to make available any new loans or

credit exceeding 30 days to any of the entities covered by the restrictions

outlined above.

3. Dual-use Goods and Technologies In July, restrictions were introduced

on the export or sale of certain dual-use goods and technologies, and the

provision of related services to any entity or body in Russia, or for use in

Russia, if those items are or may be intended, in part or otherwise, for military

use or for a military end-user (by Council Regulation (EU) No 833/2014).

However, prior authorization can be sought from competent authorities in

limited cases where authorities have no reasonable grounds to believe that the

end-user might be a military end-user, or that the goods might have a military

end-use. In addition, and with no provision for gaining prior authorization,

brokering services related to such dual-use goods and technology, and the

provision of financing or financial assistance, are prohibited where the items

are intended for military use or a military end-user.

In September 2014, a further restriction was imposed (by Council Regulation

(EU) No 960/2014) on the export or sale of certain dual-use goods and

technologies, or the provision of brokering or other services, or the arranging

of finance or financial assistance for such goods or services, when provided

to specific entities listed in our client alert available here. [client alert 14-241]

As a result, any entity supplying such goods and technologies should carefully

consider the existing sanctions to ensure that they are in compliance with

their provisions.

4. The Common Military List In July, the EU imposed a restriction on providing

technical assistance or financing in relation to goods and technologies listed in

the Common Military List. This restriction applies to any dealings with a natural

or legal person, entity or body in Russia, or for use in Russia.

5. The Oil Industry There are two layers of restrictions in relation to the oil

industry in Russia. In July, restrictions were introduced on the export or sale

of certain technologies suited to the oil industry for use in deep water oil

exploration and production, Arctic oil exploration and production, or shale

oil projects in Russia. This restriction applies to any goods, whether or not

originating in the EU, when supplied to any natural or legal person, entity

or body in Russia, or, if supplied to any other country, if such equipment or

technology is for use in Russia. A prior authorization is required to undertake

any of these activities, as in the United States, and shall not be granted in

the event that a competent authority has reasonable grounds to determine

that such technologies are for use in projects of the type outlined above.

Restrictions are also imposed on the provision of technical assistance,

brokering services, or financing or financial assistance, in relation to these

technologies.

In September 2014, the EU introduced a further prohibition on providing

services, including drilling, well testing, logging and completion services,

and the supply of specialized floating vessels for projects of the above types

in Russia. This is an absolute prohibition, with no ability to apply for a prior

authorization. However, a grace period was given for contracts concluded up

to September 12, 2014.

These restrictions are substantially similar to those implemented by the United

States under Directive 4, outlined above.

Коллектив авторов “Reed Smith”

Источник:  http://www.reedsmith.com/files/Publication/9221cf81-e4f7-4907-ab2c-f7dc249eac58/Presentation/PublicationAttachment/441e0ec9-dbd8-4c3a-b1fa-0bf7ed4d5872/alert_14-255.pdf

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