Unprecedented Expansive Sanctions Against Russia

On February 24, 2022, The U.S. Treasury announced unprecedented and expansive sanctions against Russia, which are designed to impose swift and severe economic costs. The action is in response to Russia’s invasion of Ukraine. As the sanctions were announced from the White House, Biden stated in part, “penalties will be deployed” and as the sanctions were made, Ukraine’s government reported mounting casualties inflicted by Russian forces attacking from the east, north, and south.

The President of the United States, Joe Biden, and allies ordered new sanctions targeting Russian banks, oligarchs*, and high-tech sectors. This intends to block the assets of four large Russian banks, impose export controls, and sanction oligarchs.

*Note: Russian Oligarchs are business oligarchs of the former Soviet republics who rapidly accumulated wealth during the era of Russian privatization in the aftermath of the dissolution of the Soviet Union in the 1990s. The failing Soviet state left the ownership of state assets contested, which allowed for informal deals with former USSR officials to acquire state property.

The action is designed to impose severe economic costs that will have both immediate and long-term effects on the Russian economy and financial system. Today, the U.S. Department of Treasury’s Office of Foreign Asset Control (OFAC) imposed expansive economic measures, in partnership with allies and partners, that target the core infrastructure of the Russian financial system, including Russia’s largest financial institutions and the ability of state-owned and private entities to raise capital. It will bar Russia from the global financial system. The actions will result in targeting nearly 80 percent of all banking assets in Russia and will have a deep and long-lasting effect on the Russian economy and financial system.

The actions are specifically designed to impose immediate costs and disrupt and degrade future economic activity, as well as isolate Russia from international finance and commerce, and degrade the Kremlin’s future ability to project power.

OFAC has issued eight general licenses authorizing certain transactions related to: international organizations and entities; agricultural and medical commodities and the COVID-19 pandemic; overflight and emergency landings; energy, dealing in certain debt or equity; derivative contracts; the wind-down of transactions involving certain blocked persons; and the rejection of transactions involving certain blocked people. The imposing export controls are aimed to starve Russia’s industries and military of U.S. semiconductors and other high-tech products.

Earlier in the morning, a major vessel carrier announced in part, “due to the current circumstances the carrier has decided not to call at any ports in Ukraine until further notice and will stop the acceptance of orders to and from Ukraine until further notice. While services in Russia currently remain available, they are potentially subject to change as things develop.”

Concerns or questions regarding your shipments to either country can be directed to your Western Overseas Representative.