EECONOMICCONOMIC SSANCTIONSANCTIONS IINTRODUCTIONNTRODUCTIONEECONOMICCONOMIC SSANCTIONSANCTIONS IINTRODUCTIONNTRODUCTION

1By Marian Dent, ANO Pericles © 2014

TTYPESYPES OFOF EECONOMICCONOMIC SSANCTIONSANCTIONSTTYPESYPES OFOF EECONOMICCONOMIC SSANCTIONSANCTIONS

EXPORT CONTROLSPreferred by U SPreferred by U.S.

IMPORT BANSPreferred by Russia

IMPEDING FINANCIAL FLOWSIMPEDING FINANCIAL FLOWS

Easiest and most effective for US & EU

ASSET FREEZES & SEIZURESOTHER‐TRAVEL BANS, CULTURAL SANCTIONS,OTHER TRAVEL BANS, CULTURAL SANCTIONS, CUTTING OFF AID 2

PPERCENTAGEERCENTAGE OFOF EECONOMICCONOMIC SSANCTIONSANCTIONSPPERER CCOUNTRYOUNTRY/E/ENTITYNTITY

A i t l 215 220 I iti f

Other

Approximately 215‐220 Impositions ofEconomic Sanctions Since WW1

Other11%

Arab League

United Nations12%

United States53%

EU

UK (separately from EU)3%

Arab League4%

USSR/Russia10%

EU7%

3%

10%

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EECONOMICCONOMIC SSANCTIONSANCTIONS AGAINSTAGAINST USSR/RUSSR/RUSSIAUSSIA

Dates * Country Reason Success Score Cost to Sender

1918‐1920 United Kingdom Destabilize the Bolshevik regime 2 4.1

d d ld b k d ????1925‐1931 UK, US, Austria andFrance

Stopped accepting Soviet gold backed coins. ????

1933 United Kingdom To gain release of two British citizens held byStalin ‐‐ Russian Goods (Import Prohibition)A t f 1933

12 .02

Act of 19331948‐1994 COCOM (US, EU, Japan,

Australia)Impair military potential 6 .02

1975‐1994 U.S. Freer emigration—Jackson Vanik 8 .01

1978‐1980 U.S. Human Rights-Dissident repression 2 .003

1980‐1981 U.S. Military Adventure Impairment--Invasion ofAfghanistan

2 .04

1981‐1982 U S Military Adventure Impairment—Poland 1 031981 1982 U.S. Military Adventure Impairment Poland 1 .03

1983 U.S. KAL 007 shooting down 2 0

1991 U.S. Communist Coup 8 0

2014 US, EU, Canada Ukraine ??? ???

4*Chart taken from statistic compiled by the Peterson Institute for International Economics and updated to 20014.

EECONOMICCONOMIC SSANCTIONSANCTIONS BYBY USSR/RUSSR/RUSSIAUSSIA//

Dates * Country Reason SuccessScore

Cost to Sender

1948‐1955 Yugoslavia Destabilize Tito government 1 ‐2.5

1948‐1949 France, UK, US Berlin blockade 2 .11954 Australia Embargo on wool. Repatriate Soviet defector 2 .51958‐59 Finland Cease deal with EEC, Adopt pro-USSR policies 16 1.1

1960‐1970 China Military impairment 4 .51961‐1965 Albania Destabilize Hoxha 1 .61962‐1963 Romania Limit economic independence 2 01990 Lithuania Revoke Independence Declaration 6 1.51991‐1995 Turkmenistan Human rights for Russians 12 19.8g1992‐1999 Estonia Human rights for Russians 4 11992‐1998 Latvia Human rights for Russians 4 11993‐1997 Ukraine Control over Black Sea fleet, nuclear weapons 6 7.1

1993‐1996 Kazakhstan Independence issues, energy resources 9 4.62006‐2013 Georgia (wine) Abkhasia , S Osetia, & withdrawal from CIS2009 Byelorus (dairy) Prevent dairy standard deal with EU2013 Moldova (wine) Prevent free trade deal with EU2013 Moldova (wine) Prevent free trade deal with EU2014 EU, US, (agriculture) Retaliation for West’s Ukraine Sanctions ???? ????

5*Chart taken from statistic compiled by the Peterson Institute for International Economics and updated to 20014.

PPURPOSESURPOSES OFOF SSANCTIONSANCTIONSPPURPOSESURPOSES OFOF SSANCTIONSANCTIONSPurposes of Sanctions Regime Change 

5%Policy Changes  (Anti‐drug, Anti‐terrorist Pro‐HR)

41%10%

5%6%

Anti terrorist, Pro HR)

Impairing Military Potential  (General Tech, Anti‐Nuke, 

16%Anti‐WMD)Disrupting Military "Adventurism" 

22% Compensation  (torts, anti‐expropriations)

PR Reasons  (express moral outrage, satisfy domestic constituencies))

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SSUCCESSUCCESS OFOF SSANCTIONSANCTIONSSSUCCESSUCCESS OFOF SSANCTIONSANCTIONS

60%70%80%90%

100%

20%30%40%50%60%

0%10%20%

UnsuccessfulSuccessful

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EECONOMICCONOMIC EEFFECTSFFECTS OFOF SSANCTIONSANCTIONSEECONOMICCONOMIC EEFFECTSFFECTS OFOF SSANCTIONSANCTIONS

Amount of World Exports compared to World Exports Subject to Economic Sanctions

8000S

2000400060008000

illion $ US

02000

In Bi

1950 1960 1970 1980 1990 2000World Trade 65 125 300 1880 3330 6375Sanctions 1.09 1.74 2.44 6.81 28.9 27.21

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EECONOMICCONOMIC EEFFECTSFFECTS OFOF SSANCTIONSANCTIONSEECONOMICCONOMIC EEFFECTSFFECTS OFOF SSANCTIONSANCTIONS

Amount of Gross World Product compared to World Exports, compared to World Exports Subject to Economic 

Sanctions

US

Sanctions

200004000060000

Billion

 $ U

0In B

1950 1960 1970 1980 1990 2000World Trade 65 125 300 1880 3330 6375Sanctions 1.09 1.74 2.44 6.81 28.9 27.21GWP 4000 6855 12137 18818 27539 41106

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US SUS SANCTIONSANCTIONS TTHEORYHEORYUS SUS SANCTIONSANCTIONS TTHEORYHEORY

EITHER THE PRESIDENT OR CONGRESS CANENACT SANCTIONS.PRESIDENT HAS AUTHORITY UNDERPRESIDENT HAS AUTHORITY UNDER

UNPA (United Nations Participation Act)1917 TWEA (Trading with the EnemiesAct) (eg: Cuba Sanctions)1977 IEEPA (International Emergency Economic Powers Act) (Russia) 50 U.S.C. ) ( )1701 et seq.1976 NEA (National Emergencies Act) (re1976 NEA (National Emergencies Act) (retermination) 50 U.S.C. 1601 et seq

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US SUS SANCTIONSANCTIONS TTHEORYHEORY CCONTONT..US SUS SANCTIONSANCTIONS TTHEORYHEORY CCONTONT..

T fTypes of Sanctions Based on

TargetedTransactions  Lists

l kiBlocking Countries

Vesting

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US SUS SANCTIONSANCTIONS TTHEORYHEORY CCONTONT..US SUS SANCTIONSANCTIONS TTHEORYHEORY CCONTONT..JURISDICTION – POSSIBLE TO THE EXTENT OFMINIMUM CONTACTS.SCOPE OF A SANCTIONSpecified Prohibited ActionsA ti Th t C F ilit t P hibit dActions That Cause or Facilitate ProhibitedActions

l h !• Employers watch out!• Lawyers and Finance People watch out!

Conspiracies to Commit Prohibited Actions

MENS REA « KNOWING OR SHOULD HAVEKNOWN » 

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PPRIMARYRIMARY AAGENCIESGENCIESPPRIMARYRIMARY AAGENCIESGENCIES

DEPARTMENT OF THE TREASURYOffice of Foreign Assets Control (OFAC) 31 C.F.R. Chapter V.31 C.F.R. Chapter V.

DEPARTMENT OF COMMERCE

Bureau of Industry and Security (BIS)

DEPARTMENT OF STATEDirectorate of Defense Trade Controls(DDTC)(DDTC)

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TTHEHE VVARIOUSARIOUS LLISTSISTSTTHEHE VVARIOUSARIOUS LLISTSISTS

• Specially Designated Nationals (SDN)• Sectoral Sanctions Identification (SSI)OFAC ( )

D i d P Li t (DPL)• Denied Persons List (DPL)• Entity List (EL)• Unverified List (UVL)

BIS( )

• Uses BIS Lists  or functions by countryy y• Arms Export Control Act• ITAR (Int’l Trafficking in Arms Regs)

DDTS14

TTHEHE CCURRENTURRENT UUKRAINEKRAINE RRELATEDELATED SSANCTIONSANCTIONS ONONTTHEHE CCURRENTURRENT UUKRAINEKRAINE RRELATEDELATED SSANCTIONSANCTIONS ONONRRUSSIANUSSIAN IINDIVIDUALSNDIVIDUALS & & EENTITIESNTITIES

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FFOUROUR PPRONGSRONGSFFOUROUR PPRONGSRONGS

BLOCKING SANCTIONS (OFAC)Specially Designated Nationals (SDN List)p y g ( )

FINANCIAL/SECTORAL SANCTIONS (OFAC) SSI Li (C di R i i O l )SSI List (Credit Restriction Only) 

EXPORT CONTROLS (BIS)( )Denied Persons List, Entity List, Unverified List

ARMS CONTROLS (DDTS & BIS)ARMS CONTROLS (DDTS & BIS)Uses BIS Lists

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Sanctions ChronologySanctions ChronologyUnited StatesUnited States European UnionEuropean UnionUnited StatesUnited States March 6 E.O. 13660 March 16 E O 13661

European UnionEuropean Union March 17 Council Decision 

2014/145/CFSP  & Reg. 269/2014 March 16 E.O. 13661 March 20 E.O. 13662 (SSI) April 28 (7 officials 17 co’s )

3/21, 4/28, 5/28‐ adds people June 23 D 386 , CR 692‐ Cr. goods

April 28 (7 officials, 17 co s.) May 8, 31 CFR 589 July 16 Directives 1 & 2 SSI List

July 29 Joint US/EU Ann’cem’t July 30‐31 

July 16 Directives 1 & 2, SSI List July 29 Joint US/EU Ann’cem’t Aug 13 OFAC Guidance (50%)

Annex I to CR 428/2009 (dual use) CR 833/2014 (finance sanctions) / ( h l ) Aug 13‐OFAC Guidance (50%)

Sept 12 Amend Directive 1 Directives 3 and 4

Annex 2 to CR 833/2014 (shale etc) CR 825/2014 (Crimea investment) CR 826/2014 (more officials) Directives 3 and 4

General License 1(a)

Sept 17 Amend EAR 744.21

CR 826/2014 (more officials)

Sept 8 Decision 2014/658‐9/CFSP &CR 959‐961/2014, & Amendmt Sept 17 Amend EAR 744.21 / ,to CR 428/2009

Coming Soon‐‐Guidance17

CCURRENTURRENT US SUS SANCTIONSANCTIONSCCURRENTURRENT US SUS SANCTIONSANCTIONS

3 EXECUTIVE ORDERS

REGULATIONS IN TITLE 31 OF THE CFR,REGULATIONS IN TITLE 31 OF THE CFR, 4 OFAC‐DIRECTIVES,2 OFAC‐GENERAL LICENSES, 46 OFAC‐Q’S & A’S RELATING TO ONE OF THE EOS46 OFAC Q S & A S RELATING TO ONE OF THE EOS

SEVERAL AMENDMENTS TO THE COMMERCEDEPARTMENT’S EAR

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RREMINDEREMINDER OFOF SSANCTIONSANCTIONS BBASICSASICSRREMINDEREMINDER OFOF SSANCTIONSANCTIONS BBASICSASICSWHO MUST COMPLY?See definition of US person EO 13660 Sec. 6 (c)

WHO IS A TARGET?WHO IS A TARGET? Look at the applicable listsWorry about the 50% rule

WHAT TRANSACTIONS ARE AFFECTED? Also look at the applicable lists+ t ib’ f d d i b t f b f+ contrib’s, funds, goods services by ,to, or for ben. of+ transaction for purpose of evading+ conspiracy

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CCURRENTURRENT EU SEU SANCTIONSANCTIONSCCURRENTURRENT EU SEU SANCTIONSANCTIONS

13COUNCIL DECISIONS, 17 COUNCIL IMPLEMENTINGREGULATIONSINDIVIDUAL EU STATES CAN IMPLEMENT THE

SANCTIONS IN SLIGHT DIFFERENT WAYSSANCTIONS IN SLIGHT DIFFERENT WAYS

EU’S SANCTIONS SIMILAR BUT NOT IDENTICAL TO THEU.S. SANCTIONSTHE SANCTIONS OTHER COUNTRIES HAVE ISSUED ARETHE SANCTIONS OTHER COUNTRIES HAVE ISSUED ARE

NOT PARALLEL EITHER.

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Some US EU DifferencesSome US EU DifferencesffffUnited States Lists differ—Sanctions more

European Union Sanctions more government Lists differ Sanctions more 

businessmen & businesses, and different goods

Sanctions more government officials and military

Certain individuals in Crimea 50% rule differs—

Entire Crimea is prohibited in possession of over 50% or 

owns directly or indirectly.   50% not OK

pin position to exercise dominant influence

Scope of SDN differs‐‐Must have a license to collect on such contracts although it’s

Allow collection from SDNs of payments on contracts t d i t d f dsuch contracts, although it s 

likely to be granted Sunset—under NEA –one

entered into and performed before sanctions

Sunset as stated in each Sunset under NEA  one  year unless continued by Pres

Sunset as stated in each Council Decision 

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TTHEHE EENDND

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