U.S. Economic Sanctions - Recent Developments: President Prohibits Trade with and New Investment in the Crimea Region of Ukraine and Announces Changes to the Cuba Embargo; Congress Passes New Laws Authorizing New Ukraine-Related Sanctions and Targeted Sanctions Against Venezuelan Government OfficialsSullivan & Cromwell LLP - December 24, 2014
In December, new sanctions involving the situation in Ukraine and targeting certain Venezuelan government officials came into force, and an initiative to ease certain elements of the Cuban sanctions program was announced. With regard to the situation in Ukraine, on December 18 the Ukraine Freedom Support Act of 2014 (“UFSA”) became law. The UFSA is a congressional initiative designed to help assist the Government of Ukraine in restoring its sovereignty and territorial integrity and to deter the Government of the Russian Federation from further destabilizing the situation in Ukraine. Current Ukraine-related sanctions already prohibit U.S. persons from engaging certain transactions involving various Russia- and Ukraine-based sanctions targets, and the UFSA expands the potential scope of Ukraine-related sanctions targets by authorizing President Obama to impose additional sanctions against foreign persons that engage in certain transactions in various Russian economic sectors, in particular in the energy and defense sectors. Although President Obama signed the UFSA into law, the Administration released a statement that it does not intend to impose sanctions under UFSA at this time. On the other hand, on December 19, in coordination with the European Union, which announced its own Crimea-related measures on December 18, the President issued a new Executive Order which prohibits new investment in the Crimea region of Ukraine (“Crimea”) and generally prohibits trade with Crimea, and further authorizes the imposition of blocking sanctions on persons operating in Crimea. On December 19, the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”) also announced the designation of an additional 24 “Ukrainian and Russian-backed separatists and the militias…they lead or support” as specially designated nationals (“SDNs”) under its existing Ukraine-related sanctions authority.
On December 18, President Obama also signed the Venezuela Defense of Human Rights and Civil Society Act of 2014 (“VDHRA”) into law. VDHRA requires the President to impose sanctions on officials of the Government of Venezuela or their proxies that the President determines has engaged in human rights abuses in response to anti-government protests that began in February 2014.
Finally, with regard to Cuba, on December 17 President Obama announced that the United States would take steps to normalize diplomatic and economic relations with Cuba, and that the United States would implement changes to its current sanctions policies and regulations with respect to Cuba. While the broader U.S. embargo against Cuba will remain in place, the announced changes will result in changes to the implementation of that embargo. The changes are not effective immediately. OFAC will implement the changes by amendments to the Cuban Assets Control Regulations, and other changes will be implemented by the Department of Commerce by amendments to the Export Administration Regulations. None of the changes will have effect until the new regulations are issued. Since there is little detail on the Cuba-related changes available at this time, the details are not discussed in this memorandum.