Worldwide: US Sanctions Against Russia: The Outlook Under President Trump

President-elect Donald J. Trump has expressed admiration for Russian President Vladimir Putin, and the two reportedly had a warm exchange about the future relationship of the two countries soon after the US election outcome was announced. As a result, many have speculated that a Trump administration may relax the US sanctions against Russia that were imposed in response to Russia's actions in Ukraine and its annexation of Crimea. In recent days, this speculation has intensified in the wake of Mr. Trump's choice for secretary of state and statements by his incoming White House chief of staff suggesting that lifting the sanctions is a real possibility. A President Trump will enjoy substantial discretion in reshaping the US relationship with Russia, but relaxation of sanctions will likely be met with resistance from Congress, which generally has a much less favorable view of Russia's role in world affairs.

This Legal Update discusses how the new president might reshape the US relationship with and affect the sanctions against Russia.

Mr. Trump and Mr. Putin

During the campaign, Mr. Trump remarked that "in terms of leadership, [Vladimir Putin]'s getting an A, our president is not doing so well."1 He also referred to President Putin as someone "highly respected within his country and beyond."2 Mr. Trump was reported to confirm in an ABC interview that if elected he would "look at" whether the United States should "recognize" Russia's current control over the Crimea region.3

The relationship continued to warm after the election. President Putin sent a telegram to Mr. Trump the morning after his victory, stating that he hopes "for cooperation in ending a crisis in Russian-American relations."4 The two also held a teleconference on November 14, 2016, after which the Kremlin announced that they agreed to "assess the current unsatisfactory state of bilateral relations," develop trade and economic ties, and establish joint efforts to fight international terrorism. President Putin wished Mr. Trump "success in the implementation of the pre-election program, and noted his willingness to build a partnership dialogue with the new administration on the principles of equality, mutual respect and non-interference in the internal affairs of each other."5

On December 13, 2016, incoming White House Chief of Staff Reince Priebus refused to take the position that the Trump administration will keep Russia sanctions in place, suggesting that the public take a "wait and see" approach.6 Around the same time as Mr. Priebus's statement, Mr. Trump's transition team announced his plans to nominate ExxonMobil CEO Rex Tillerson to serve as the next secretary of state. Mr. Tillerson is perceived to have close financial ties to Russia and was awarded its "Order of Friendship" by President Putin in 2013. He has also spoken out against using sanctions as a policy tool.7 These initial signals of possible change raise questions about whether the United States would, under a President Trump, reverse course by recognizing the legitimacy of Russia's control of the Crimea region and removing the related sanctions.

The Current Sanctions against Russia

Since July 2014, the United States has imposed a series of sanctions on Russia as a result of Russian aggression against Ukraine. These sanctions primarily target the country's financial services sector, energy sector (e.g., certain energy firms and certain deepwater-, Arctic offshore- and shale-related crude oil projects), and defense sector.8

In many respects, Russia sanctions have narrower applications than other sanctions programs maintained by the United States. For example, many individuals and entities designated under the Russia sanctions are listed as Sectoral Sanctions Identifications ("SSIs"). Unlike dealings with Specially Designated Nationals ("SDNs"), from which US individuals and entities are broadly barred, dealings with SSIs are generally permitted with the exception of a few specified types of transactions. By contrast, the Crimea region of Ukraine, now under Russian control, is subject to comprehensive economic sanctions imposed by the United States.9 US persons are generally prohibited from having any business dealings related to the region.

Although the prospect of a President Trump lifting Russia sanctions in the short term has attracted public attention, the Obama administration continues to implement its foreign policy opposing Russia's de facto control over Crimea. Approximately one week after the election, on November 14, 2016, the US Treasury Department designated six individuals who represent Crimea and Sevastopol in the Russian State Duma (Parliament) as SDNs, prohibiting in general US persons from engaging in any transactions with these individuals and blocking their assets subject to US jurisdiction.10 And on December 20, 2016, the US Treasury Department announced additional SSI and SDN designations under the Russia sanctions.11

A Thaw in January?

The Senate confirmation hearings over Mr. Tillerson's nomination may provide a forum for expressions of congressional concern, both Democratic and Republican, over Mr. Trump's friendlier stance toward Russia. Nevertheless, upon taking office, President Trump will not need congressional authorization to terminate the Russia sanctions currently in place, as they have been imposed pursuant to executive orders under presidential authority.

The only potential legal impediment to broad presidential rescission of the current sanctions against Russia is the Ukraine Freedom Support Act of 2014 (the "Act"), which Congress passed in December 2014. Among other things, the Act requires the president to impose sanctions against entities, owned or controlled by the Russian government or by Russian nationals, that knowingly manufacture, sell, transfer, broker, or assist with the transfer of defense articles into Ukraine, Georgia, Moldova, Syria, or any other country designated by the president and against anyone who knowingly assists or provides support for these activities. President Obama stated, in the White House press release issued on the same day that he signed the Act into law, that his administration "does not intend to impose sanctions under this law, but the Act gives the Administration additional authorities that could be utilized, if circumstances warranted."

Nevertheless, various Russian entities are currently designated as SSIs and SDNs subject to US sanctions in connection with Russia's conduct in Crimea, pursuant to Executive Orders 13660, 13661, 13662, and 13685. These presidential orders were issued under legal authorities granted to the president by other laws, including the International Emergency Economic Powers Act and the National Emergencies Act. One may argue that some of the current SSI and SDN designations satisfy the above-mentioned mandatory sanctions requirement. For example, Directive 3 issued by the Treasury Department's Office of Foreign Assets Control on September 12, 2014, is an important component of the Russia sanctions. The text of Directive 3 specifies that it aims to target "the defense and related materiel sector of the Russian Federation economy," the same sector that the mandatory sanctions requirement of the Act seeks to target. If President Trump removed the Russia sanctions by rescinding all related SSI and SDN designations, then a legal issue could arise as to whether the president has violated the mandatory sanctions requirement of the Act and what remedy may be available under US laws.

Ultimately, however, any challenge to the rescission authority of President Trump would be difficult, because the Act also provides for a "national security waiver" that authorizes the president to waive the application of sanctions, or waive sanctions for a specific transaction, for purposes of US national security and with congressional notification.

President Trump will also have to take into account the diplomatic effects of any executive action on the Russia sanctions. US allies continue to stand behind their policy to oppose Russia's territorial claims over Crimea and will keep in place their own Russia sanctions implementing this policy. On November 11, 2016, Canadian Foreign Minister Stephane Dion urged all countries to remain firm on imposing sanctions against Russia for its actions toward Ukraine.12 The European Union also extended its economic sanctions against Russia by another six months on December 13, 2016.13 Thus, if President Trump were to relax sanctions against Russia, the United States would be moving in a direction contrary to that of its closest allies.

Whether American allies or congressional leaders will persuade President Trump to moderate his expressed warmth toward Russia remains to be seen, but if the new president wishes to act on his campaign rhetoric, he will have substantial authority to do so. US and foreign businesses that have an interest in Russia will need to remain alert and be prepared for possibly fundamental changes in US sanctions against Russia.

 See also US Sanctions Against Cuba: The Outlook Under President Trump and US Sanctions Against Iran: The Outlook Under President Trump.

Footnotes

1. Chris Cillizza,Donald Trump's answer on Russia and Vladimir Putin at the NBC forum was totally bananas, Washington Post (Sept. 8, 2016), https://www.washingtonpost.com/news/the-fix/wp/2016/09/08/donald-trumps-answer-on-russia-and-vladimir-putin-at-the-commander-in-chief-forum-was-bananas.

2 John Santucci, Trump Says 'Great Honor' to Get Compliments from 'Highly Respected' Putin, ABC News (Dec. 17, 2015), http://abcnews.go.com/Politics/trump-great-honor-compliments-highly-respected-putin/story?id=35829618.

3 Chris Cillizza,Donald Trump's ABC interview may be his best/worst yet, Washington Post (Aug. 1, 2016), https://www.washingtonpost.com/news/the-fix/wp/2016/08/01/donald-trumps-abc-interview-may-be-his-bestworst-yet.

4 Donald Trump and Vladimir Putin pledge to build a 'strong and enduring partnership' on the phone, National Post (Nov. 15, 2016), http://news.nationalpost.com/news/world/donald-trump-and-vladimir-putin-pledge-to-build-a-strong-and-enduring-partnership-on-the-phone.

5 Id.

6 Louis Nelson, Priebus: Trump won't rule out lifting Russia sanctions, Politico (Dec. 13, 2016), http://www.politico.com/story/2016/12/russia-sanctions-trump-reince-priebus-232560.

7 Id.

8 Mayer Brown Legal Update,US Congress Expands Sanctions against Russia (Dec. 19, 2014), https://www.mayerbrown.com/US-Congress-Expands-Sanctions-against-Russia-12-19-2014/.

9 See generally, Office of Foreign Assets Control, Dept. of Treasury,Ukraine/Russia Related Sanctions Program, (updated June 2016), https://www.treasury.gov/resource-center/sanctions/Programs/Documents/ukraine.pdf.

10 Press Release, Dept. of Treasury, Treasury Sanctions Individuals for Activities Related to Russia's Occupation of Crimea (Nov. 14, 2016), https://www.treasury.gov/press-center/press-releases/Pages/jl0609.aspx; and Resource Center, Dept. of Treasury, Russia/Ukraine-related Designations (Nov. 14, 2016), https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20161114_33.aspx.

11 Resource Center, Dept. of Treasury, Russia/Ukraine-related Designations and Identifications; Publication of Russia/Ukraine-related General License (Dec. 20, 2016), https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20161220.aspx.

12 AaronMaasho, Canada says Russian sanctions must be upheld by all countries, Channel NewsAsia, (Nov. 12, 2016), http://www.channelnewsasia.com/news/world/Canada-says-russian-sanctions-must-be-upheld-by-all-countries/3282628.html.

13 Charles Riley, Europe extends sanctions on Russia, CNN Money (Dec. 16, 2016), http://money.cnn.com/2016/12/16/news/russia-trump-ties-europe-sanctions/.

Originally published on December 21, 2016

Learn more about our Government Relations, International Trade, Energy and Middle East practices.

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2016. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.