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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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