New EO Sanctioning Russia After Russia Recognizes Two Breakaway Territories in Ukraine

Feb. 22, 2022

President Biden has issued a new Executive Order sanctioning Russia in response to Russia’s recognition of two breakaway territories in eastern Ukraine as independent. The order states that the Russian Federations recognitions of the Donetsk People’s Republic (DNR) or Luhansk People’s Republic (LNR) regions of Ukraine, “contradicts Russia’s commitments under the Minsk agreements and further threatens the peace, stability, sovereignty, and territorial integrity of Ukraine, and thereby constitutes an unusual and extraordinary threat to the national security and foreign policy of the United States.”

The executive order is an expansion of earlier sanctions issued when Russia invaded Crimea in 2014. It prohibits new U.S. investment in the so-called DNR or LNR regions of Ukraine, imports from the United States and exports into the United States from the regions, and certain financial and property transactions. The order also provides for sanctions on persons determined to operate in the DNR or LNR regions, to be a leader or member of the board of directors of an entity operating in the DNR or LNR regions; or to have materially provided support any person whose property and interests in property are blocked pursuant the order.

The Department of the Treasury also issued six General Licenses to ensure that humanitarian activity is not hindered. They provide for a short-term wind down of activities, the export to the regions of food, medicine and medical devices, and allows for personal remittances. The licenses also allow telecommunications and internet services to remain operational, and mail services to continue. The licenses further permit international organizations to supply aid to the people in these two regions.

In a statement from Press Secretary Jen Psaki, the White House stated that they have anticipated a move like this from Russia and were ready to respond immediately. The statement went on to say, “these measures are separate from and would be in addition to the swift and severe economic measures we have been preparing in coordination with Allies and partners should Russia further invade Ukraine.”

The European Union promised to follow suit and to impose sanctions over Russian President Vladimir Putin’s decision to recognize the two separatist regions as independent. Specifically, European Council President Charles Michel and European Commission President Ursula von der Leyen called the decision by the Russian President “a blatant violation of international law as well as of the Minsk agreements,” and that “The Union will react with sanctions against those involved in this illegal act.”

President Biden has already announced that a new tranche of sanctions will be imposed including full blocking sanctions against two large Russian financial institutions, comprehensive sanctions on Russian sovereign debt, and sanctions against the Russian elite and their families. Germany has also halted approval of the Nord Stream 2 gas pipeline. As the situation in Russia and Ukraine continues to develop, further sanctions and export controls are likely from the U.S. and its allies.

If you have any questions or would like more information about Russian sanctions and potential export controls do not hesitate to contact an attorney at Barnes, Richardson & Colburn LLP