On August 8, 2018, the U.S. Department of State announced in a press release that in reaction to the use of the nerve agent “Novichok” in the attempted assassination of UK citizens Sergei and Yulia Skripal, the United States would introduce sanctions on the Russian Government under the Chemical and Biological Weapons Control and Warfare Elimination act of 1991 (the “CBW Act”). The State Department announced that the sanctions will take effect on or around August 22, 2018.
Initial sanctions to be imposed on Russia under the CBW Act
Under the CBW Act, five measures are to be imposed upon an initial finding of use of chemical weapons. However, given the current state of U.S.-Russian relations, they are unlikely to have much impact.
The five initial measures are:
- a prohibition on foreign assistance to Russia under the Foreign Assistance Act of 1961 (except for urgent humanitarian assistance, food or other agricultural products). In an August 8, 2018 briefing, a senior State Department official suggested that the “provision of foreign assistance to Russia and to the Russian people” would be carved out;
- the termination of arms sales to Russia of goods and services under the Arms Export Control Act and the termination of licenses for export of any item on the “United States Munitions List”;
- the termination of all U.S. Government military financing for Russia. According to State Department releases, the U.S. Government does not appear to currently provide any foreign military financing to Russia;
- a denial of U.S. Government credit or financial assistance to Russia; and
- the prohibition of export to Russia of national security-sensitive goods or technologies controlled under the Export Administration Regulations. The State Department noted in the August 8, 2018 briefing that there will be a “presumption of denial” for these items, rather than the pre-existing process of case-by-base determination. In addition, there will be a carve out for goods relating to space flight and commercial passenger aviation, for which licenses will still be available on a case-by-case basis.
Follow-on sanctions under the CBW Act
The CBW Act further instructs the President to impose a second round of sanctions unless one of two sets of conditions is met within 90 days: (a) the foreign government is no longer using chemical or biological weapons, has provided assurances it will not do so, and is willing to allow inspections by international observers, or (b) the President makes a determination that waiver of the sanctions is essential to the national security interests of the United States.
The six possible measures, at least three of which are to be imposed after three months, are:
- the U.S. Government opposition of loans, or financial or technical assistance, by international financial institutions to Russia;
- the prohibition on any U.S. bank from providing any credit to the government of Russia (except for urgent humanitarian assistance, food or other agricultural products);
- the prohibition of all goods and technology exports to Russia (except for food or other agricultural products);
- restrictions on the import into the United States of articles (including petroleum) manufactured in Russia;
- the downgrade or suspension of diplomatic relations between the United States and the Russian government;
- measures related to the suspension of the authority of air carriers owned or controlled by the Russian government (i.e., Aeroflot) to transport to or from the United States.
Likely impact of the CBW Act sanctions on Russia
The first round of CBW Act sanctions look likely to be essentially limited to an expansion of the existing export control regime, which is unlikely to have a widespread impact on U.S.-Russian trade or business. A number of the second round of sanctions could have more significant ramifications, if introduced.
Although the second round is nominally mandatory, there is no mechanism to compel the Presidential determination or their imposition – it would be a political decision to expand the sanctions in a meaningful way. By way of illustration, whilst CBW Act sanctions were imposed on Syria in August 2013 and additional measures followed in December 2013, CBW Act sanctions were imposed upon North Korea in March 2018 but the Presidential determination nor the additional measures have yet been imposed despite the three-month periods having elapsed.
We will continue to monitor the situation.