The US Congress has passed and President Obama is expected to sign the “Ukraine Freedom Support Act of 2014” (“the Act”), which gives the President authority to impose certain secondary sanctions on non-US persons that make “significant” investments in special Russian crude oil projects. In addition, the President is authorized to impose a specified sanction on foreign financial institutions that are determined to have knowingly engaged in significant transactions involving certain defense and energy-related transactions or facilitated certain transactions for any Russian person that is a Specially Designated National (SDN) under the Act or Ukraine-related Executive Orders. While imposition of these secondary sanctions is generally discretionary on the part of President, they will no doubt increase the already felt chilling effect on even permissible financial transactions and other trade involving Russia.

In addition to these discretionary secondary sanctions, the new legislation requires the President to impose at least 3 or more of several specified sanctions on Rosoboronexport, as well as on entities that are owned or controlled by the Russian government or by Russian nationals and that the President determines knowingly manufacture or sell defense articles transferred to, or transfer, broker or assist the transfer of defense articles to, Syria, or to other specified countries (including Ukraine, Georgia and Moldova) without the consent of the internationally recognized government of that other country.

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