On 8 August 2018 the US administration announced that it will be imposing sanctions on the Russian government under the Chemical and Biological Weapons Control and Warfare Elimination Act 1991 over the use of a novichok nerve agent in an attempt to assassinate UK citizen Sergei Skripal and his daughter Yulia Skripal.

Sanctions

After a 15-day congressional notification period, the sanctions will take effect when published in the Federal Register, which is expected to take place around 22 August 2018.

Under the act, the following sanctions must go into effect:

  • foreign assistance – termination of foreign assistance under the Foreign Assistance Act 1961, except for urgent humanitarian assistance and food or other agricultural commodities or products. State Department officials have stated that there will be a waiver for the provision of foreign assistance to Russia and Russian citizens;
  • arms sales – termination of sales under the Arms Export Control Act of any:
    • defence articles;
    • defence services;
    • design and construction services; and
    • licences for exports of any item on the US Munitions List;
  • arms sales financing – termination of all foreign military financing for the applicable country under the Arms Export Control Act;
  • denial of US government credit and financial assistance – denial of any credit, credit guarantees or other financial assistance by any department, agency or instrumentality of the US government, including the Export-Import Bank of the United States; and
  • prohibition on the export of national security-sensitive goods and technology – prohibition of the export to the affected country of any goods or technology on the Commerce Control List of national security-controlled items.

Comment

Of these five sanctions, the fifth, the prohibition on the export of national security-controlled items to the Russian government, is likely the most significant. State Department officials have indicated that these export control sanctions will be applied to exports to all Russian state-owned or state-funded enterprises, estimated to be around 70% of the Russian economy and 40% of the Russian workforce.

However, lessening this blow, State Department officials have indicated that there will be carve-outs from the export control sanctions permitting case-by-case licensing of items for export to the Russian government for:

  • space flight activities;
  • safety of commercial passenger aviation;
  • exports to wholly owned subsidiaries of US companies and other foreign companies in Russia;
  • deemed export licences for Russian nationals that are employed by firms in the United States; and
  • possibly other items exported to purely commercial end users for civilian end uses.

For further information on this topic please contact Kay C Georgi, John Gurley or Regan K Alberda at Arent Fox LLP's Washington DC office by telephone (+1 202 857 6000) or email (kay.georgi@arentfox.com, john.gurley@arentfox.com or regan.alberda@arentfox.com). Alternatively, contact Marwa M Hassoun at Arent Fox's Los Angeles office by telephone (+1 213 629 7400) or email (marwa.hassoun@arentfox.com). The Arent Fox LLP website can be accessed at www.arentfox.com.

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