On December 18 2014 President Obama signed into law the Ukraine Freedom Support Act of 2014, which authorises further sanctions against parties in Russia, as well as military assistance for Ukraine. The act requires the imposition of sanctions with respect to Russian weapons exporters, including Rosoboronexport, that the president determines are exporting arms to Syria, Ukraine, Georgia or Moldova. The act also authorises – but does not require – the imposition of sanctions and export controls against Russia's energy sector.

Defence sector

The Ukraine Freedom Support Act provides for new sanctions on Russia's defence industry and singles out Rosoboronexport, a key Russian weapons exporter, for sanctions. Specifically, the act requires the president to impose sanctions with respect to Russian entities that he determines have transferred, brokered, otherwise assisted in the transfer or knowingly manufactured or sold defence articles that are transferred into Syria, Ukraine, Georgia or Moldova. The act also targets any foreign person who knowingly assists, sponsors or provides support for a Russian entity involved in the transfer of defence articles to Syria, Ukraine, Georgia or Moldova.

Energy sector

The Ukraine Freedom Support Act authorises the president to impose sanctions with respect to a foreign person who knowingly makes a significant investment in a project intended to extract crude oil from:

  • Russia's exclusive economic zone in waters more than 500 feet deep;
  • Russian Arctic offshore locations; or
  • shale formations located in Russia.

It also authorises export controls on equipment used in oil extraction in Russia. Both measures are left to the president's discretion, by authorising rather than requiring the president to impose such sanctions.

In addition, the act authorises the president to impose sanctions with respect to Gazprom if he determines that Gazprom has interfered with the delivery of gas to NATO members in Europe, or further withholds gas supplies from Ukraine, Georgia or Moldova.

Sanctions to be imposed

The sanctions that the president may impose under the Ukraine Freedom Support Act are similar to those that he may impose under the Iran Sanctions Act and include a ban on assistance from the Export-Import Bank of the United States, a government procurement ban and loss of access to US financial systems. The act gives the president discretion not to impose sanctions in certain cases, including cases involving national security or pre-existing contracts.

Foreign financial institutions

The Ukraine Freedom Support Act also authorises the president to sanction any foreign financial institution that he determines has facilitated sanctionable activities related to Russia's defence and energy sectors or facilitated a significant financial transaction on behalf of any Russian specially designated national. Such sanctions include a prohibition on, or strict conditions on the maintenance of, a correspondent or payable-through account in the United States.

Increased assistance to Ukraine

The measure provides $510 million in assistance to the Ukrainian government, including $160 million for military aid. The balance would go towards promoting energy efficiency and civil society and to broadcasting in order to counter Russian propaganda.

The Ukraine Freedom Support Act authorises the president to provide Ukraine with military assistance. In addition, the secretary of state is required to submit a plan to Coablengress to meet the need for the protection and assistance of internally displaced persons in Ukraine, and the secretaries of state and defence are to assist entities in Ukraine's defence sector to reorient exports away from Russia.

The United States will also work with Ukraine to address its potentially severe short-term heating fuel and electricity shortages in 2014 and 2015, and will take steps to help Ukraine reduce its dependence on natural gas imported from Russia.

Lisa Crosby, Andrew Shoyer, Robert Torresen or Lindsay Bourne

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