On June 6, and in furtherance of its May 16 announcement, the European Commission adopted a delegated act to amend the annex to the EU Blocking Statute by adding within its scope US Iran-related secondary sanctions that have extra-territorial application. The delegated act will enter into force once it is published in the EU Official Journal – probably well before the August 16 deadline set out for the re-imposition of the US secondary sanctions – unless the European Parliament or the Council (the Member States) object within a two-month scrutiny period.
List of US Secondary Sanctions Newly Targeted
The revised annex sets out the third-country measures to which the statute applies should it enter into force. The revised annex includes the same references to US sanctions laws that have previously been included in the annex, namely those that target US sanctions on Cuba. But it also lists the following new US sanctions laws and regulations specifically to address the reimposition of US sanctions pursuant to the US withdrawal of the JCPOA:
On May 21, 2018, President Trump issued a new executive order prohibiting certain transactions benefitting the government of Venezuela. The order prohibits all transactions related to, provision of financing for, and other dealings in:
(i) the purchase of any debt owed to the Government of Venezuela, including accounts receivable,
(ii) any debt owed to the Government of Venezuela that is pledged as collateral after the effective date of this order, including accounts receivable; and
(iii) the sale, transfer, assignment, or pledging as collateral by the Government of Venezuela of any equity interest in any entity in which the Government of Venezuela has a 50 percent or greater ownership interest.
As is typically the case with such executive orders, the new order also prohibits “any transaction that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions set forth in this order” and “any conspiracy formed to violate any of the prohibitions set forth in this order.”
Notably, the Government of Venezuela is defined to include the Central Bank of Venezuela and Petroleos de Venezuela, S.A. (PdVSA), among other political subdivisions, agencies, and instrumentalities of the government.
As noted in a statement from President Trump, the new order was intended to keep
the Maduro regime from conducting “fire sales,’ liquidating Venezuela’s critical assets . . . . I have signed an Executive Order to prevent the Maduro regime from selling or collateralizing certain Venezuelan financial assets, and to prohibit the regime from earning money from the sale of certain entities of the Venezuelan government.
The president also issued a message to Congress further outlining the restrictions contained in the new order. Based on the text of the executive order and the President’s statement, the executive order appears to be targeted at efforts by the cash-strapped Venezuelan government to collateralize debt owed to it or to sell of its stake in state-owned entities, and prohibits U.S. persons from participating in such activities.
The order was issued one day after Venezuelan President Nicolas Maduro was reelected in a vote criticized for widespread irregularities. Vice President Mike Pence released a statement calling the election a “sham” and “a further blow to the proud democratic tradition of Venezuela.”
While these new restrictions are important, the administration had been discussing considerably harsher sanctions, including a full embargo on the importation of oil from Venezuela. Additional future sanctions are possible, but the newly announced prohibitions are less drastic than some of the recent chatter had indicated.