On 13 December 2014, the US Congress passed legislation entitled the "Ukraine Freedom Support Act of 2014" (H.R. 5859) seeking to impose new sanctions against Russia and in support of Ukraine.  On Thursday, December 18, President Obama signed the Act into law, while stating that at present, the Administration does not intend to impose new sanctions pursuant to the Act.

Description of Law

The Act provides that the President "shall" (absent a Presidential waiver) impose three or more sanctions (from a specified menu) against:

  • Rosoboronexport, a significant Russian defense exporter; and
  • entities that the President  determines are either: (1) Russian-owned or -controlled entities that knowingly manufacture, sell, transfer or broker the transfer of defense articles to Syria, Ukraine, Georgia, Moldova, or other designated countries without authorization from the internationally-recognized governments of those countries; or (2) other parties knowingly assisting, sponsoring or providing financial, material or technological support for, goods or services to or in support of, such entities in those activities.

Further, the President "may" impose three or more sanctions against foreign persons determined to make "significant investments" in Russian deepwater, Arctic offshore, and shale energy projects for the extraction of oil.

The following sanctions comprise the menu of options from which the President may select:

  • Export-Import Bank Assistance - The President may direct the Export-Import Bank of the United States to not approve the issuance of any guarantee, insurance, extension of credit, or participation in the extension of credit in connection with the export of any goods or services to the foreign person.
  • Procurement Sanction - The President may prohibit the head of any executive agency (as defined in section 133 of title 41, United States Code) from entering into any contract for the procurement of any goods or services from the foreign person.
  • Arms Export Prohibition - The President may prohibit the exportation or provision by sale, lease or loan, grant, or other means, directly or indirectly, of any defense article or defense service to the foreign person and the issuance of any license or other approval to the foreign person under section 38 of the Arms Export Control Act (22 U.S.C. 2778).
  • Dual-Use Export Prohibition - The President may prohibit the issuance of any license and suspend any license for the transfer to the foreign person of any item the export of which is controlled under the Export Administration Act of 1979 (as in effect pursuant to the International Emergency Economic Powers Act) or the Export Administration Regulations under subchapter C of chapter VII of title 15, Code of Federal Regulations.
  • Property Transactions - The President may, pursuant to such regulations as the President may prescribe, prohibit any person from
    • acquiring, holding, withholding, using, transferring, withdrawing, transporting, or exporting any property that is subject to the jurisdiction of the United States and with respect to which the foreign person has any interest;
    • dealing in or exercising any right, power, or privilege with respect to such property; or
    • conducting any transaction involving such property.
  • Banking Transactions - The President may, pursuant to such regulations as the President may prescribe, prohibit any transfers of credit or payments between financial institutions or by, through, or to any financial institution, to the extent that such transfers or payments are subject to the jurisdiction of the United States and involve any interest of the foreign person.
  • Prohibition on Investment in Equity or Debt of a Sanctioned Person- The President may, pursuant to such regulations as the President may prescribe, prohibit any U.S. person from transacting in, providing financing for, or otherwise dealing in
    • debt of longer than 30 days’ maturity of a foreign person, with respect to which sanctions are imposed under subsection (a) or of longer than 90 days’ maturity of a foreign person, with respect to which sanctions are imposed under subsection (b); and issued on or after the date on which such sanctions are imposed with respect to the foreign person.
    • equity of the foreign person issued on or after that date.
  • Exclusion from the United States and Revocation of Visa or Other Documentation - In the case of a foreign person who is an individual, the President may direct the Secretary of State to deny a visa to, and the Secretary of Homeland Security to exclude from the United States, the foreign person, subject to regulatory exceptions to permit the United States to comply with the agreement regarding the headquarters of the United Nations, signed at Lake Success on June 26, 1947 and entered into force on November 21, 1947, between the United Nations and the United States, or other applicable international obligations.
  • Sanctions on Principal Executive Officers - In the case of a foreign person that is an entity, the President may impose on the principal executive officer or officers of the foreign person, or on individuals performing similar functions and with similar authorities as such officer or officers, any of the sanctions described in this subsection applicable to individuals.

The Act also directs the President to impose sanctions on Gazprom if the President determines that Gazprom is withholding significant natural gas supplies from North Atlantic Treaty Organization (NATO) member countries, or further withholds significant natural gas supplies from countries such as Ukraine, Georgia, or Moldova.  Upon such a determination, the President is required to prohibit US persons from investing in or purchasing significant amounts of Gazprom equity or debt and to impose at least one additional sanction under the Act. 

The Act also provides for optional sanctions against foreign financial institutions that knowingly: 

  • engage in “significant” transactions involving entities designated under any of the above energy/defense sanctions except Rosoboronexport (but including Gazprom); or 
  • facilitate “significant financial transactions” involving Russian SDNs designated under the various Ukraine/Russia-related measures.

The sanction for such foreign financial institutions involve limitations on opening or maintaining correspondent or payable-through accounts in the United States—effectively cutting them off from access to the US banking system.


Most of the Act's sanctions measures will not go into effect immediately because they require determinations to be made within certain time periods by the President and/or executive branch agencies (including the US Treasury Department’s Office of Foreign Assets Control) that specific entities fit the criteria for being sanctioned.

Also, importantly, the Act contains a waiver provision that grants the President waiver authority if he "determines that the waiver is in the national security interest of the United States."  In an official statementfollowing the President's signing of the Act, the White House explained, "Signing this legislation does not signal a change in the Administration’s sanctions policy, which we have carefully calibrated in accordance with developments on the ground and coordinated with our allies and partners. At this time, the Administration does not intend to impose sanctions under this law, but the Act gives the Administration additional authorities that could be utilized, if circumstances warranted."  Thus, it appears that the White House does not view the Act as creating any significant immediate change in terms of US sanctions policies.