New Executive Order Authorizes Imposition of Additional Sanctions on the Government of Belarus and Certain Sectors of the Belarusian Economy
On August 9, 2021, President Biden issued Executive Order 14038 (the “EO”) which expanded the scope of the national emergency previously declared in EO 13405 of June 16, 2006. The EO imposes additional sanctions in response to conduct by the Government of Belarus (“GoB”) and the President Alyaksandr Lukashenka regime which the Biden Administration described as “long-standing abuses aimed at suppressing democracy and the exercise of human rights and fundamental freedoms.” As specific examples, the EO cites the “fraudulent” August 9, 2020 election administered by the GoB, in which Lukashenka was reelected, and the GoB’s forced grounding of an international flight to arrest Belarusian journalist Raman Pratasevich and his partner Sofia Sapega.
Among other things, the EO gives the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) the discretionary authority, in consultation with the U.S. Secretary of State, to impose blocking sanctions on GoB agencies, GoB leaders and officials, and individuals and companies operating in the defense and related materiel, security, energy, potassium chloride (potash), tobacco products, construction or transportation sectors of the Belarusian economy. The EO also authorizes OFAC to sanction individuals and entities “responsible for or complicit in” activities such as “actions or policies that threaten the peace, security, stability, or territorial integrity of Belarus,” suppression of human rights and freedom of the press, electoral fraud, deceptive transactions, and public corruption.
OFAC immediately used its authority under the EO in order to add multiple persons and entities to its Specially Designated Nationals & Blocked Persons List (“SDN List”). Those added to the SDN List under the EO include:
-BelKazTrans and Closed Joint-Stock Company New Oil Company, who were sanctioned for operating in the energy sector of the Belarusian economy;
-Inter Tobacco, Energo-Oil and Grodno Tobacco Factory Neman, who were sanctioned for operating in the tobacco product sector of the Belarusian economy;
-Cyprus-based Dana Holdings Limited, who was sanctioned for operating in the construction sector of the Belarusian economy; and
-Belaruskali OAO, who was sanctioned for being owned by the GoB and for operating in the potassium chloride (potash) sector of the Belarusian economy.
The U.S. Treasury Department published a separate press release which identifies all of the SDNs designated by OFAC under the EO. As a result of these designations, all property and interests in property of these SDNs that are or come within the U.S. or the possession or control of U.S. persons are blocked, and U.S. persons are generally prohibited from engaging in transactions involving such SDNs unless authorized by OFAC. OFAC’s “50% Ownership Rule” will also extend these blocking sanctions to any entities owned 50 percent or more, individually or in the aggregate, directly or indirectly, by one or more of these newly designated SDNs. Additionally, the EO gives OFAC the authority to impose blocking sanctions on any non-U.S. persons who provide material assistance to any SDN designated pursuant to the EO.
For Belaruskali OAO, OFAC issued General License 4, which authorizes the wind down of transactions involving Belaruskali OAO, or any entity owned 50% or more by Belaruskali OAO, through 12:01 a.m. eastern standard time on December 8, 2021. OFAC issued FAQ 918 to provide additional information regarding General License 4.
OFAC also issued FAQ 917 which clarifies the scope of the EO’s sector-based sanctions as follows:
The identification of a sector pursuant to E.O. of August 9, 2021 provides notice that persons operating in the identified sector risk exposure to sanctions; however, the identification of a sector does not automatically block all persons operating in that sector of the Belarus economy. Only persons designated on OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List), and entities owned 50 percent or more, individually or in the aggregate, directly or indirectly, by one or more such persons, are subject to blocking sanctions.
As a result, the EO does not automatically sanction persons operating in the identified sectors of the Belarusian economy, but it does provide OFAC with the authority to impose blocking sanctions on such persons at any time.
Grant Leach is an Omaha-based partner with the law firm Husch Blackwell focusing on international trade, export controls, trade sanctions and anti-corruption compliance.
Tony Busch is an attorney in Husch Blackwell’s Washington, D.C. office.
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