USA Rachets up Russia Sanctions – Will the UK follow?
Gavin Irwin comments on yesterday’s House of Commons Library Briefing Paper on the UK’s approach to financial sanctions against Russia
On 12th April 2018, the House of Commons Library published a Briefing Paper entitled ‘Sanctions Against Russia’.
The introduction to the Briefing poses the following question:
With the alleged chemical weapons deployment in Syria and the poisoning incident in Salisbury, pressure has increased for further sanctions against Russia. But what measures are already in place?
It begins by:
- summarising the current sanctions framework against Russia by reference to the international community’s reaction to the destabilisation of Ukraine and the annexation of Crimea; and,
- describing the mounting pressure to introduce ‘Magnitsky’ legislation in the UK … a general power … to impose sanctions against human rights abusers.
Sergei Magnitsky was a Russian lawyer who specialised in anti-corruption work. He was arrested in 2008 after alleging that there had been a large-scale theft from the Russian state, sanctioned and carried out by Russian officials. He died after being held in custody for almost a year without charge. During that time, he had been denied treatment for existing medical conditions and had been physically assaulted just before his death.
The original, 2012, US Magnitsky Act targeted only the Russian officials allegedly involved with Sergei Magnitsky’s mistreatment and death in custody. Later versions of the law provided for sanctions against violators of human rights, wherever located, and whatever the nature of the violation.
The current UK sanctions regime against Russia is derived, in large part, from the EU regime and is constituted of Crimea specific sanctions:
- Asset freezes and travel bans in relation to 150 persons
- Asset freezes in relation to 38 entities
- A general import and investment ban applying to Crimea and Sevastopol
- A ban in relation to the provision of Crimea tourism services
- A ban in relation to the export of certain technology related to transport, telecommunications and the energy sector
and sanctions of a more general nature:
- The prohibition of certain financial transactions with five major state-owned Russian banks, three major Russian energy companies and three major Russian defence companies
- An arms and dual-use goods embargo
- A ban on the export of certain energy-related equipment and technology
- The cessation of new financing operations in the Russian Federation by the European Investment Bank
- The suspension of other EU economic cooperation programmes
All require periodic review.
However, in light of the Salisbury incident – the alleged poisoning, with a military-grade nerve agent, of Sergei Skripal and his daughter Yulia – the Briefing describes further action being considered by the UK authorities.
On 14th March 2018, the Prime Minister confirmed that the Government would table Magnitsky amendments to the Sanctions and Anti-Money Laundering Bill, currently before Parliament:
…to strengthen our powers to impose sanctions in response to the violation of human rights. In doing so, we will play our part in an international effort to punish those responsible for the sorts of abuses suffered by Sergei Magnitsky
Adding:
… we will continue to bring all the capabilities of UK law enforcement to bear against serious criminals and corrupt elites. There is no place for these people, or their money, in our country.
On 6th April 2018, the US Treasury Office of Foreign Assets Control (‘OFAC’) updated its Specially Designated Nationals List by adding a raft of Russian individuals and entities in relation to whom / which relevant financial transactions and activities are now prohibited. (Certain exemptions apply until 5th June 2018 provided that they relate to: Maintenance or Wind down of Operations or Existing Contracts; and/or, Transactions Necessary to Divest or Transfer Debt, Equity, or other Holdings in Blocked Persons.)
An immediate impact was felt on the share prices of the extractive industry giants Gazprom (energy), Polyus (gold), Rusal (aluminium), Norilsk Nickel and various Russian banking entities.
On 11th April 2018, the Times described OFAC’s action as:
- targeting the very essence of Vladimir Putin’s state
- being intended to completely recalibrate the relationship [between the USA and Russia]
- having wiped $16 billion off the personal wealth from oligarchical fortunes
It remains to be seen whether the UK’s Magnitsky amendments, and the alacrity with which they will be enforced, will measure up to OFACs extraordinary action.
Categories: Newsflash
