President Trump authorizes new sanctions on Russian sovereign debt; OFAC imposes prohibition on certain U.S. bank loans
On August 1, President Trump issued Executive Order (E.O.) 13883 titled “Administration of Proliferation Sanctions and Amendment of Executive Order 12851,” which authorizes sanctions on new issuances of Russian sovereign debt and directs the U.S. government to attempt to cut off international financing and forbids U.S. bank loans to governments subject to U.S. sanctions for using chemical or nuclear weapons. Among other things, E.O. 13883 allows the Secretary of the Treasury, in consultation with the Secretary of Defense, the authorization to (i) “oppose. . .the extension of any loan or financial or technical assistance to [a sanctioned] country by international financial institutions”; and (ii) “prohibit any U.S. bank from making any loan or providing any credit to the government of [a sanctioned] country, except for loans or credits for the purpose of purchasing food or other agricultural commodities or products.”
Following the issuance of E.O. 13883, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions on August 3 against the Russian Federation, which will “impos[e] a prohibition related to certain U.S. bank loans and will oppose multilateral development bank assistance to the Russian Federation.” According to OFAC, the sanctions are issued in response to Russia’s use of the “Novichok” nerve agent in the U.K. in March 2018. In order to implement the sanctions related to U.S. bank loans, OFAC issued the CBW Act Directive on August 2—scheduled to take effect August 26 following a required Congressional notification period—which “prohibits U.S. banks from participating in the primary market for non-ruble denominated bonds issued by the Russian sovereign and also prohibits U.S. banks from lending non-ruble denominated funds to the Russian sovereign.” OFAC also released a set of FAQs to provide guidance on the CBW Act Directive, including a discussion of actions undertaken by the U.S. government as well as OFAC’s measures for implementing sanctions related to U.S. bank loans.
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