U.S. Sanctions on Russia
Released: 2019-01-11T00:00:00

Introduction

U.S. Sanctions on Russia: A Key Policy Tool

Many observers consider sanctions to be a central element of U.S. policy to counter Russian malign behavior. This includes Russia's invasion of Ukraine in 2014, election interference and cyberattacks, human rights abuses, illicit trade with North Korea, support to the government of Syria, and use of a chemical weapon. The United States also employs sanctions in an effort to deter further objectionable activities by Russia (e.g., expanding the war in Ukraine or launching new attacks in neighboring countries). Most Members of Congress support a robust use of sanctions amid concerns about Russia's international behavior and geostrategic intentions.

Most Russia-related sanctions implemented by the United States have been levied in response to Russia's 2014 invasion of Ukraine. These sanctions are based on national emergency authorities granted the office of the President in the National Emergencies Act (NEA; P.L. 94-412 ; 50 U.S.C. 1621) and International Emergency Economic Powers Act (IEEPA; P.L. 95-223 ; 50 U.S.C. 1701) and exercised by President Barack Obama in 2014 in a series of executive orders (EOs 13660, 13661, 13662, 13685). The Obama and Trump Administrations have used these EOs to impose sanctions on approximately 650 Russian individuals and entities.

The executive branch also has used a variety of EOs and legislation to impose sanctions on Russian individuals and entities in response to a number of other concerns. Legislation that established specifically Russia-related sanctions includes the following:

The Sergei Magnitsky Rule of Law Accountability Act of 2012 ( P.L. 112-208 , Title IV; 22 U.S.C. 5811 note). Support for the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act of 2014, as amended (SSIDES; P.L. 113-95 ; 22 U.S.C. 8901 et seq.). Ukraine Freedom Support Act of 2014, as amended (UFSA; P.L. 113-272 ; 22 U.S.C. 8921 et seq.). Countering Russian Influence in Europe and Eurasia Act of 2017, as amended (CRIEEA; P.L. 115-44 , Countering America's Adversaries Through Sanctions Act [CAATSA], Title II; 22 U.S.C. 9501 et seq.).

The last of these, CRIEEA, codifies Ukraine-related and cyber-related EOs, strengthens sanctions authorities from the 2014 Ukraine-related EOs and legislation, and identifies several new sanctions targets, both possible new categories of designees and additional objectionable behavior. It also establishes congressional review of any action the President takes to ease or lift a variety of sanctions.

Russia Sanctions and the Trump Administration

The Trump Administration's pace in implementing sanctions, particularly primary and secondary sanctions under CRIEEA, has raised some questions in Congress about the Administration's commitment to holding Russia responsible for its malign behavior. Administration officials contend they are implementing a robust set of sanctions on Russia, including new CRIEEA requirements.

As of the start of 2019, the Trump Administration has made 29 designations based on new sanctions authorities in CRIEEA, relating to cyberattacks (§224, 24 designations), human rights abuses (§228, amending SSIDES, 3 designations), and arms sales (§231, 2 designations). The Administration has not made designations under new CRIEEA authorities related to pipeline development, corrupt privatization deals, or support to Syria (§§232-234), nor has it made other designations under SSIDES or UFSA, as amended by CRIEEA (§§225-228), related to weapons transfers abroad, gas export cutoffs, special oil projects, corruption, and sanctions evasion. Some Members of Congress have called on the President to make more designations based on CRIEEA's mandatory sanctions provisions.

The Trump Administration has made many Russia-related designations under sanctions authorities that predate CRIEEA, however. These authorities include Ukraine-related and cyber-related EOs codified by CRIEEA, as well as EOs related to weapons proliferation, North Korea, Syria, transnational crime, and international terrorism. The Administration also has made designations based on earlier legislation, such as the Sergei Magnitsky Act; the Global Magnitsky Human Rights Accountability Act (22 U.S.C. 2656 note); the Iran, North Korea, and Syria Nonproliferation Act, as amended (INKSNA; 50 U.S.C. 1701 note); and the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (CBW Act; 22 U.S.C. 5601 et seq.).

The United States has imposed most Ukraine-related sanctions on Russia in coordination with the European Union (EU). As the invasion of Ukraine progressed in 2014, the Obama Administration argued that EU support for sanctions was crucial, as the EU has more extensive trade and investment ties with Russia than does the United States. Many view U.S.-EU cooperation in imposing sanctions as a tangible indication of U.S.-European solidarity, frustrating Russian efforts to drive a wedge between transatlantic partners. Since 2017, the efforts of Congress and the Trump Administration to tighten U.S. sanctions unilaterally have prompted some degree of concern in the EU about U.S. commitment to sanctions coordination and U.S.-EU cooperation on Russia and Ukraine more broadly.

How Effective Are Sanctions on Russia?

The United States (and, in response to certain activities, the EU and others) has imposed sanctions on Russia mainly to pressure Russia to withdraw from Crimea and eastern Ukraine; to cease malicious cyber activity against the United States, its allies, and partners; to deter and, in some instances, take punitive steps in response to human rights abuses and corruption; to abide by the Chemical Weapons Convention; and to halt Russia's support to the Syrian and North Korean regimes.

Many observers have debated the degree to which sanctions promote change in Russia's behavior. With respect to Ukraine, Russia has not reversed its occupation and annexation of Crimea, nor has it stopped fostering separatism in eastern Ukraine. On the contrary, it has extended military operations. After Russia opened a bridge to Crimea over the Kerch Strait, the waterway connecting the Black Sea to the Sea of Azov, it stepped up its interference with commercial traffic traveling to and from ports in eastern Ukraine. On November 25, 2018, Russian coast guard vessels forcibly prevented three Ukrainian naval vessels from transiting the Kerch Strait, fired on them as they sought to leave the area, and detained and imprisoned their crew members. At the same time, Russia has signed two agreements that recognize the entire occupied region in eastern Ukraine as part of Ukraine, and Russian-led separatist military operations have been limited to areas along the perimeter of the current conflict zone. Russia has not expanded its military aggression to other states.

With respect to other malign activities, the relationship between sanctions and Russian behavior is difficult to determine. Sanctions in response to Russia's malicious cyber-enabled activities, human rights abuses, corruption, use of a chemical weapon, weapons proliferation, and support to Syria and North Korea are relatively limited and highly targeted. The extent to which such sanctions might be expected to change Russian behavior is unclear. To the extent that Russia does change its behavior, other factors besides sanctions could be responsible.

If Russia does not change its behavior in response to sanctions, this may be for a number of reasons. Russian policymakers may be willing to incur the cost of sanctions, whether on the national economy or on their own personal wealth, in furtherance of Russia's foreign policy goals. Sanctions also might have the unintended effect of boosting internal support for the Russian government, whether through appeals to nationalism ("rally around the flag") or through Russian elites' sense of self-preservation. Finally, sanctions may be targeting individuals that have less influence on Russian policymaking than the United States assumes.

Furthermore, the economic impact of sanctions may not be consequential enough to affect Russian policy. Most Russia-related sanctions do not broadly target the Russian economy or entire sectors. Rather, they consist of broad restrictions against specific individuals and entities, as well as narrower restrictions against wider groups of Russian companies. Overall, more than four-fifths of the largest 100 firms in Russia (in 2017) are not directly subject to any U.S. or EU sanctions, including companies in a variety of sectors, such as transportation, retail, services, mining, and manufacturing. Although Russia faced several economic challenges in 2014-2015, including its longest recession in almost 20 years, the 2014 collapse in global oil prices had a larger impact than sanctions. Russia's economy strengthened in 2016 and 2017, as oil prices rose.

The sanctions' relatively low impact on the Russian economy is by design. The Obama Administration and the EU intended for Ukraine-related sanctions, which account for most U.S. and global Russia-related sanctions, to have a limited and targeted economic impact. They sought to target individuals and entities responsible for offending policies and/or associated with key Russian policymakers in a way that would get Russia to change its behavior while minimizing collateral damage to the Russian people or to the economic interests of the countries imposing sanctions. Moreover, some sanctions were intended to put only long-term pressure on the Russian economy, by denying oil companies access to Western technology to modernize their industry or locate new sources of oil. The full economic ramifications of these restrictions potentially have yet to materialize.

There is some evidence that U.S. sanctions on Russia can have broad economic effects if they are applied to economically significant targets, although doing so may create instability in global financial markets. April 2018 sanctions on Rusal, a global aluminum firm, had broad effects that rattled Russian and global financial markets. The sanctions on Rusal marked the first time the United States and the EU imposed full blocking sanctions on a top-20 Russian firm and the first time the Treasury Department appeared prepared to implement CRIEEA-mandated secondary sanctions. In December 2018, however, the Treasury Department announced its intention to remove sanctions on Rusal, pending 30 days for congressional review, on the basis of an agreement that would require Kremlin-connected billionaire Oleg Deripaska, who is subject to sanctions, to relinquish his control over the firm (for more, see " The Section 241 "Oligarch" List ," below).

About the Report

This report provides a comprehensive overview of the use of sanctions in U.S. foreign policy toward Russia. It is compartmentalized, however, so that readers primarily interested in a particular issue, for example sanctions in response to Russia's use of a chemical weapon, may find the relevant information in a subsection of the report.

The report first provides an overview of U.S. sanctions authorities and tools, particularly as they apply to Russia. It next describes various sanctions regimes that the executive branch has used to impose sanctions on Russian individuals and entities or that are available for this purpose, addressing authorities, tools, targets, and historical context. Third, the report briefly discusses countersanctions that Russia has introduced in response to U.S. and other sanctions. Fourth, it addresses the evolution of U.S. coordination with the European Union on Russia sanctions policy, and similarities and differences between U.S. and EU sanctions regimes. Finally, the report assesses the economic impact of sanctions on Russia at the level of the national economy and individual firms.

Use of Economic Sanctions to Further Foreign Policy and National Security Objectives

Economic sanctions provide a range of tools Congress and the President may use to seek to alter or deter the objectionable behavior of a foreign government, individual, or entity in furtherance of U.S. national security or foreign policy objectives.

Scholars have broadly defined economic sanctions as "coercive economic measures taken against one or more countries [or individuals or entities] to force a change in policies, or at least to demonstrate a country's opinion about the other's policies." Economic sanctions may include limits on trade, such as overall restrictions or restrictions on particular exports or imports; the blocking of assets and interest in assets subject to U.S. jurisdiction; limits on access to the U.S. financial system, including limiting or prohibiting transactions involving U.S. individuals and businesses; and restrictions on private and government loans, investments, insurance, and underwriting. Sanctions also can include a denial of foreign assistance, government procurement contracts, and participation or support in international financial institutions.

Sanctions that target third parties—those not engaged in the objectionable activity subject to sanctions but engaged with the individuals or entities that are—are popularly referred to as secondary sanctions . Secondary sanctions often are constructed to deter sanctions evasion, penalizing those that facilitate a means to avoid detection or that provide alternative access to finance.

The United States has applied a variety of sanctions in response to objectionable Russian activities. Most Russia-related sanctions, including most sanctions established by executive order (see " Role of the President ," below), do not target the Russian state directly. Instead, they consist of designations of specific individuals, entities, and vessels on the Specially Designated Nationals and Blocked Persons List (SDN) of the Treasury Department's Office of Foreign Assets Control (OFAC). Sanctions block the U.S.-based assets of those designated as SDNs and generally prohibit U.S. individuals and entities from engaging in transactions with them. In addition, the Secretary of State, in consultation with the Secretary of Homeland Security and Attorney General, is tasked with denying entry into the United States or revoking visas granted to designated foreign nationals.

Sanctions in response to Russia's invasion of Ukraine also consist of sectoral sanctions . Often, sectoral sanctions broadly apply to specific sectors of an economy. In the case of Russia-related sanctions, sectoral sanctions have a narrower meaning; they apply to specific entities in Russia's financial, energy, and defense sectors that OFAC has identified for inclusion on the Sectoral Sanctions Identifications (SSI) List. These sectoral sanctions prohibit U.S. individuals and entities from engaging in specific kinds of transactions related to lending, investment, and/or trade with entities on the SSI List, but they permit other transactions.

Another major category of Russia-related sanctions consists of a presumption of denial to designated end users for export licenses. The Department of Commerce's Bureau of Industry and Security (BIS) places entities subject to export restrictions on the Entity List (Supplement No. 4 to Part 744 of the Export Administration Regulations).

Role of the President

The President, for a variety of reasons related to constitutional construction and legal challenges throughout U.S. history, holds considerable authority when economic sanctions are used in U.S. foreign policy. If Congress enacts sanctions in legislation, the President is to adhere to the provisions of the legislation and is responsible for determining the individuals and entities to be subject to sanctions.

The President also often has the authority to be the sole decisionmaker in initiating and imposing sanctions. The President does so by determining, pursuant to the International Emergency Economic Powers Act (IEEPA), that there has arisen an "unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States." The President then declares that a national emergency exists, as provided for in the National Emergencies Act (NEA), submits the declaration to Congress, and establishes a public record by publishing it in the Federal Register . Under a national emergency, the President may further invoke the authorities granted his office in IEEPA to investigate, regulate, or prohibit transactions in foreign exchange, use of U.S. banking instruments, the import or export of currency or securities, and transactions involving property or interests in property under U.S. jurisdiction.

President Obama invoked NEA and IEEPA authorities to declare that Russia's 2014 interference in Ukraine constituted a threat to the United States. On that basis, he declared the national emergency on which most Ukraine-related sanctions are based. President Obama and President Trump also have used the NEA and IEEPA to declare national emergencies related to cyber-enabled malicious activities and election interference.

Role of Congress

Congress influences which foreign policy and national security concerns the United States responds to with sanctions by enacting legislation to authorize, and in some instances require, the President to use sanctions. Congress has taken the lead in authorizing or requiring the President (or executive branch) to use sanctions in an effort to deter weapons proliferation, international terrorism, illicit narcotics trafficking, human rights abuses, regional instability, cyberattacks, corruption, and money laundering. Legislation can define what sanctions the executive branch is to apply, as well as the conditions that need to be met before these sanctions may be lifted.

One limitation on the role of Congress in establishing sanctions originates in the U.S. Constitution's bill of attainder clause. Congress may not enact legislation that "legislatively determines guilt and inflicts punishment upon an identifiable individual without provision of the protections of a judicial trial." In other words, Congress may enact legislation that broadly defines categories of sanctions targets and objectionable behavior, but it is left to the President to "[determine] guilt and [inflict] punishment"—that is, to populate the target categories with specific individuals and entities.

Sanctions Implementation

In the executive branch, several agencies have varying degrees of responsibility in implementing and administering sanctions. Primary agencies, broadly speaking, have responsibilities as follows:

Department of the Treasury's OFAC designates SDNs to be subject to the blocking of U.S.-based assets; prohibits transactions; licenses transactions relating to exports (and limits those licenses); restricts access to U.S. financial services; restricts transactions related to travel, in limited circumstances; and identifies entities for placement on the SSI List as subject to investment and trade limitations. Department of State restricts visas, arms sales, and foreign aid; implements arms embargos required by the United Nations; prohibits the use of U.S. passports to travel, in limited circumstances; and downgrades or suspends diplomatic relations. Department of Commerce's BIS restricts licenses for commercial exports, end users, and destinations. Department of Defense restricts arms sales and other forms of military cooperation. Department of Justice investigates and prosecutes violations of sanctions and export laws.

U.S. Russia-Related Sanctions

The United States imposes sanctions on Russia in accordance with several laws and executive orders. In 2012, the United States introduced a new sanctions regime on Russia in response to human rights abuses. In 2014, the United States introduced an extensive new sanctions regime on Russia in response to Russia's invasion of Ukraine. In 2016, the United States imposed sanctions on Russian individuals and entities for election interference. In 2017, Congress introduced and the President signed into law legislation that strengthened existing sanctions authorities and established several new sanctions in response to Russia's invasion of Ukraine, malicious cyber-enabled activities, human rights abuses, and corruption. The United States also has imposed sanctions on Russian individuals and entities in response to the use of a chemical weapon, weapons proliferation, trade with North Korea in violation of U.N. Security Council requirements, support for the Syrian government, transnational crime, and terrorism.

For an overview of Russia-related sanctions authorities and designations, see Appendix B .

Sergei Magnitsky Act and the Global Magnitsky Act

In December 2012, Congress passed and the President signed into law the Sergei Magnitsky Rule of Law Accountability Act of 2012 (hereinafter the Sergei Magnitsky Act). This legislation bears the name of Sergei Magnitsky, a Russian lawyer and auditor who died in prison in November 2009 after uncovering massive tax fraud that allegedly implicated government officials. The act entered into law as part of a broader piece of legislation related to U.S.-Russia trade relations (see text box entitled "Linking U.S.-Russia Trade to Human Rights," below).

The Sergei Magnitsky Act requires the President to impose sanctions on those he identifies as having been involved in the "criminal conspiracy" that Magnitsky uncovered and in his subsequent detention, abuse, and death. The act also requires the President to impose sanctions on those he finds have committed human rights abuses in Russia against individuals fighting to expose the illegal activity of government officials or seeking to exercise or defend internationally recognized human rights and freedoms.

The Global Magnitsky Human Rights Accountability Act ( P.L. 114-328 , Title XII, Subtitle F; 22 U.S.C. 2656 note) followed in 2016. This act authorizes the President to apply globally the sanctions authorities aimed at the treatment of whistleblowers and human rights defenders in Russia in the 2012 act. The Global Magnitsky Act also authorizes the President to impose sanctions against government officials and associates around the world responsible for acts of significant corruption.

Of the 49 individuals designated pursuant to the Sergei Magnitsky Act, 38 are directly associated with the alleged crimes that Magnitsky uncovered and his subsequent ill-treatment and death. OFAC has designated another nine individuals, all from Russia's Chechnya region, for human rights violations and killings in that region and for the 2004 murder of Paul Klebnikov, the American chief editor of the Russian edition of Forbes . Two designations target the suspected killers of former Russian spy Alexander Litvinenko in London in 2006.

In December 2017, President Trump issued EO 13818 to implement the Global Magnitsky Act, in the process expanding the target for sanctions to include those who commit any "serious human rights abuse" around the world, not just human rights abuse against whistleblowers and human rights defenders. At the same time, the Administration issued the first 13 designations under the act; among them were two Russian citizens designated for their alleged participation in high-level corruption.

Ukraine-Related Executive Orders and Legislation

Most OFAC designations of Russian individuals and entities have been in response to Russia's 2014 invasion and annexation of Ukraine's Crimea region and Russia's subsequent fostering of separatist conflict in eastern Ukraine. In 2014, the Obama Administration said it would impose increasing costs on Russia, in coordination with the EU and others, until Russia "abides by its international obligations and returns its military forces to their original bases and respects Ukraine's sovereignty and territorial integrity."

The United States has imposed Ukraine-related sanctions on more than 650 individuals, entities, and vessels (see Table 1 and Table B-1 ). In addition to Treasury-administered sanctions, the Department of Commerce's BIS denies export licenses for military, dual-use, or energy-related goods to designated end users, most of which also are subject to Treasury-administered sanctions. The basis for these Ukraine-related sanctions is a series of four executive orders (EOs 13660, 13661, 13662, and 13685) that President Barack Obama issued in 2014.

Two of President Obama's Ukraine-related EOs target specific objectionable behavior. EO 13660 provides for sanctions against those the President determines have undermined democratic processes or institutions in Ukraine; undermined Ukraine's peace, security, stability, sovereignty, or territorial integrity; misappropriated Ukrainian state assets; or illegally asserted governmental authority over any part of Ukraine. EO 13685 provides for sanctions against those the President determines have conducted business, trade, or investment in occupied Crimea.

The other two EOs provide for sanctions against a broader range of targets. EO 13661 provides for sanctions against any Russian government officials, those who offer them support, and those operating in the Russian arms sector. EO 13662 provides for sanctions against individuals and entities that operate in key sectors of the Russian economy, as determined by the Secretary of the Treasury.

Specially Designated Nationals

OFAC established four SDN lists based on the four Ukraine-related EOs: two lists for those found to have engaged in specific activities related to the destabilization and invasion of Ukraine, and two lists for broader groups of targets. As of the start of 2019, OFAC has placed more than 365 individuals, entities, and vessels on the four Ukraine-related SDN lists (see Table 1 and Table B-1 ).

OFAC has drawn on EO 13660 to designate individuals and entities for their role in destabilizing and invading Ukraine. Designees mainly include former Ukrainian officials (including ex-President Viktor Yanukovych and a former prime minister), de facto Ukrainian separatist officials in Crimea and eastern Ukraine, Russian-based fighters and patrons, and associated companies or organizations.

OFAC has drawn on EO 13685 to designate primarily Russian or Crimea-based companies and subsidiaries that operate in occupied Crimea.

OFAC has drawn on EO 13661 and EO 13662 to designate a wider circle of Russian government officials, members of parliament, heads of state-owned companies, and other prominent businesspeople and associates, including individuals the Treasury Department has considered part of Russian President Vladimir Putin's "inner circle." It also has designated related entities.

Among the designated government officials and heads of state-owned companies are Russia's minister of internal affairs, Secretary of the Security Council, directors of the Foreign Intelligence Service and National Guard Troops; the chairs of both houses of parliament; and the chief executive officers of state-owned oil company Rosneft, gas company Gazprom, defense and technology conglomerate Rostec, and banks VTB and Gazprombank.

OFAC also has designated several politically connected Russian billionaires (whom the Treasury Department refers to as oligarchs) under EO 13661 and, as of April 2018, EO 13662. Designees include 11 of Russia's wealthiest 100 individuals, including 2 of the top 10, as estimated by Forbes . Of these 11 billionaires, 7 were designated in April 2018.

The entities OFAC has designated include holdings owned or controlled by SDNs. These holdings include Bank Rossiya, which the Treasury Department has described as the "personal bank" of Russian senior officials; other privately held banks and financial services companies (e.g., SMP Bank and the Volga Group); private aluminum company Rusal; gas pipeline construction company Stroygazmontazh; construction company Stroytransgaz; electric company EuroSibEnergo; and vehicle manufacturer GAZ Group.

Designated entities also include several defense and arms firms, such as the state-owned United Shipbuilding Corporation, Almaz-Antey (air defense systems and missiles), Uralvagonzavod (tanks and other military equipment), NPO Mashinostroyenia (missiles and rockets), and several subsidiaries of the state-owned defense and hi-tech conglomerate Rostec, including the Kalashnikov Group (firearms).

Sectoral Sanctions Identifications

Prior to April 2018, OFAC used EO 13662 solely as the basis for identifying entities for inclusion on the SSI List. Individuals and entities under U.S. jurisdiction are restricted from engaging in specific transactions with entities on the SSI List, which OFAC identifies as subject to one of four directives under the EO. SSI restrictions apply to new equity investment and financing (other than 14-day lending) for identified entities in Russia's financial sector (Directive 1); new financing (other than 60-day lending) for identified entities in Russia's energy sector (Directive 2); and new financing (other than 30-day lending) for identified entities in Russia's defense sector (Directive 3). A fourth directive prohibits U.S. trade with identified entities related to the development of Russian deepwater, Arctic offshore, or shale projects that have the potential to produce oil and, amended as a result of requirements enacted in CRIEEA in 2017, such projects worldwide in which those entities have an ownership interest of at least 33% or a majority of voting interests.

As of the start of 2019, OFAC has placed 13 Russian companies and their subsidiaries and affiliates on the SSI List. The SSI List includes major state-owned companies in the financial, energy, and defense sectors; it does not include all companies in those sectors. The parent entities on the SSI List, under their respective directives, consist of the following:

Four large state-owned banks (Sberbank, VTB Bank, Gazprombank, Rosselkhozbank) and VEB, which "acts as a development bank and payment agent for the Russian government"; State-owned oil companies Rosneft and Gazpromneft, pipeline company Transneft, and private gas producer Novatek; State-owned defense and hi-tech conglomerate Rostec; and For restrictions on transactions related to deepwater, Arctic offshore, or shale oil projects, Rosneft and Gazpromneft, private companies Lukoil and Surgutneftegaz, and state-owned energy company Gazprom (Gazpromneft's parent company).

Ukraine-Related Legislation

In addition to issuing four Ukraine-related executive orders in 2014, President Obama signed into law the Support for the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act (SSIDES) on April 3, 2014, and the Ukraine Freedom Support Act (UFSA) on December 18, 2014. SSIDES was introduced in the Senate on March 12, 2014, six days after President Obama issued the first Ukraine-related EO, declaring a national emergency with respect to Ukraine. The President signed UFSA into law the day before he issued his fourth Ukraine-related EO, prohibiting trade and investment with occupied Crimea. CRIEEA, which President Trump signed into law on August 2, 2017, amended SSIDES and UFSA (for more on CRIEEA, see " Countering Russian Influence in Europe and Eurasia Act of 2017 ," below).

Both SSIDES and UFSA expanded upon the actions the Obama Administration took in response to Russia's invasion of Ukraine. President Obama, however, did not cite SSIDES or UFSA as an authority for designations or other sanctions actions. In November 2018, President Trump cited SSIDES, as amended by CRIEEA (Section 228), to designate two individuals and one entity for serious human rights abuses in territories forcibly occupied or controlled by Russia. President Trump has not cited UFSA as an authority for any sanctions designations.

Sanctions authorities in SSIDES and UFSA overlap with steps taken by the President in issuing executive orders under emergency authorities. Many individuals and entities OFAC designated for their role in destabilizing Ukraine, for example, could have been designated pursuant to SSIDES. Similarly, some of the individuals OFAC designated in April 2018 as "oligarchs and elites who profit from [Russia's] corrupt system" potentially could have been designated pursuant to the authority in SSIDES that provides for sanctions against those responsible for significant corruption. In addition, Russian arms exporter Rosoboronexport, subject to sanctions under UFSA, is subject to sanctions under other authorities (see " Weapons Proliferation ").

SSIDES and UFSA contain additional sanctions provisions that the executive branch could use. These include sanctions against Russian individuals and entities for corruption, arms transfers to Syria and separatist territories, and energy export cutoffs. They also include potentially wide-reaching secondary sanctions against foreign individuals and entities that facilitate significant transactions for Russia-related designees, help them to evade sanctions, or make significant investments in certain oil projects in Russia (for details, see text box entitled "Sanctions in Ukraine-Related Legislation" below).

Cyber-Related Executive Orders and Legislation

The executive branch draws on national emergency authorities to impose sanctions for a range of malicious cyber-enabled activities, including activities the United States has attributed to the Russian government. On April 1, 2015, President Obama issued EO 13694, invoking national emergency authorities to declare that "the increasing prevalence and severity of malicious cyber-enabled activities originating from, or directed by persons located … outside the United States, constitute an unusual and extraordinary threat." EO 13694 targeted those who (1) engage in cyberattacks against critical infrastructure, (2) for financial or commercial gain, or (3) to significantly disrupt the availability of a computer or network. Although the President declared the national emergency relating to malicious cyber-enabled activities in April 2015, he did not announce the first designations until December 2016.

On December 28, 2016, President Obama issued EO 13757, which amended EO 13694 to establish sanctions against those engaged in "tampering with, altering, or causing a misappropriation of information with the purpose or effect of interfering with or undermining election processes or institutions." Under the amended EO, OFAC designated four individuals and five entities for election-related malicious cyber activities. These designees included Russia's leading intelligence agency (Federal Security Service, or FSB), military intelligence (Main Intelligence Directorate, or GRU), and four GRU officers. In addition, OFAC designated two individuals for financial-related malicious cyber-enabled activities.

In March 2018, the Trump Administration designated 13 individuals and 3 entities for election-related malicious cyber activities. These designees included the Internet Research Agency (IRA), the Russian "troll factory" that the Department of Justice's Special Counsel's Office indicted for crimes related to U.S. election interference in February 2018, as well as 12 of its employees, its alleged financial backer, and two of the financier's companies, all of which were also indicted.

In June and August 2018, OFAC designated five individuals and seven entities that the Treasury Department referred to as FSB enablers. One of these entities, Divetechnoservices, "procured a variety of underwater equipment and diving systems for Russian government agencies" and "was awarded a contract to procure a submersible craft." The Treasury Department noted that Russia "has been active in tracking undersea communications cables, which carry the bulk of the world's telecommunications data."

In December 2018, OFAC designated two individuals and four entities for cyber-enabled election interference. According to the Treasury Department, these designees were "related to Project Lakhta, a broad Russian effort that includes the IRA, which has sought to interfere in political and electoral systems worldwide" and has the same financial backers as the IRA. The designees included a Project Lakhta employee whom the Department of Justice charged in September 2018 for conspiracy to defraud the United States related to Project Lakhta's efforts "to interfere in the U.S. political system, including the 2018 midterm election." Designees also included four entities that represent themselves as media outlets and the head of one of these entities.

CRIEEA, enacted in August 2017, codified EO 13694, as amended, and, in Section 224, enlarged the scope of cyber-related activities subject to sanctions to include a range of activities conducted on behalf of the Russian government that undermine "cybersecurity against any person, including a democratic institution, or government" (for more on CRIEEA, see " Countering Russian Influence in Europe and Eurasia Act of 2017 ," below). In March 2018, the Trump Administration designated, pursuant to Section 224, the FSB, GRU, and four GRU officers, all of which OFAC previously had designated under EO 13694, as well as two other GRU officers, for the 2017 "NotPetya" ransomware attack that targeted Ukraine and spread to other countries. In June 2018, OFAC designated one more entity under this authority.

In December 2018, OFAC designated 13 GRU officers for undermining cybersecurity under Section 224. OFAC designated nine of the officers for cyber-related election interference and four for cyber-enabled operations against the World Anti-Doping Agency (WADA) and/or the Organization for the Prohibition of Chemical Weapons (OPCW). All of these officers also have been indicted by the Department of Justice for related crimes.

In addition, OFAC designated two GRU officers for the "attempted assassination" in the United Kingdom of former Russian military intelligence officer Sergei Skripal and his daughter through the use of a lethal nerve agent (for more, see " Use of a Chemical Weapon ," below). Although the attempted assassination was not cyber-related, OFAC used Section 224 to designate these officers as agents of the previously designated GRU.

Countering Russian Influence in Europe and Eurasia Act of 2017

On August 2, 2017, President Trump signed the Countering America's Adversaries Through Sanctions Act of 2017 (CAATSA), which includes as Title II the Countering Russian Influence in Europe and Eurasia Act of 2017 (CRIEEA). CRIEEA codifies Ukraine-related and cyber-related EOs (discussed above), strengthens sanctions authorities from Ukraine-related EOs and legislation, and establishes several new sanctions. It also establishes congressional review of any action the President takes to ease or lift a variety of sanctions.

As of the start of 2019, the Trump Administration has made 29 designations based on new sanctions authorities in CRIEEA, relating to cyberattacks (§224, 24 designations), human rights abuses (§228, amending SSIDES, 3 designations), and arms sales (§231, 2 designations). The Administration has not made designations under other new CRIEEA authorities related to pipeline development, questionable privatization deals, and support to Syria (§§232-234), nor has it made other designations under SSIDES or UFSA as amended by CRIEEA (§§225-228) related to weapons transfers abroad, certain oil projects, corruption, and sanctions evasion. Some Members of Congress have called on the President to make more designations based on CRIEEA's mandatory sanctions provisions.

Trump Administration designations pursuant to CRIEEA include the following (some of which are discussed in more detail above, in " Ukraine-Related Executive Orders and Legislation " and " Cyber-Related Executive Orders and Legislation "):

On March 15, 2018, OFAC made its first designations under new CRIEEA authorities in response to actions taken to undermine cybersecurity (§224). OFAC designated two entities and six individuals responsible for a 2017 global ransomware attack. Separately, OFAC made 16 designations for election-related cyber-enabled activities pursuant to EO 13694 (which was codified by CRIEEA). On April 6, 2018, OFAC imposed sanctions on 7 politically connected Russian billionaires (referred to by the Treasury Department as oligarchs), 12 companies they own or control, and 17 government officials. OFAC made these designations under the Ukraine-related EOs codified by CRIEEA. OFAC has made four other rounds of designations under these Ukraine-related EOs: on June 20, 2017 (before CRIEEA entered into law), when it designated as SDNs or placed on the SSI List 58 individuals and entities; on January 26, 2018, when it designated or placed on the SSI List 42 individuals and entities; on November 8, 2018, when it designated 9 individuals and entities; and on December 19, 2018, when it designated 1 individual. On June 11 and August 21, 2018, OFAC designated five individuals and seven entities it referred to as FSB enablers for malicious cyber-enabled activities pursuant to EO 13694. OFAC also designated one of these entities pursuant to Section 224 of CRIEEA. On September 20, 2018, the Administration imposed its first secondary sanctions pursuant to Section 231 of CRIEEA, against those engaged in "significant transactions" with the Russian defense or intelligence sectors. OFAC designated the Equipment Development Department of China's Central Military Commission, as well as its director, for taking delivery of 10 Su-35 combat aircraft in December 2017 and S-400 surface-to-air missile system-related equipment in 2018. On November 8, 2018, OFAC designated two individuals and one entity for committing serious human rights abuses in Russian-occupied regions of Ukraine pursuant to SSIDES, as amended by CRIEEA, Section 228. On December 19, 2018, OFAC designated two individuals and four entities for cyber-enabled election interference pursuant to EO 13694. OFAC also designated 15 individuals pursuant to Section 224 of CRIEEA for cyber-related election interference and/or cyberattacks against WADA or the OPCW, as well as for the attempted assassination in the UK of a former Russian intelligence officer and his daughter.

As of the start of 2019, the Administration has not imposed sanctions under other CRIEEA authorities (§§225-228, 232-234). The Administration could use these authorities to target the following:

significant foreign investment in deepwater, Arctic offshore, or shale oil projects within Russia (§225, amending UFSA); foreign financial institutions that facilitate certain transactions for Russia's defense or energy sectors, or for those subject to Ukraine-related sanctions (§226, amending UFSA); those who engage in significant corruption (§227, amending UFSA); sanctions evaders and foreign persons that facilitate significant transactions for those subject to Russia-related sanctions (§228, amending SSIDES); investment in Russia's energy export pipelines (§232); investment (or facilitating investment) that contributes to the privatization of Russia's state-owned assets "in a manner that unjustly benefits" government officials and associates (§233); and any foreign person who supports or facilitates Syria's acquiring or developing a variety of advanced or prohibited weapons and defense articles, including weapons of mass destruction (§234).

Issues Related to CRIEEA Implementation

The Trump Administration's pace in implementing sanctions, particularly primary and secondary sanctions under CRIEEA, has raised some questions in Congress about the Administration's commitment to holding Russia responsible for its malign activities. Administration officials contend they are implementing a robust set of Russia-related sanctions, including new CRIEEA requirements.

When President Trump signed CAATSA (with CRIEEA as Title II) into law in August 2017, his signing statement noted that the legislation was "significantly flawed" and "included a number of clearly unconstitutional provisions." He said he would implement the legislation "in a manner consistent with the President's constitutional authority to conduct foreign relations."

In the first few months of 2018, some Members of Congress expressed concern about the absence of new designations pursuant to CRIEEA's new authorities. Resolutions were introduced in the Senate, on February 12, 2018, and the House, on February 26, 2018, calling on the President to exercise relevant mandatory sanctions authorities under CRIEEA in response to Russia's "continued aggression in Ukraine and forcible and illegal annexation of Crimea and assault on democratic institutions around the world, including through cyber attacks." On March 15, 2018, OFAC made its first designations, related to cyberattacks, under CRIEEA's new authorities.

The Administration might not invoke various CRIEEA authorities for a number of reasons. First, the Administration might cite only a relevant executive order, for example, and not legislation with corresponding authority or requirements. Second, sanctions provisions have different evidentiary requirements, which could lead the Administration to choose one over another; it also might be easier to later remove a designation made under one authority than under another. Third, investigations can take time; if OFAC has not made a designation, it may still be investigating activity that is potentially subject to sanctions. Finally, the Administration may seek to use a particular authority to deter objectionable activity; if that deterrence effort is successful, it may need to make only a few (or no) designations based on that authority.

Section 231 Sanctions on Transactions with Russia's Defense and Intelligence Sectors

Congress and the Administration have worked to align their positions on one of CRIEEA's new authorities, Section 231, which imposes sanctions on individuals and entities that engage in significant transactions, including arms purchases, with Russia's defense and intelligence sectors.

In October 2017, the State Department issued initial guidance regarding Section 231 sanctions. It indicated it would examine "a wide range of factors ... in looking at any individual case" to determine whether a "significant transaction" had occurred. These factors "may include, but are not limited to, the significance of the transaction to U.S. national security and foreign policy interests, in particular whether it has a significant adverse impact on such interests; the nature and magnitude of the transaction; and the relation and significance of the transaction to the defense or intelligence sector of the Russian government." A senior State Department official said the State Department would "take a close look around the world at transactions and dealings that we think may fall within the scope of this sanctions provision, and we're going to look at really robust engagement ... and talk to partners and allies about where we find transactions that may be problematic."

In October 2017, the Administration fulfilled a Section 231 requirement to "specify the persons that are part of, or operate for or on behalf of, [Russia's] defense and intelligence sectors." The State Department emphasized that the 39 entities on the list were not subject to sanctions but that secondary sanctions could be imposed on individuals and entities "that are determined to knowingly engage in a significant transaction with a person specified in the Guidance on or after the date of enactment of the Act."

In January 2018, the Administration indicated that the threat of Section 231 sanctions was having an effect without making any designations. State Department spokesperson Heather Nauert said the State Department estimated that Section 231 had led "foreign governments [to abandon] planned or announced purchases of several billion dollars in Russian defense acquisitions." In February 2018, then-Secretary of State Rex Tillerson reiterated that "we've been advising countries around the world as to what the impact on their relationship and purchases that they might be considering with Russia, and many have reconsidered those and have decided to not proceed with those discussions." In August 2018, U.S. Assistant Secretary of State Wess Mitchell said that "the chilling effect" of Section 231 had led to some $8 billion to $10 billion in "foreclosed arms deals."

At the same time, the Administration sought greater flexibility with regard to Section 231 sanctions. As originally enacted, Section 231 allowed the President to waive the application of sanctions for national security reasons or to "further the enforcement of this title," but only if the President certified that Russia had "made significant efforts to reduce the number and intensity of cyber intrusions." In addition, the President could delay the imposition of sanctions, if the President certified that an individual or entity was "substantially reducing the number of significant transactions" it makes with Russia's defense or intelligence sector.

In April 2018, then-Secretary of Defense James Mattis asked Congress to consider introducing a more "flexible [national security] waiver authority." Otherwise, he said, "we prevent ourselves from acting in our own best interest and place an undue burden on our allies and partners." In July 2018, Secretary Mattis wrote to the chairpersons of the House and Senate Armed Services Committees to request the introduction of a limited national security waiver that "would enable allied nations to simultaneously sustain their current force while they move to a closer security relationship with the U.S." In so doing, the United States would be able to support those "whose goal is to end reliance on Russian weapons sales…. Failure to provide waiver relief would deny the U.S. a very effective tool to undermine Russian influence in many areas of the world."

In response to Secretary Mattis's request, Congress amended Section 231 in the John S. McCain National Defense Authorization Act for Fiscal Year 2019 ( P.L. 115-232 , §1294). The amendment provides for a national security waiver that does not require congressional review but does require the President to certify a transaction would not (1) be with an entity that directly participated in or facilitated cyber intrusions, (2) endanger the United States' multilateral alliances or ongoing operations, (3) increase the risk of compromising U.S. defense systems, or (4) negatively impact defense cooperation with the country in question. The President also must certify that the country is taking steps to reduce the share of Russian-produced arms and equipment in its total inventory or is cooperating with the United States on other matters critical to U.S. national security. As of the start of 2019, the Administration has not used this waiver authority.

On September 20, 2018, OFAC made its first designations pursuant to Section 231 against the Equipment Development Department of China's Central Military Commission, as well as its director, for taking delivery from Russia of 10 Su-35 combat aircraft in December 2017 and S-400 surface-to-air missile system-related equipment in 2018.

In September 2018, the State Department also expanded and formalized the list of individuals and entities it considers part of Russia's defense and intelligence sectors. Now referring to this list as the List of Specified Persons, the State Department indicated that "any person who knowingly engages in a significant transaction with any of these persons is subject to mandatory sanctions under CRIEEA section 231." The State Department again expanded the list in December 2018.

The Section 241 "Oligarch" List

CRIEEA, in Section 241, required the Administration to submit a report to Congress that includes "an identification of any indices of corruption" among "the most significant senior foreign political figures and oligarchs in the Russian Federation, as determined by their closeness to the Russian regime and their net worth." The Section 241 requirement neither authorizes nor requires the President to impose sanctions on individuals included in the report.

The Treasury Department submitted this report in unclassified form with a classified annex in January 2018. The unclassified report drew on publicly available lists of political figures and wealthy Russians, without assessments of their closeness to the regime or "indices of corruption." According to the Treasury Department, the classified annex contains an "extremely thorough analysis" of information pertaining, among other things, to "links to corruption, and international business affiliations of the named Russian persons."

Many observers speculated that the list—or a more tailored version, possibly based on information from the classified annex—might serve as the basis for new designations. In January 2018 testimony to the Senate Committee on Banking, Housing, and Urban Affairs, Secretary of the Treasury Steven Mnuchin indicated that "we intend to now use that report and that intelligence to go forward with additional sanctions."

On April 6, 2018, OFAC designated several politically connected Russian billionaires (whom the Treasury Department referred to as oligarchs), companies owned or controlled by these individuals, and government officials. OFAC made these designations under Ukraine-related authorities codified by CRIEEA. The Treasury Department, however, suggested the designations were in the spirit of CRIEEA's new authorities, as they were "in response to worldwide malign activity" and not just Russia's invasion of Ukraine. The Treasury Department added that "Russian oligarchs and elites who profit from [a] corrupt system will no longer be insulated from the consequences of their government's destabilizing activities."

The designation of Rusal, a leading global producer of aluminum, attracted global attention. The move marked the first time OFAC designated one of Russia's 20 largest companies. International attention also focused on the fact that designating Rusal opened the door to the possible imposition of wide-ranging secondary sanctions, mandated by CRIEEA, on foreign individuals and entities that facilitate significant transactions on behalf of designees. Rusal's designation made foreign banks and firms reluctant to engage in transactions with the firm.

The Trump Administration appears to have been responsive to international concerns regarding Rusal's designation. On April 23, 2018, the Administration provided a six-month wind-down period for transactions with Rusal that it has repeatedly prolonged and indicated it would remove sanctions against the firm if Kremlin-connected billionaire Oleg Deripaska, who is subject to sanctions, divested and ceded control (since his control was the justification for Rusal's designation in the first place). On December 19, 2018, the Treasury Department announced that an agreement on eliminating Deripaska's control of Rusal's parent company had been reached and, accordingly, notified Congress it intended to terminate sanctions on Rusal and two related companies in 30 days. Pursuant to CRIEEA, Congress has authority to review this action and to prevent its implementation, if Congress passes a joint resolution of disapproval by a veto-proof majority within 30 days.

Other Sanctions Programs

The United States imposes economic sanctions on Russian individuals and entities in response to a variety of other objectionable activities. These activities include the use of a chemical weapon, weapons proliferation, trade with North Korea in violation of U.N. Security Council requirements, support for the Syrian government, transnational crime, and terrorism.

Use of a Chemical Weapon

On August 6, 2018, Secretary of State Michael Pompeo determined that in March 2018 the Russian government used a chemical weapon in the United Kingdom in contravention of international law (see text box entitled "U.S. Determination of Russia's Use of a Chemical Weapon," below). This finding triggered the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (CBW Act).

The CBW Act requires the President (who, in 1993, delegated CBW Act authorities to the Secretary of State) to terminate arms sales; export licenses for U.S. Munitions List items; foreign military financing; and foreign assistance, other than that which addresses urgent humanitarian situations or provides food, agricultural commodities, or agricultural products. The act also requires the President to deny credit, credit guarantees, or other financial assistance from the U.S. government, including Export-Import Bank programs, and to deny export licenses for goods controlled for national security reasons (the Commodity Control List). The act requires the imposition "forthwith" of these sanctions upon determining that a chemical weapon has been used.

On August 27, 2018, Assistant Secretary of State for International Security and Nonproliferation Christopher Ford announced the establishment of these sanctions. However, he invoked national security waiver authority to allow for the continuation of foreign assistance, exports related to government space cooperation and commercial space launches, and export licensing for national security-sensitive goods and technology in specific categories related to civil aviation safety, deemed exports or reexports on a case-by-case basis, wholly owned U.S. subsidiaries operating in Russia, and commercial end users for commercial purposes.

Within three months after the initial determination (in this case, early November 2018), the CBW Act also requires the President to take further economic and diplomatic punitive steps unless he can determine and certify to Congress that Russia

"is no longer using chemical or biological weapons in violation of international law or using lethal chemical or biological weapons against its own nationals," "has provided reliable assurances that it will not in the future engage in any such activities, and" "is willing to allow on-site inspections by United Nations observers or other internationally recognized, impartial observers, or other reliable means exist, to ensure" that Russia is not using chemical or biological weapons in violation of international law or against its own nationals.

If the President does not certify on all these terms, he, in consultation with Congress, is required to

oppose support to Russia in international financial institutions; prohibit U.S. banks from making loans or providing credit to the Russian government, other than those related to the purchase of food or other agricultural commodities or products; prohibit exports to Russia of all other goods and technology, except food and other agricultural commodities and products; restrict importation into the United States of articles that are of Russia-origin growth, product, or manufacture; downgrade or suspend diplomatic relations; and set in motion the suspension of foreign air carriers owned or controlled by Russia "to engage in foreign air transportation to or from the United States."

As of the start of 2019, the Secretary of State had not levied a new round of sanctions, nor had the President determined that Russia meets the three conditions needed to avert sanctions. On November 6, 2018, the State Department informed Congress that it "could not certify that Russia met the required conditions" and intends "to proceed in accordance with the terms of the CBW Act, which directs the implementation of additional sanctions." In September 2018 testimony to the House Committee on Foreign Affairs, then-Assistant Secretary of State Manisha Singh said "we intend to impose a very severe second round of sanctions under the CBW. The global community will not tolerate behavior such as we have seen from Russia, especially in poisoning and killing its own citizens."

The CBW Act authorizes the President to waive sanctions if he finds it essential to U.S. national security interests to do so and notifies Congress at least 15 days in advance. The President also may waive sanctions if he finds "that there has been a fundamental change in the leadership and policies of the government of that country, and if the President notifies the Congress at least 20 days before the waiver takes effect."

CBW-related sanctions remain in place for at least a year. They may be removed only after the President determines and certifies to Congress that the three conditions stated above have been met and that Russia is making restitution to those affected by the use of the chemical weapon.

Weapons Proliferation

Several laws require the President to impose sanctions on those he determines have engaged in trade in weapons of mass destruction or advanced conventional weapons. Restrictions cover a range of activities but generally include a one- to two-year cutoff of procurement contracts with the U.S. government and restrictions on import and export licensing. Restrictions also may include a denial of U.S. foreign aid, sales of defense articles and defense services subject to U.S. export control for national security and foreign policy purposes (U.S. Munitions List items), and export licenses for dual-use goods and services (Commerce Control List).

Pursuant to the Iran, North Korea, and Syria Nonproliferation Act, as amended (INKSNA), Russian state-owned arms exporter Rosoboronexport and six other Russian defense entities are denied most U.S. government procurement contracts, export licenses, and trade in U.S. Munitions List-controlled goods and services. Weapons proliferation sanctions against Rosoboronexport are in addition to Ukraine-related sectoral sanctions imposed on the agency in December 2015 and its designation in April 2018 as an SDN for providing support to the Syrian government. Restrictions against entering into government contracts and other transactions with Rosoboronexport have been stated in annual Defense appropriations acts since 2013.

The prohibitions against transactions with Rosoboronexport do not apply to contracts related to the maintenance or repair of Mi-17 helicopters purchased by the United States "for the purpose of providing assistance to the security forces of Afghanistan, as well as for the purpose of combating terrorism and violent extremism globally." They also do not apply to procurement related to the purchase or maintenance of optical sensors that "improve the U.S. ability to monitor and verify Russia's Open Skies Treaty compliance."

In October 2012, the Department of Commerce's BIS imposed restrictions on 119 Russian individuals and entities, and 45 others from 11 other countries, for suspected involvement in procurement and delivery of items to Russia for military-related and other governmental or related end uses in violation of the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations. BIS periodically has imposed restrictions on other Russian individuals and entities for suspected violations of the EAR with respect to exports to Russia for military and other purposes.

In December 2017, BIS imposed export-licensing restrictions on two entities for producing a ground-launched cruise missile system and associated launcher in violation of the Intermediate-Range Nuclear Forces Treaty.

Support to North Korea

The U.N. Security Council, beginning in 2006, has required its member states to curtail a range of diplomatic, finance, trade, and exchange relations with North Korea. The Security Council took action in response to North Korea's withdrawal from the Treaty on Non-Proliferation of Nuclear Weapons, its testing of nuclear weapons, and its efforts to develop missile delivery systems. Security Council resolutions also have drawn attention to North Korea's abuse of diplomatic privileges and immunities, money laundering, bulk cash smuggling, disruption of regional stability, and disregard for the human rights conditions of its civilian population.

To meet the United States' U.N. obligations, and to implement requirements enacted in the North Korea Sanctions and Policy Enhancement Act of 2016 (P.L. 114-122; 22 U.S.C. 9201 et seq.), as amended by the Korean Interdiction and Modernization of Sanctions Act (Title III, CAATSA), the President has issued a series of executive orders to block assets, transactions, and travel of designated North Korean individuals and entities. These sanctions also apply to other foreign individuals and entities that engage in trade or support North Korean designees.

In June and August 2017, OFAC designated a Russian oil company and its subsidiary, three Russian individuals, and two Singapore-based companies those individuals control under EO 13722 (March 2016) for trade in petroleum with North Korea. OFAC also designated two Russian entities and two related individuals for sanctions pursuant to EO 13382 (June 2005) for providing supplies and procuring metals to a North Korean company designated in 2009 for its weapons of mass destruction programs.

In August and September 2018, OFAC designated four more entities and six vessels for facilitating trade with North Korea. On August 3, 2018, OFAC designated a Russian bank under EO 13810 (September 2017) for "facilitating a significant transaction on behalf of an individual designated for weapons of mass destruction-related activities." According to the Treasury Department, the bank has had a commercial relationship with North Korean entities since at least 2009. On August 21, 2018, OFAC designated two Russian shipping companies and six vessels under EO 13810 for involvement "in the ship-to-ship transfer of refined petroleum products with North Korea-flagged vessels, an activity expressly prohibited by the U.N. Security Council." On September 13, 2018, OFAC designated under EO 13722 and EO 13810 a Russia-based front company for a China-based information technology company that "in reality ... is managed and controlled by North Koreans" and facilitates the exportation of information technology workers from North Korea.

Support to Syria

In a series of executive orders dating back to 2004, the President has sought to block trade and transactions with the government of Syria and its supporters. The U.S. government has imposed these sanctions in response to Syria's past occupation of Lebanon, support of international terrorism, pursuit of weapons of mass destruction and the means to deliver them, undermining of international efforts to stabilize Iraq, and escalating violence against its own people.

In April 2018, OFAC designated Russia's state-owned arms exporter Rosoboronexport and an associated bank pursuant to EO 13582 (August 2011) for providing material support and services to the government of Syria. Previously, during the Obama Administration, OFAC designated two other banks, which have since had their licenses revoked, and 12 related individuals pursuant to EO 13582 (in May 2014, November 2015, and December 2016).

Transnational Crime

Russian individuals and entities are subject to sanctions for activities related to transnational crime. OFAC currently designates at least 15 Russian individuals and 6 entities for their roles in transnational criminal organizations (TCOs). In December 2017, OFAC designated as a TCO the "Thieves-in-Law," which it characterized as "a Eurasian crime syndicate that has been linked to a long list of illicit activity across the globe." OFAC also designated 10 individuals (Russian nationals and others) and 2 entities as TCOs for their relation to the Thieves-in-Law; these designees included 6 individuals that OFAC previously had designated in July 2011, during the Obama Administration, as part of a related TCO, the Brothers' Circle. In December 2017, OFAC delisted the Brothers' Circle and several related individuals and entities, when it designated the Thieves-in-Law.

Terrorism

Russian individuals and entities are subject to sanctions related to global terrorism. OFAC has designated at least 2 entities and 12 affiliated individuals, in Russia or as fighters abroad, as Specially Designated Global Terrorists (SDGTs). The Caucasus Emirate, a terrorist and insurgent group in Russia's North Caucasus region, was established in 2007. OFAC listed its founder, Doku Umarov, as an SDGT in 2010 (he was killed in 2013). OFAC designated the Caucasus Emirate itself in May 2011. In 2015, the Islamic State recognized as its local affiliate the Caucasus Province (Vilayet), which reportedly was established by insurgents previously affiliated with the Caucasus Emirate. OFAC designated the Caucasus Province as an SDGT in September 2015.

Restrictions on U.S. Government Funding

As in past years, FY2018 and FY2019 appropriations restrict assistance to the Russian government. The Department of Defense Appropriations Act, 2019 ( P.L. 115-245 , Division A), prohibits the use of defense funding to make a loan or loan guarantee to Rosoboronexport or any of its subsidiaries (§8103). For FY2018, the Energy and Water Development and Related Agencies Appropriations Act, 2018 ( P.L. 115-141 , Division D), prohibits funds to Russia from its Defense Nuclear Nonproliferation Account (§305(a)). For the same year, the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2018 (Division K), requires country notification procedures to be invoked for foreign aid to Russia (§7015(f)). This act also prohibits funds from being made available to Russia's central government (§7070), a restriction in place since FY2015.

The State Department's 2018 Trafficking in Persons Report identifies Russia as a Tier 3 nation that fails to meet minimum standards for the elimination of human trafficking. The designation requires limits on aid and U.S. support in the international financial institutions.

In December 2018, under the International Religious Freedom Act of 1998, as amended ( P.L. 105-292 , 22 U.S.C. 6401 et seq.), Secretary of State Pompeo included Russia for the first time on the Special Watch List identifying "governments that have engaged in or tolerated severe violations of religious freedom." The Special Watch List was established in 2016 to publicly name foreign governments whose treatment of religious freedoms has deteriorated over the past year. Naming to the Special Watch List serves as a warning that the United States could be considering designating the foreign nation as a Country of Particular Concern (CPC) in the coming year. If Russia were to be designated a CPC, it would become subject to diplomatic and economic sanctions that could range from private demarches to prohibitions on export licensing, procurement contracts, and transactions through U.S. financial institutions.

Russian Countersanctions

The Russian government has responded to U.S. and other sanctions by imposing a variety of retaliatory measures, also known as countersanctions. The day the Senate passed the Sergei Magnitsky Act in December 2012, the Russian government announced new restrictions on imported beef, pork, and poultry that, within a few months, led to a major decline in U.S. meat imports to Russia. Several days after President Obama signed the act into law, the Russian parliament voted to ban U.S. adoptions of Russian children. It also introduced a visa ban against U.S. citizens whom Russia characterized as being involved in human rights violations or crimes against and persecution of Russian citizens. The day after OFAC issued its first designations under the Sergei Magnitsky Act in April 2013, the Russian government issued a list of U.S. citizens prohibited from entering Russia.

Russia also imposed countersanctions in response to Ukraine-related sanctions. These measures included additional travel prohibitions and a ban on the import of agricultural products from countries that had imposed sanctions on Russia.

Russia imposed countersanctions related to CRIEEA in anticipation of the act being signed into law. The day after Congress passed the legislation in July 2017, and while the bill awaited the President's signature, the Russian government ordered a reduction of U.S. mission personnel in Russia to no more than 455, which it said was equal to the number of Russian personnel in the United States. It also suspended U.S. use of storage and resort facilities in Moscow. Some observers viewed these measures as a response to CRIEEA but also, belatedly, to the Obama Administration's December 2016 decision to declare certain Russian diplomatic personnel persona non grata and to deny access to two Russian government-owned compounds. In response, on August 31, 2017, the Trump Administration closed Russia's Consulate General in San Francisco, a chancery annex in Washington, DC, and a consular annex that functioned as a trade office in New York City.

In March 2018, in response to a nerve agent attack on British citizen and former Russian military intelligence officer Sergei Skripal and his daughter, the Trump Administration expelled 60 Russian diplomats and closed the Russian consulate in Seattle. In response, Russia expelled 60 U.S. diplomats and closed the U.S. Consulate General in St. Petersburg.

After the United States' imposition of new designations of Russian government officials and politically connected billionaires and their holdings in April 2018, President Putin signed into law an act authorizing, but not requiring, restrictions related to trade with the United States and other unfriendly states, as well as foreign access to Russian public procurement and privatization.

U.S. and EU Coordination on Sanctions

Like the United States, the EU has imposed sanctions—or restrictive measures in EU parlance—against Russia since 2014 for its annexation of Ukraine's Crimea region and its subsequent fostering of separatism in eastern Ukraine. The EU imposed Ukraine-related sanctions largely in cooperation with the United States. EU sanctions are similar, although not identical, to U.S. sanctions.

Many in the EU welcomed efforts by Congress in 2017 to ensure that the Trump Administration maintained U.S. sanctions on Russia. At the same time, new sanctions that Congress introduced in CRIEEA raised some concerns in Europe about the continued alignment of U.S.-EU sanctions and cooperation on Ukraine policy more broadly.

Unlike the United States, the EU has not imposed sanctions on Russian individuals or entities for actions related to human rights violations, malicious cyber activity, corruption, transnational crime, or support to Syria or North Korea. However, the March 2018 nerve agent attack in the United Kingdom on former Russian intelligence officer Sergei Skripal and his daughter helped spur the EU to agree to a broad new sanctions regime targeting individuals and entities involved in the development and use of chemical weapons. A degree of momentum also appears to be building within the EU for new EU-wide restrictive measures against people and organizations that carry out cyberattacks, as well as human rights violations.

Imposing EU sanctions requires the unanimous agreement of all 28 EU member states. Most EU sanctions are imposed for a defined period of time (usually six months or a year) to incentivize change and provide the EU with flexibility to adjust the sanctions as warranted. Unanimity among EU member states also is required to renew (i.e., extend) EU sanctions.

U.S. and EU Sanctions Cooperation

Since the outbreak of the Ukraine crisis in early 2014, the United States and the EU have pursued similar policies—including those related to sanctions—aimed at supporting Ukraine's political transition and restoring its territorial integrity. U.S.-EU cooperation in imposing sanctions on Russia and coordination on other political and diplomatic responses to the Ukraine conflict largely have been viewed as a high point in transatlantic relations and have helped prevent Russia from driving a wedge between the United States and Europe.

In the first half of 2014, Ukraine-related sanctions that the United States and the EU imposed focused mostly on denying visas and freezing assets of Russian and Ukrainian government officials and pro-Russian separatists. The United States then imposed its first round of sectoral sanctions on July 16, 2014. At the time, many in the EU were hesitant to impose sectoral sanctions on Russia; they worried that doing so might hinder a peaceful resolution to the conflict and negatively affect the EU's extensive trade and investment relations with Russia. Some EU countries dependent on Russian oil and gas supplies also feared that stronger sanctions could prompt Russia to cut off energy exports in retaliation.

On July 17, 2014, the day after President Obama imposed the first U.S. sectoral sanctions on Russia, separatists in eastern Ukraine downed Malaysia Airlines Flight MH17 with a missile supplied by the Russian military. This event, along with the intensifying conflict and continued Russian intransigence, changed the political calculus in Europe on sanctions. European officials and publics were particularly dismayed when the separatists prohibited access to the MH17 crash site and delayed recovery of the remains of the 298 victims, including over 200 EU citizens. By the end of July 2014, the EU expanded its list of individuals and entities subject to asset freezes and visa bans and joined the United States in imposing sanctions on selected companies in Russia's financial, defense, and energy sectors. Both the United States and the EU further tightened their sectoral sanctions in September 2014.

U.S.-EU coordination sought to close as many gaps as possible between the two sanction regimes to send a unified message to Russia, maximize the effectiveness of sanctions, and make compliance for financial firms and multinational companies easier. President Obama asserted that the combined U.S.-EU measures would "have an even bigger bite" than U.S. sanctions alone.

Although EU sectoral sanctions largely mirror those imposed by the United States, they represent a carefully crafted compromise among EU member states. Agreeing on sectoral sanctions was difficult for the EU, given that the union's 28 member states have varying economic interests and historical relations with Russia. EU member states sought to draft certain provisions in ways to protect some national economic interests. For example, Germany and other member states dependent on Russian gas supplies were eager to preserve their energy ties to Russia. Consequently, the EU decided to apply lending and investment restrictions only in the oil sector, not to Gazprom or other companies in the Russian gas sector. The EU also applied restrictions on the sale of energy exploration equipment, technology, and services only to oil, not gas, development projects. Finally, the EU designed sectoral sanctions in a way that would share potential economic burdens across all member states.

The EU has tied lifting its sanctions on Russia to the full implementation of the Minsk peace agreements for Ukraine and asserts that it is committed to maintaining sanctions until this goal is achieved. At the same time, questions persist in some EU countries about the sanctions' effectiveness, especially amid concerns that sanctions could be hindering EU relations with Russia on other global priorities and harming European business interests. The EU sanctions (and Russian countersanctions) have come with financial costs for certain industries in some EU member states, including Germany, Finland, and the Baltic states. Some European officials have periodically floated ideas about restructuring the sanctions. Others firmly reject suggestions to relax or recalibrate EU sanctions and have urged the Trump Administration to uphold U.S. sanctions on Russia.

U.S. and EU Ukraine-Related Sanctions Compared

EU sanctions in response to Russia's annexation of Crimea and destabilization of eastern Ukraine consist of three measures:

Restrictive measures on individuals and entities in Russia and Ukraine believed to be involved in the annexation of Crimea and destabilization of eastern Ukraine. Designees are subject to asset freezes and, for individuals, visa bans. As of the start of 2019, the EU has designated 164 individuals and 44 entities (Council Decision 2014/145/CFSP, March 17, 2014). Economic sanctions targeting Russia ' s finance, defense, and energy sectors ( sectoral sanctions). The EU requires its member states to impose lending and investment restrictions on five major state-controlled Russian banks, three defense firms, and three energy companies, as well as their subsidiaries outside the EU. The sanctions also ban the import and export of arms; the sale of dual-use goods and technology to Russian military end users and nine mixed companies; and sales of equipment, technology, and services for oil-development projects related to deepwater, Arctic offshore, and shale exploration (Council Decision 2014/512/CFSP, July 31, 2014). Restrictions on economic relations with Ukraine's occupied Crimea region. The EU has banned EU individuals and EU-based companies from importing goods, exporting certain goods and technologies, and providing tourism services in Ukraine's Crimea region. The EU also has restricted trade and investment in certain economic sectors and infrastructure projects (Council Decision 2014/386/CFSP, June 23, 2014).

In addition, in response to the political upheaval in Ukraine in early 2014 and in an effort to bolster Ukraine's political transition, the EU imposed restrictive measures on individuals identified as responsible for the misappropriation of Ukrainian state funds or for the abuse of office causing a loss of Ukrainian public funds. The EU hoped to prevent the transfer of such funds outside of Ukraine and to facilitate their recovery. As of the start of 2019, the EU has frozen assets of and imposed visa bans on 13 former Ukrainian officials, including ex-Ukrainian president Viktor Yanukovych and others who served in his government (Council Decision 2014/119/CFSP, March 5, 2014).

Sanctions Targeting Individuals and Entities

As of the start of 2019, the United States has designated as Ukraine-related SDNs—subject to asset freezes, prohibitions on transactions, and, for individuals, travel bans—209 individuals, 158 entities, and 2 vessels. In its equivalent sanctions programs, the EU has designated 177 individuals and 44 entities. Both the United States and the EU have designated a number of high-ranking Russian officials and other individuals close to President Putin.

The U.S. and EU lists of designated individuals and entities are not identical. Various legal and political reasons account for some of the differences in the U.S. and EU designations. The EU has imposed sanctions on more individuals and entities directly related to the fighting in Ukraine—military officials, insurgents, and battalions—than has the United States. The United States has specifically designated more companies operating in Crimea and entities affiliated with other designated individuals and entities, whereas the EU provides for blanket restrictions on Crimea-related activities and against affiliated individuals and entities. The EU is unable to impose restrictive measures on some individuals who hold dual citizenship with EU countries.

Since 2014, several individuals have been removed from the EU sanctions list. Unlike the United States, which requires a decedent's survivors to petition for removal, the EU removes individuals from its sanctions list due to death. In addition, some designees have successfully petitioned for their removal.

Sectoral Sanctions

EU and U.S. restrictions against lending and/or investments with entities in specific sectors mostly overlap and target a handful of key companies and their subsidiaries in the financial, defense, and energy sectors, including exports and services related to deepwater, Arctic offshore, or shale oil projects in Russia (see Table C-1 ).

The manners in which the United States and the EU employ this measure differ somewhat and have changed over time. As of the start of 2019, the United States specifically identifies 13 Russian companies and 276 of their subsidiaries and affiliates as subject to sectoral sanctions. The EU, for its part, identifies 11 entities (and majority-owned subsidiaries outside the EU) as subject to sectoral sanctions. The United States has explicitly identified several companies, including Gazprom, with which sales of equipment, technology, and services for certain oil projects are prohibited; by contrast, the EU has not named specific companies to which these prohibitions apply. In addition, the EU does not impose sanctions on such oil projects worldwide, as CRIEEA does.

EU and U.S. policies are comparable in restricting most arms trade with and dual-use exports to Russia, but the EU applied arms-trade sanctions to future contracts only. The EU decision to allow existing arms sales and service contracts with Russia to continue was largely at the insistence of France (which had an existing $1.2 billion contract to sell two Mistral helicopter carriers to Russia) and some Central European countries that rely on Russian companies to service their Soviet-era weapons systems. Analysts suggest, however, that the arms-trade sanctions—and ongoing concern about Russian actions in Ukraine and Russian military resurgence—prompted EU members to reevaluate some existing weapons system sales and licenses. Although not required to do so under the terms of the EU sanctions, France canceled the sales contract with Russia for the Mistral helicopter carriers. Germany also canceled a preexisting contract to supply Russia with a $155 million combat simulation center. Central and Eastern European countries have been advancing plans to phase out Russian-origin military equipment and replace it with more modern U.S. and European equipment.

The EU and the United States also addressed the issue of existing sales and service contracts on energy development projects differently. The EU allowed for the continuation of existing contracts and agreements, in certain cases with authorization at the national level. The United States generally prohibited, other than a brief wind-down period, the continuation of existing contracts and agreements, unless otherwise authorized by OFAC. This difference led, for instance, to Eni (an Italian energy company) continuing its deepwater exploration in the Black Sea in partnership with Russian state-controlled oil company Rosneft; by contrast, ExxonMobil withdrew from certain joint ventures with Rosneft in 2018 after failing in April 2017 to secure a waiver from the Treasury Department to move forward with its own oil exploration project in the Black Sea.

Neither the United States nor the EU has employed sectoral sanctions that broadly target Russia's gas sector or state-controlled gas company Gazprom. Reports suggest that as the United States and EU worked to develop sanctions on Russia in 2014, they agreed to avoid measures that could harm the other's interests, including in relation to the production and supply of Russian gas. As discussed above, many EU countries dependent on Russian gas supplies were particularly worried about sanctions that could impede the flow of Russian gas and harm relations with Russia in this area. The United States and EU do apply financial restrictions to two Gazprom subsidiaries (Gazpromneft, its oil production and refining subsidiary, and Gazprombank, a financial institution), and the U.S. restrictions on deepwater, Arctic offshore, and shale oil projects also specifically apply to Gazprom. In addition, the United States applies lending restrictions to Novatek, a private Russian gas company. Neither the United States nor the EU has applied sanctions targeting gas production or trade.

Implications of CRIEEA

Given the previously close U.S.-EU coordination on Ukraine-related sanctions, many in the EU were dismayed by certain provisions in CRIEEA as the draft legislation evolved in 2017. European leaders and EU officials recognized that the main intent of CRIEEA was to codify and strengthen sanctions on Russia, including many with parallels in EU legislation. They also were concerned, however, that some of the initial provisions were drafted without regard for the EU's role as a U.S. partner and had the potential to negatively affect EU economic, business, and energy interests.

For example, the German and Austrian governments were concerned about the possible effects of a provision authorizing (but not requiring) sanctions on individuals or entities that engage in trade or make investments (with a value of $1 million, or $5 million in aggregate over 12 months) that enhance Russia's ability to construct energy export pipelines. This provision had the potential to establish new secondary sanctions on German, Austrian, and other European energy companies through their financing of the Nord Stream 2 pipeline, a Gazprom-run project to increase the amount of Russian gas delivered to Germany and other parts of Europe via the Baltic Sea.

Some in Europe also objected to what they viewed as a unilateral imposition of sanctions. Those of this view worried that new U.S. sanctions could complicate the delicate political consensus on the EU's own sanctions and weaken U.S.-EU cooperation on Ukraine. Others warned that codifying U.S. sanctions could reduce flexibility in negotiations with Moscow on resolving the conflict in Ukraine. Finally, many in the EU were troubled that CRIEEA's introduction of more general secondary sanctions against those who engage in significant transactions with U.S. designees could impact European business partners of Russian companies, even if those companies were not on the EU's own sanctions list.

EU concerns were accommodated to some degree by language inserted in CRIEEA specifying that the President should "continue to uphold and seek unity" with European partners on sanctions (§212) and that new U.S. sanctions on pipeline ventures would not be imposed without coordinating with U.S. allies (§232). Following CRIEEA's enactment, the European Commission (the EU's executive) expressed overall satisfaction that "European interests can thus be taken into account in the implementation of any [U.S.] sanctions."

At the same time, some in Europe remain wary that implementation of new U.S. sanctions could affect European energy projects. The European Commission has cautioned that the EU is prepared to take "appropriate steps" if U.S. sanctions disadvantage EU companies trading with Russia in the energy sector. The EU has not elaborated publicly on what such "appropriate steps" might be, and the EU hopes to avoid the need for these measures. In October 2017, the Trump Administration published guidance noting that pipeline-related sanctions in CRIEEA, Section 232, would not apply to existing projects (i.e., those initiated before August 2, 2017). The guidance also reasserted that the United States would not impose any such sanctions without coordination with U.S. allies.

Some European officials and experts are skeptical of the Trump Administration's commitment to consult the EU and its member states ahead of imposing new sanctions, especially amid broader European concerns about whether the Administration regards the EU as a partner or a competitor. Those of this view point, for example, to the Trump Administration's April 6, 2018, designation of several Russian billionaires and the companies they control. Some media reports suggested the Trump Administration issued these designations without significant prior consultations with the EU or leading European governments.

In particular, the designation of Rusal, a leading global producer of aluminum and the raw material alumina, had potentially significant implications for Europe's aluminum and manufacturing sectors. Concern that the Administration would enforce CRIEEA's secondary sanctions against European firms that have commercial and financial dealings with Rusal (whose facility in Ireland supplies many European aluminum producers) effectively halted such transactions. The U.S. announcement also led to a rise in the price of alumina. European officials warned that sanctions on Rusal could lead to plant closures, job losses, and the supply and production chains of key European industries, ranging from the makers of aluminum cans and foil to automobile and aerospace companies.

The Trump Administration appears to have been responsive to subsequent European entreaties (and those of other international partners, such as Brazil) regarding the difficulties posed for them by Rusal's designation. Treasury Secretary Mnuchin indicated that the "impact on our partners and allies" contributed to a U.S. decision to extend the wind-down period for transactions with Rusal. In December 2018, the Treasury Department announced its intention to terminate sanctions against Rusal and two related companies (see " The Section 241 "Oligarch" List ," above).

Some analysts have noted that the United States and the EU continue to coordinate other Ukraine-related sanctions. In January 2018, for example, the Trump Administration designated three individuals (including a Russian deputy energy minister) and one entity under Ukraine-related authorities that the EU had sanctioned in April 2017 for their involvement in supplying occupied Crimea with gas turbines. German company Siemens originally sold the turbines for use in Russia; the EU determined that the transfer of the turbines to Crimea was in breach of contractual provisions covering the original sale by Siemens and in contravention of EU prohibitions on the supply of key equipment for certain infrastructure projects in Crimea.

Potential New EU Sanctions

Beyond Ukraine, the EU and many member states are concerned about a range of other Russian activities, including use of a chemical weapon, cyber threats, and human rights abuses.

In October 2018, the EU approved a new legal framework that is to allow it to impose restrictive measures on individuals and entities involved in the development and use of chemical weapons, regardless of their nationality or location. Authorized sanctions include travel bans and asset freezes. Although this measure is not aimed at Russia specifically, observers largely view the March 2018 Skripal attack as providing impetus for the new sanctions framework. The EU has not yet named individuals or entities subject to these new sanctions, but many analysts expect the two Russian intelligence officers accused of carrying out the Skripal attack will be among those ultimately designated.

Analysts also expect that any new EU-wide sanctions for cyber activities would not be aimed at Russia specifically but could be used against Russian individuals and entities who are believed to be engaged in malicious cyber activities. In October 2018, EU leaders directed that "work on the capacity to respond to and deter cyberattacks through EU restrictive measures should be taken forward." Press reports indicate that such sanctions likely would consist of travel bans and asset freezes, although the EU has not yet put forward a specific proposal.

Some European leaders and EU officials—including some members of the European Parliament—have called for an "EU Magnitsky Act" to impose sanctions on Russians complicit in human rights abuses, money-laundering activities, and other "antidemocratic" activities. Since 2016, Estonia, Latvia, and Lithuania have passed their own national versions of the Sergei Magnitsky Act or Global Magnitsky Act. In May 2018, the UK Parliament approved a so-called Magnitsky amendment to its new Sanctions and Anti-Money Laundering Act that expands UK authorities to sanction individuals, companies, or states that commit gross human rights violations. Press reports indicate that Sweden, Denmark, and the Netherlands are considering similar national "Magnitsky" legislation.

The Netherlands also has proposed that the EU should develop a new sanctions regime that could target individuals accused of human rights abuses worldwide, regardless of their nationality. Media reports suggest that the Netherlands has refrained from naming its proposal for a new EU human rights sanctions regime after Sergei Magnitsky in an effort to ensure the necessary EU consensus. Dutch officials reportedly assess that some EU member states may be hesitant to support such a regime if it were named for Magnitsky because of concerns that it would prompt a negative Russian reaction. Other experts note that the motivations for developing an EU-wide human rights sanctions regime go beyond concerns about Russia and have been prompted by the killing of Saudi journalist Jamal Khashoggi.

Following the Skripal attack, some UK parliamentarians and analysts began calling for additional financial sanctions on Russia, including possibly banning financial clearinghouses from selling Russian sovereign debt. UK Prime Minister Theresa May reportedly agreed to look into imposing such a ban on the City of London, but experts note that any such sanctions likely would be more effective if imposed by the EU, given that key European clearinghouses are not incorporated in the UK and would not be affected by unilateral UK sanctions. Many analysts are skeptical, however, that the EU would be able to achieve the required unanimity to impose such additional EU-wide sanctions on Russian financial activity. Some analysts also suggest that the UK's expected departure from the EU in March 2019 may diminish the prospects for any further EU sanctions targeting Russia's sovereign debt.

Economic Impact of Sanctions on Russia

The Russian Economy Since 2014

It is difficult to disentangle the impact of sanctions imposed on Russia, particularly those related to its invasion of Ukraine, from fluctuations in the global price of oil, a major export and source of revenue for the Russian government.

In 2014 and 2015, Russia faced serious economic challenges and entered a two-year recession ( Figure 1 ), its longest in almost 20 years. Investor sentiment collapsed, resulting in capital flight, a collapse in the value of the ruble, and inflation ( Figure 1 and Figure 2 ). The Russian government and many Russian firms (including firms not subject to sanctions) were broadly shut out of capital markets. The government's budget deficit widened, and it tapped reserves to finance spending, defend the value of the ruble, and recapitalize banks affected by sanctions. Between the end of 2013 and May 2015, Russia's foreign exchange reserves fell by about one-third.

Oil prices began to rise in 2016. Although they have not reached pre-2014 levels, the uptick helped to stabilize Russia's economy. The rate of economic contraction slowed, inflation fell, and the value of the ruble stabilized ( Figure 1 ). The Russian government and non-sanctioned Russian entities resumed some access to international capital markets, capital outflows slowed, and foreign direct investment into Russia rebounded ( Figure 2 ). At the same time, 2016 was a difficult fiscal year; the Russian government relied heavily on funding from one of its sovereign wealth funds and was forced to partially privatize Rosneft, the prized state-owned oil company, to raise funds.

Russia continues to face long-term economic challenges relating to adverse demographic changes and limited progress on structural reforms. Its reserve holdings remain well below their peak levels. In addition, sanctions continue to constrain the ability of some Russian firms, particularly in the banking sector, to access financing ( Figure 2 ).

However, the Russian economy is notably stronger than in 2014-2015. In 2017, the International Monetary Fund (IMF) commended Russian authorities for their effective policy response, which, along with higher oil prices, helped the economy exit its two-year recession. One expert noted "the fear of economic destabilization that has permeated the country since its 2014 invasion of Crimea—which was met with crippling sanctions from the West—has all but evaporated."

Estimates of the Broad Economic Impact

Some statistical studies estimate the precise impact of sanctions relative to other factors, particularly large swings in oil prices. These studies suggest that sanctions may have had a negative but modest impact. One survey of research on the economic impact of sanctions and oil prices concluded that sanctions had a relatively smaller impact on Russian gross domestic product (GDP) than oil prices. Likewise, in November 2014, Russian Finance Minister Anton Siluanov estimated the annual cost of sanctions to the Russian economy at $40 billion (2% of GDP), compared to $90 billion to $100 billion (4% to 5% of GDP) lost due to lower oil prices. Similarly, in 2015, Russian economists estimated that sanctions would decrease Russia's GDP by 2.4% by 2017 but that this effect would be 3.3 times lower than the effect of the oil price shock. Another analysis found that oil prices, not sanctions, drove changes in the value of the ruble.

Russian officials and businesspeople subject to sanctions, who at times have harshly criticized the sanctions, have made public statements that appear to support these conclusions. For example, in November 2016, Putin argued that sanctions were "severely harming Russia" in terms of access to international financial markets but that the impact was not as severe as the harm from the decline in energy prices. Likewise, in July 2017, Alexei Kudrin, an economic adviser to Putin, argued that U.S. sanctions were curbing economic growth in Russia and preventing the country from regaining its status as a leading economic power. He contended, however, that a robust structural reform package could lift growth to 3%-4% and offset the effects of sanctions. In May 2018, Arkady Rotenberg, a billionaire businessman close to Putin, said the Ukraine-related sanctions "did create certain difficulties, but we've overcome them, and these difficulties made us unite."

Factors Influencing the Broad Economic Impact

Russia's economic recovery in 2016-2017 occurred while sanctions remained in place and, in some instances, were tightened. As a result, some have questioned why the sanctions have not had a greater economic impact. A key factor is that the Obama Administration, the EU, and other international counterparts designed Ukraine-related sanctions, which account for most of the implemented U.S. and global Russia sanctions, to have a limited and targeted economic impact. The sanctions do not broadly prohibit economic activity with Russia. They were intended to be "smart sanctions" that targeted individuals and entities responsible for offending policies and/or were associated with key Russian policymakers but inflicted minimal collateral damage on the Russian people or on the economic interests of countries imposing sanctions.

As a result, the Ukraine-related sanctions target specific Russian individuals and firms. In some cases, they prohibit only specific types of transactions. Overall, more than four-fifths of the largest 100 firms in Russia (in 2017) are not directly subject to any U.S. sanctions, including companies in a variety of sectors, such as railway, retail, autos, services, mining, and manufacturing ( Table D-1 ). According to one independent Russian polling firm, 78% of individuals polled in April 2018 reported that they were largely unaffected by Western sanctions.

More than half of the U.S. SDN sanctions that block assets and restrict transactions target individuals, not firms. Such sanctions may be consequential for the specific individuals involved and may send important political messages, but they are unlikely to have broader effects on Russia's economy. SDN sanctions on entities are mainly limited to businesses controlled by designated individuals, companies that operate in Crimea, and several defense and arms firms. Of the 100 largest firms in Russia, 7 are subject to full blocking (SDN) sanctions ( Table D-1 ).

In contrast, the sectoral (SSI) sanctions target large Russian companies, affecting 7 of Russia's 10 largest companies. However, they limit a specific set of transactions relating to debt, equity, and/or certain long-term oil projects ( Table D-1 ). In terms of debt (and, in some cases, equity) restrictions, the sanctions were intended to restrict the access of major Russian financial, energy, and defense firms to international markets. Many major Russian firms had borrowed heavily from international investors. Restricting their access to new financing from western capital markets was intended to disrupt their ability to refinance (rollover) existing debts. As their debts matured, this would force firms to make large repayments or scramble for alternative sources of financing.

The sectoral sanctions restricting certain oil projects sought to put long-term pressure on the Russian government by denying Russian oil companies access to Western technology to modernize their industry or locate new sources of oil. In 2016, a State Department official explained that sanctions were not designed to push Russia "over the economic cliff" in the short run but to exert long-term economic pressure on the country. By design, the full economic ramifications of restrictions on oil projects may have yet to materialize fully. The IMF estimated that lower capital accumulation and technological transfers resulting from sanctions could reduce Russia's output in the longer term by up to 9%; in contrast, it estimated the short-term impact of the sanctions as much smaller, between 1.0% and 1.5%.

Impact on Russian Firms and Sectors

Even if the economic effects on Russia's economy as a whole may have been modest, the impact on specific firms and sectors may be more significant. Several anecdotal examples illustrate the sanctions' impact on the firm and sector levels:

Russian banks have been reluctant to provide financial services in Crimea over the threat of sanctions. Rostec, a major state-owned defense conglomerate, saw profits drop in 2014 from a loss in foreign investment caused by sanctions. Some Western oil service companies, a valuable source of expertise and equipment for Russian oil companies, limited their operations in Russia following sanctions. Exxon canceled its involvement in a joint venture with Rosneft over U.S. sanctions. Sanctions reportedly forced Rosneft to suspend an oil project in the Black Sea. The Russian government has encouraged wealthy Russians to repatriate offshore funds, citing the need for financing in the face of sanctions. Workers in Rusal's hometown have expressed concerns about their jobs following U.S. sanctions. Alfa Bank, Russia's largest privately held bank (and not under U.S. sanctions), announced in January 2018 that it was winding down its business with Russian defense firms, many of which are subject to SDN sanctions.

Using statistical models, one study uses firm-level data to assess the impact of U.S. and European sanctions in 2014 on Russian firms. Based on data from between 2012 and 2016, it finds that sanctioned firms on average lost about one-quarter of their operating revenues, over one-half of their asset values, and about one-third of their employees relative to their non-sanctioned peers. The authors argue that the findings suggest the sanctions effectively targeted firms with relatively minimal collateral damage to other Russian firms.

The study estimates the average effects on sanctioned firms and provides only a snapshot of the sanctions' effects. Some sanctioned firms did worse than average; other sanctioned firms did well. For example, the ruble-denominated profits of Sberbank (the largest bank in Russia), Rostec (a major defense conglomerate), and Novatek (an independent natural gas producer) are higher today than when sectoral sanctions were imposed in 2014 (see Table D-2 ).

Factors Influencing the Impact on Firms and Sectors

Some firms have weathered the sanctions better than others have. This discrepancy may be attributable to a number of factors. First, the extent to which sanctions interrupted economic transactions varies across sanction targets. It is not clear to what extent some sanctioned targets, including Russian intelligence services, the Night Wolves (a motorcycle club), or the Eurasian Youth Union, engage in significant economic transactions with the United States or in the U.S. financial system. If the transactions are limited, the sanctions are more symbolic than disruptive of economic activity. Additionally, the limited design of the sectoral sanctions did not necessarily result in a rapid disruption in business operations, particularly as oil prices picked up. Despite sanctions, Russian energy firms largely have been able to carry on business as normal. Russian oil production has reached record highs, despite restrictions on access to Western technology for certain oil exploration projects.

Second, the Russian government has implemented various measures to support some sanctioned firms. For example, Sberbank benefited from substantial central bank purchases of its new debt, which it can no longer sell in U.S. and European capital markets due to sanctions. The Russian government strategically granted contracts to sanctioned firms; it provided sanctioned Bank Rossiya the sole contract to service the $36 billion domestic wholesale electricity market, granted the contract to build a bridge linking the Russian mainland with annexed Crimea to a sanctioned construction company (Stroygazmontazh), and selected a sanctioned bank (VTB) to be the sole manager of the government's international bond sales.

In December 2014, the government launched a bank recapitalization program worth about 1.2% of GDP to support large and regional banks directly or indirectly affected by the sanctions, as well as provided regulatory forbearance and increased deposit insurance. The central bank also helped sanctioned banks access foreign currency. The Russian government increased its orders from its defense industry firms in 2014, offsetting sales lost from the sanctions. It is also repurposing a nationalized bank, Promsvyazbank, to finance Russia's defense industry in response to financing challenges created by sanctions. In addition, Promsvyazbank extended a new credit line to the Renova Group, owned by billionaire Viktor Vekselberg, to support the firm within weeks after it and its owner came under U.S. sanction in April 2018.

More government support may be forthcoming. For example, the head of Novatek, an independent natural gas producer subject to financing restrictions, reportedly has requested government assistance funding the creation of deepwater drilling equipment to replace U.S. imports. The government is creating a department within the Finance Ministry to liaise with sanctioned businesses, study their challenges, and draft government proposals for support. Although it is difficult to find a precise quantitative estimate of the extent to which the Russian government has used resources to shield firms from sanctions, such support shifts the cost of sanctions from the targeted firms to the government.

Third, some Russian firms have minimized the sanctions' impact by forging alternative economic partnerships. For example, sanctions had the potential to jeopardize Russia's military modernization program, but Russia ultimately found alternative suppliers, particularly from China, South Korea, and Southeast Asia. Additionally, independent gas company Novatek secured alternative financing from China to proceed with a natural gas project in the Artic. Gazprom secured a $2 billion loan from the Bank of China, the largest loan from a single bank in Gazprom's history. More generally, Russian energy firms have concluded a number of corporate agreements with Chinese and Saudi companies following the imposition of sanctions.

However, the extent to which Russia can successfully execute a "pivot to China" and other non-Western sources of financing, investment, and trade should not be overstated. Public Chinese banks seem more willing to engage than private Chinese banks, and business transactions are complicated by other geopolitical considerations, such as Russia's reluctance to join China's new development bank, the Asian Infrastructure Investment Bank, or participate in Asian forums, such as the Asia-Pacific Economic Cooperation summit. Eager to attract investment, Russian firms also appear to be offering better investment deals to Chinese investors to circumvent financing problems caused by sanctions, suggesting that alternative financing has not been a full substitute for Western capital. Finally, CRIEEA's introduction of a policy option to impose secondary sanctions against third parties that engage in significant transactions with sanctioned Russian individuals and firms, and with Russia's defense and intelligence sectors, means that these alternatives remain risky and uncertain.

Outlook

Debates about the effectiveness of U.S. and other sanctions on Russia continue in Congress, in the Administration, and among other stakeholders. After more than four years of escalating sanctions, Russia has not reversed its occupation and annexation of Ukraine's Crimea region, nor has it stopped fostering separatism in eastern Ukraine. On the contrary, it has extended military operations to the Black Sea and the Azov Sea bordering Ukraine and Russia. The United States and its allies have documented multiple instances of Russian cyber-enabled malicious activities. They also have determined that Russian agents used a lethal nerve agent to attack an opponent in the United Kingdom. In addition, Russia remains an influential supporter of the Syrian government.

Nonetheless, many observers argue that sanctions help to restrain Russia or that the imposition of sanctions is an appropriate foreign policy response regardless of immediate effect. Since the introduction of sanctions, multiple reports suggest Russian government officials and their supporters pay close attention to sanctions developments and express concern about their real and potential impact. Observers also note that sanctions have led the Russian government to make policy adjustments, including diverting resources to affected businesses and sectors.

There exists a wide range of options moving forward. Some argue it is necessary to introduce more sanctions on Russia, including more comprehensive and/or more targeted sanctions. Others contend that the Administration should first focus on fully implementing the range of existing sanctions authorized by law. Some observers stress the need to coordinate new sanctions with Europeans and other allies. Others are skeptical that sanctions can produce desired changes in Russian behavior, especially without also using other foreign policy tools. Some express concerns that sanctions, particularly those that are imposed unilaterally, hurt U.S. businesses and cede economic opportunities to firms in other countries.

In the 115 th Congress, several bills were introduced to increase the use of sanctions to address Russia's malign activities. Members of Congress may continue to debate the establishment and implementation of U.S. sanctions on Russia in the 116 th Congress.

Potential new sanctions on Russia in legislation range widely. In the 115 th Congress, they included measures to expand the types of targeted individuals, entities, and sectors ( S. 3336 , H.R. 6437 , S. 2313 / H.R. 4884 , H.R. 5428 , H.R. 5216 ); expand the range of prohibited transactions, including with regard to Russian sovereign debt ( S. 3336 , H.R. 6437 , S. 2313 / H.R. 4884 , H.R. 6423 , H.R. 5428 ); make mandatory previously discretionary secondary sanctions on Russian pipeline investment ( S. 3229 , H.R. 6384 ); expand the scope of sanctions in response to malicious cyber-enabled activities ( H.R. 5576 / S. 3378 ); determine whether the government of Russia supports acts of international terrorism (which would expand sanctions on Russia) ( S. 3336 , S. 2780 , H.R. 6573 , H.R. 6475 ); and expand congressional review procedures to the Sergei Magnitsky Act ( S. 3336 , S. 3275 ) .

Appendix A. Legislative Abbreviations and Short Titles

CAATSA: Countering America's Adversaries Through Sanctions Act ( P.L. 115-44 )

CBW Act: Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 ( P.L. 102-182 , Title III; 22 U.S.C. 5601 et seq.)

CRIEEA: Countering Russian Influence in Europe and Eurasia Act of 2017, as amended ( P.L. 115-44 , Title II; 22 U.S.C. 9501 et seq.)

Global Magnitsky Act: Global Magnitsky Human Rights Accountability Act ( P.L. 114-328 , Title XII, Subtitle F; 22 U.S.C. 2656 note)

IEEPA: International Emergency Economic Powers Act ( P.L. 95-223 ; 50 U.S.C. 1701)

INKSNA: Iran, North Korea, and Syria Nonproliferation Act, as amended ( P.L. 106-178 , 50 U.S.C. 1701 note)

NEA: National Emergencies Act ( P.L. 94-412 ; 50 U.S.C. 1621)

Sergei Magnitsky Act: The Sergei Magnitsky Rule of Law Accountability Act of 2012 ( P.L. 112-208 , Title IV; 22 U.S.C. 5811 note)

SSIDES: Support for the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act of 2014, as amended ( P.L. 113-95 ; 22 U.S.C. 8901 et seq.)

UFSA: Ukraine Freedom Support Act of 2014, as amended ( P.L. 113-272 ; 22 U.S.C. 8921 et seq.)

Appendix B. U.S. Sanctions on Russia

Appendix C. U.S. and EU Sectoral Sanctions

Appendix D. Russian Firms and U.S. Sanctions