Morgan Lewis US and Russia Sanctions Update

CBW Act Sanctions (cont'd) State Dep't Release of August 2019 announced those three selected new sanctions: 1) 2) US opposition to any loan or financial assistance to Russia by int'l financial institutions (IFIs) but there has been very little if any such loan / assistance activity to Russia in recent years in any event and the US, while having weighty vote, doesn't have formal veto power over these (World Bank, IMF) prohibition on US banks' (i) participating in the primary market for non-ruble denominated Russian sovereign debt, and (ii) lending non-ruble denominated funds to the Russian government thus, US banks have been and are to date still free to purchase Russian sovereign debt on the secondary market, and ruble sovereign debt generally and the ban on lending to the Russian "government" is narrowly defined as being only to the "Russian sovereign" - so that lending to Russian gov't-owned companies have been/is untouched by this sanction (but OFAC Directives 1 and 2 still restrict lending to the designated state-owned banks and energy companies - see slides 17-18 above) 3) additional export licensing restrictions on Dep't of Commerce controlled goods / technology stated to apply only to items controlled for chemical and biological weapons proliferation reasons ܀ and the same waivers (license exceptions) that applied to first-round CBW Act sanctions (slide 64) continued to apply here on case-by-case basis (and with same presumption of denial for state-owned / -funded entities) but again, such availability of waivers now tightened by early 2020 Commerce/BIS rules, and now the new Navalny-related CBW Act sanctions (see slides 5, 29 and 63-64) Thus, the Skripal-related second-round sanctions (taken together with the waivers also simultaneously granted) had quite narrow/limited "bite" as a practical matter But now need to await the likely second-round Navalny-related sanctions - maybe the same, and/or different (and in any event with likely narrower exceptions/waivers) This second round may well include further tightened restrictions against purchasing Russia's sovereign debt (perhaps in coordination with UK and/or EU), per news reports Plus possible Magnitsky Act SDN designations against more oligarchs - for human rights violations/corruption Morgan Lewis 419 67

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