U.S. Prepares Sanctions to Respond to Russia’s Actions Toward Ukraine

In response to Russian President Putin’s recognition of certain breakaway regions of Ukraine on February 21, 2022, the White House announced that it will be issuing an Executive Order (EO) targeting the Donetsk People’s Republic (DNR) and the Luhansk People’s Republic (LRN), each located in the Donbas region of eastern Ukraine. The EO will “prohibit new investment, trade, and financing by U.S. persons to, from, or in” these areas of Ukraine. The EO will also establish new sanctions aimed at individuals and entities who seek to operate or continue operating in these areas. Additionally, the White House announced that the Administration will also be releasing separate economic measures targeting Russia itself; however, they did not provide any details as to what these measures may entail. 

As the White House confirmed, the EO focused on the DNR and LRN is a precursor to what are likely to be broader sanctions against Russia, in the event that President Putin undertakes to invade or instigate other hostile actions against Ukraine. Among the measures that have been under discussion are those that would target Russian banks and state-owned companies not already under sanctions administered by the Office of Foreign Assets Control (OFAC). It does now appear that the most punitive measures against Russia and its financial sector, namely steps to deny access to Russian banks to the SWIFT network used by banking institutions globally, are off the table. However, the Administration has also discussed other sanctions that are likely to focus on banning the export of services and goods to Russia’s technology and energy sectors, including measures to interdict even third-party countries from supplying U.S.-origin goods, technology, and services into Russia.

We recommend that clients review their current customer and vendor relationships to identify critical supply chains that could be impacted from restrictions on Ukrainian or Russian companies. Although some of the sanctions under discussion may provide for brief winding down periods, others may kick in immediately.

If you believe you’ll need assistance navigating or complying with these orders, or would like additional information, please contact Guillermo Christensen, office managing partner of the firm’s Washington D.C. office and a former CIA officer with national security experience including in dealing with OFAC and export control matters.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.