Sanctions constitute a tried and true part of the US foreign–policy toolkit, with the central role America enjoys in the global financial system according it immense coercive power over the behaviour of both friend and foe. The future of US sanctions against Russia may have some role to play in the newly revitalised negotiations over Ukraine, writes Ivan Timofeev, Programme Director of the Valdai Discussion Club.
The latest round of Russian–American talks has drawn attention to the sanctions dimension. It was reported that Gene Lange—the Acting Under Secretary of the US Treasury—took part in them. He is a fairly significant figure in his own right. Besides financial sanctions, his portfolio also covers financial intelligence and counter–terrorism financing. Of course, he is not the only one overseeing sanctions within the Administration. Some of these powers are concentrated in the State Department. The Department of Commerce also plays a huge role, since export controls fall within its remit. Yet financial restrictions can be regarded as the most significant of all, and the Office of Foreign Assets Control (OFAC), which sits within the US Treasury, has long since become the bureaucratic “brand” of American sanctions.
Is it possible, in principle, for sanctions against Russia to be eased or lifted? Sceptics have plenty of arguments against this. First and foremost—the sheer scale involved. Sanctions cover practically all key sectors—banks, industry, technology, the energy sector, and much else besides. Even more important is the fact that countries friendly towards Russia are compelled to take them into account, for fear of extraterritorial secondary sanctions. Another argument is the emergence in the United States of a “web of laws” on sanctions against Russia. Indeed, quite a number of them have been passed. For example, since February 2022, normal trade relations have been suspended by law, imports of Russian energy resources have been banned, and a mechanism for confiscating Russian sovereign assets has been enshrined in law (though it has not yet been applied). Laws were being passed even before the special military operation, including the once–notorious Countering America’s Adversaries Through Sanctions Act (CAATSA) of 2017. Repealing federal laws is extremely difficult.
The Administration has plenty of such legal options at its disposal, despite the “web of laws.” Since the start of the special military operation, most financial sanctions against Russian individuals and entities have been imposed under Executive Order 14024 of 15 April 2021. Unlike a number of earlier presidential executive orders (for example, 13660, 13661, 13662, 13685, and others), it has not been codified into law. In other words, the President has complete freedom of action to lift or suspend these sanctions. The same applies to export controls and many of the import bans. A significant share of them remains entirely within the Administration’s power. Even with regard to those sanctions that have become part of the legislation, the US President enjoys wide discretion. Given the political will, he can quite readily suspend them or enforce them at a bare minimum. The Jackson–Vanik amendment, well remembered in Russia, was repealed in 2012—thirty–eight years after it was adopted. In practice, however, it had not been enforced since the late 1980s, when relations between the USSR and the United States began to improve.
The key question is—will the Administration make use of these legal options? And here, too, the sceptics have good arguments once again. The conflict in Ukraine is too complex. No formula for untangling it is yet in sight. This means there will be no political grounds for changing the sanctions regime either. However, American diplomacy, should it wish to, can certainly offer Moscow algorithms for easing restrictive measures, or allow individual relaxations as a political signal. The Americans used such signals in the 1970s in the process of restoring relations with the People’s Republic of China. The very fact that the intensity of new US sanctions against Russia declined noticeably during Donald Trump’s presidency may itself be presented by Washington as just such a signal. Sanctions are unlikely to prove decisive in the diplomatic equation of a settlement in Ukraine. But business will keep a close eye on geopolitical movements, while markets will try to read the direction they point in.
The Valdai Discussion Club was established in 2004. It is named after Lake Valdai, which is located close to Veliky Novgorod, where the Club’s first meeting took place.
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