Senate Bill Could Impose Sweeping New Russia Sanctions
More than 25 Senate Democrats introduced a bill this week that would impose a host of sweeping new sanctions against Russia -- including new restrictions on Russian debt, dealings with government officials and banks -- if Russia further invades Ukraine. The legislation, led by Sen. Bob Menendez, D-N.J., would also require the administration to expedite deliveries of defense shipments to Ukraine and would authorize new sanctions on certain financial messaging service providers and Russia’s energy and mineral extraction industries.
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The bill was proposed as an alternative to Sen. Ted Cruz’s December bill, expected to receive a vote this week, which would sanction companies associated with the Russia-backed Nord Stream 2 pipeline (see 2201110059). Menendez’s legislation would require some Nord Stream 2 sanctions and direct the Biden administration to review its May sanctions waiver for the pipeline “in light of the Kremlin’s military buildup” on Ukraine’s border (see 2106070065).
“This legislation makes it absolutely clear that the U.S. Senate will not stand idly by as the Kremlin threatens a re-invasion of Ukraine,” said Menedez, chair of the Senate Foreign Relations Committee. Senate Majority Leader Chuck Schumer, D-N.Y., who also introduced the bill, said it would serve as a “powerful deterrent by immediately and forcefully imposing crippling sanctions on Vladimir Putin and the Russian Federation government.”
The Defending Ukraine Sovereignty Act of 2022 would authorize several sanctions measures if President Joe Biden determines that Russia “has engaged in a renewed invasion or escalation” in Ukraine, including new designations against Putin and Russia’s prime minister, foreign minister, defense minister, chief of the general staff of Russia’s armed forces and various military branches. The U.S. would also be required to impose sanctions on major Russian financial institutions, including at least three among Sberbank, VTB, Gazprombank, VEB.RF, the Russian Direct Investment Fund, Credit Bank of Moscow, Alfa Bank, Rosselkhozbank, FC Bank Otkritie, Promsvyazbank, Sovcombank and Transkapitalbank.
Another provision would authorize U.S. sanctions against providers of “specialized financial messaging services,” such as the Society for Worldwide Interbank Financial Telecommunication (SWIFT), that allow certain Russian banks to exchange information with other financial institutions. If those sanctions are imposed, the Treasury and State departments would be required to periodically report to Congress on any financial messaging service providers that continue to give services to the Russian banks.
The legislation would also ban U.S. transactions in Russian primary and secondary sovereign debt, including government bonds. The U.S. in April imposed restrictions on U.S. financial institutions' participation in the primary market for ruble or non-ruble denominated bonds by certain Russian entities, but those restrictions only applied to newly issued ruble sovereign debt and Russia’s primary market, and not the secondary market or existing sovereign debt holdings (see 2104150019).
Another provision would require new sanctions against Russia’s oil, gas, coal, and minerals sectors, including people or entities involved in certain extraction, production, mining or processing activities. Under the bill’s authority, the president could sanction anyone working in any of those sectors if it’s “in the interest of United States national security.”
The bill would also require Biden to impose certain sanctions against entities responsible for the operation of Nord Stream 2. The State Department would also have to review its May waiver for the pipeline within 30 days of the bill becoming law to ensure the waiver is in the “best interest of United States national security.”
In another provision meant to deter Russia from invading Ukraine, the bill would authorize the Defense and State departments to use powers under the Arms Export Control Act to “expedite the procurement and delivery of defense articles and services” to Ukraine. The administration also would be required to report to Congress on those defense shipments or security assistance.