On August 9, 2021, the United States, the United Kingdom, and Canada significantly escalated sanctions against Belarus in a multilateral effort to put pressure on the current Lukashenko regime. These sanctions were announced on the first anniversary of the fraudulent elections held in Belarus on August 9, 2020 and follow a series of previous measures against Belarus, including most recently the coordinated measures between the UK, US, Canada and the EU in June (see our previous blog post here) and the sectoral sanctions also introduced by the EU in June (see our previous blog post here).
In addition, the Swiss Government announced further economic sanctions against Belarus yesterday (August 11, 2021), including controls on trade in certain goods and restrictions in the financial sector.
The UK’s sectoral measures have been introduced by the Republic of Belarus (Sanctions) (EU Exit) (Amendment) Regulations 2021 (the “UK Regulations“), which amend the Republic of Belarus (Sanctions) (EU Exit) Regulations 2019. The UK’s Foreign, Commonwealth and Development Office (“FCDO“) has issued a press release in respect of these measures here.
The sanctions include restrictions on a broad range of technology and software, dual-use goods and technology, tobacco goods, petroleum, potassium chloride (potash) products, financial services, and on the aviation sector. It is important to note that the restrictions apply to both direct and indirect conduct.
The prohibitions and requirements imposed by the UK Regulations apply within the territory of the UK (including Northern Ireland) and in relation to the conduct of all UK persons wherever they are in the world. UK persons include British nationals, as well as all bodies incorporated or constituted under the law of any part of the UK. Accordingly, the prohibitions and requirements imposed by the UK Regulations apply to all companies established in any part of the UK, and they also apply to branches of UK companies operating overseas.
Parties are prohibited from engaging in a variety of financial services and dealing with related financial instruments, including:
- Directly or indirectly dealing in (including purchasing, selling, providing investment services for or assistance in the issuance of) transferable securities and money-market instruments with a maturity exceeding 90 days issued after noon on August 9, 2021 to:
- Belarus, Belarusian authorities (which is itself defined very broadly), and entities wholly owned by the foregoing;
- credit or financial institutions majority owned by Belarus or a Belarusian authority, and their non-UK majority-owned subsidiaries, and persons acting on behalf of or at the direction of the foregoing;
- loans or credit with a maturity exceeding 90 days to the same (subject to an exception for the financing of legitimate UK trade) made after noon on August 9, 2021; and
- insurance or re-insurance to Belarus, Belarusian authorities, entities wholly owned by Belarus or a Belarusian authority, and persons acting on behalf of or at the direction of the foregoing.
The UK Regulations include trade prohibitions relating to:
- dual-use goods and technology for use by the Belarusian military or any other military end-use, as well as related technical assistance, financial services and funds, and brokering services;
- interception and monitoring goods, technology, and services, as well as related technical assistance, financial services and funds, and brokering services;
- the export/supply of tobacco industry goods; and
- the import of potash or petroleum products which originate in, are located in or are consigned from Belarus. Furthermore, technical assistance, financial services and funds, and brokering services in relation to petroleum products are also prohibited.
The UK’s Export Control Joint Unit has published guidance on these trade sanctions here.
The UK Regulations also include aviation measures to prevent Belarusian air carriers from overflying or landing in the UK.
Furthermore, the UK Regulations also introduce a prohibition on the provision of technical assistance to President Lukashenko’s fleet of luxury aircraft. This has been effected by prohibiting technical assistance relating to aircraft to or for the benefit of certain Designated Persons. The UK Sanctions List (available here) has been updated to include details of the relevant Designated Persons for the purposes of this control (under the “Sanctions Imposed” sections of the relevant entries).
The UK government guidance has also been updated to state that technical assistance relating to the following aircraft would be considered to be for the benefit of the relevant Designated Persons:
- Gulfstream G550 – Registration number: EW-001PJ
- Boeing 767-300 – Registration number: EW-001PB
- Boeing 737-800 – Registration number: EW-001PA
- Mil Mi-8 helicopter – Registration number: EW-002DA
- Mil Mi-8 helicopter – Registration number: EW-001DA
- AgustaWestland AW-139 helicopter – Registration number: EW-001PH
- Embraer ERJ-135BJ Legacy – Registration number: P4-MSG
- Bombardier BD-700 1A10 Global Express XRS – Registration number: P4-GMS
In addition to amendments to existing designations, the UK has also designated one further individual, Mikhail Gutseriev.
Also on August 9, 2021, the Biden Administration issued a new Executive Order targeting those contributing to the situation in Belarus (“New Belarus EO“), further evidence of the Biden Administration’s ongoing multilateral approach with regard to sanctions actions. Concurrent with its issuance, the US Treasury Department’s Office of Foreign Assets Control (“OFAC“) (i) designated numerous Belarusian individuals and entities, (ii) issued General License No. 4 (“GL 4“), and (iii) issued three FAQs, as further described below. The New Belarus EO, list of parties designated, GL 4, and FAQs are all available here.
The New Belarus EO is expansive in scope and authorizes OFAC to designate the following:
- leaders, officials, senior executive officers, and board members of blocked Belarusian entities (both those already designated and those to be designated under the New Belarus EO);
- political subdivisions, agencies, or instrumentalities of the Government of Belarus;
- leaders of the Government of Belarus;
- those operating in certain sectors of the Belarusian economy, including the defense and related materiel sector, security sector, energy sector, potassium chloride (potash) sector, tobacco products sector, construction sector, transportation sector and additional sectors as determined by the US Government;
- those engaged in certain illicit activities in Belarus (i.e., threatening peace and stability, limiting or penalizing the exercising of human rights and fundamental freedoms, election fraud, deceptive practices, and public corruption);
- parties considered to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, any of the foregoing; and
- entities owned/controlled by, or acting on behalf of, the Government of Belarus.
US Persons are prohibited from dealing with Specially Designated Nationals (“SDNs“) or entities 50% or more owned by SDNs. In addition, US Persons that come into possession or control of property of an SDN are required to block the transaction and report it to OFAC. As a reminder, for these purposes, US Persons include (i) entities incorporated in the United States and their non-US branches, (ii) persons physically located in the United States, and (iii) US citizens and permanent residents, regardless of location or employment. Non-US persons who provide “support” to SDNs can be at risk of themselves being designated as an SDN.
We note that the Government of Belarus and the sectors outlined above in (iv) have not been comprehensively sanctioned, as clarified by FAQ 917. Rather, the sanctions only apply to parties that have been added to the SDN List (or, as noted above, entities that are 50% or more owned by SDNs). The SDN designations that OFAC made concurrent with the issuance of the New Belarus EO include but are not limited to numerous officials, government-owned/controlled entities (including the potash company Belaruskali OAO), certain energy sector companies, and the Department of Internal Affairs of the Gomel Regional Executive Committee.
GL 4 authorizes transactions and activities prohibited under the New Belarus EO that are ordinarily incident and necessary to the wind down of transactions involving Belaruskali OAO, or any entity that it owns 50% or more through December 8, 2021. Lastly, FAQs 916, 917, and 918 summarize the above developments.
Also on August 9, 2021, Canada announced further sanctions against Belarus by amending the Special Economic Measures (Belarus) Regulations (the “Canadian Regulations“) (see Regulations Amending the Special Economic Measures (Belarus) Regulations (international.gc.ca)). The amendments to the Canadian Regulations introduce new measures restricting persons in Canada and any Canadians outside of Canada from the following activities:
- dealing in transferrable securities and money market instruments, including treasury bills, certificates of deposit and commercial papers but not including instruments of payment, issued by Belarus and Belarusbank, Belinvestbank, Belagroprombank or any other organization controlled by Belarus, or a person acting on behalf of or at the direction of these entities;
- dealing in debt of longer than 90 days, including bonds, loans, debentures, extensions of credit, loan guarantees, letters of credit, bank drafts, bankers’ acceptances, discount notes, treasury bills, commercial paper and other similar instruments in relation to Belarus and Belarusbank, Belinvestbank, Belagroprombank or any other organization controlled by Belarus, or a person acting on behalf of or at the direction of these entities;
- providing insurance and reinsurance to Belarus or an organization controlled by Belarus, or a person acting on behalf of or at the direction of these entities;
- importing, purchasing, acquiring, shipping or dealing in certain petroleum products, wherever situated, exported from Belarus;
- providing to Belarus or any person in Belarus financial, technical or other services related to the abovementioned petroleum products, or providing to Belarus or any person in Belarus insurance or reinsurance related to these petroleum products; and
- importing, purchasing, acquiring, shipping or dealing in certain potassium chloride (potash) products.
On August 11, 2021, the Swiss Government announced further economic sanctions against Belarus. These include controls on trade in certain goods as well as restrictions in the financial sector. The new measures took effect on Wednesday August 11, 2021 at 6pm CEST.
The new package of economic sanctions on Belarus follows the EU’s previous introduction of sectoral sanctions against Belarus in June 2021. In addition to the existing embargo on arms and equipment that may be used for internal repression, the Swiss Federal Council has imposed an embargo on goods that could be used to monitor or intercept the internet and telephone communications. The new sanctions also restrict trade in dual-use goods and technologies (export prohibition for military purposes or to the Belarusian army or other military end-users), various petroleum and potassium chloride (potash) products (import prohibition), and goods for the production or processing of tobacco products (export prohibition).
In the financial sector, the Swiss Federal Council has imposed prohibitions (i) for the issuance of and trading in financial instruments and the provision of loans to the Belarusian government and other public bodies, entities and agencies as well as three Belarusian banks (Belarusbank, Belinvestbank and Belagroprombank) and (ii) for the provision of insurance or reinsurance services to the Belarusian government and other public bodies, entities and agencies. Lastly, the Swiss Federal Council has also decided to impose financial sanctions on Belaeronavigatsia, the state-owned provider of air navigation services.
The Swiss Government had previously adopted sanctions against Belarus on June 28, 2006 along the lines of those imposed by the EU. The Ordinance on Measures against Belarus and the list of individuals, companies and organizations subject to sanctions have been amended several times since then, in step with EU developments (the Ordinance most recently on December 11, 2020, and the list of designated parties most recently on July 7, 2021). The latest measures yesterday have been adopted by a complete revision of the Ordinance.