Home ShipmanagementLegal Continued pressure on Belarus by the United States as key Belarusian companies once again become the target of comprehensive sanctions

Continued pressure on Belarus by the United States as key Belarusian companies once again become the target of comprehensive sanctions

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Continued pressure on Belarus by the United States as key Belarusian companies once again become the target of comprehensive sanctions

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At a Glance…

On April 19, 2021, the Department of Treasury, Office of Foreign Assets Control (OFAC) revoked Belarus General License 2G and issued Belarus General License 2H (GL 2H), “Authorizing the Wind Down of Transactions Involving Certain Blocked Entities,” restoring sanctions against nine Belarusian companies. The nine companies that are the subject of GL 2H are large conglomerates that hold shares in many companies operating in Belarus. Accordingly, persons with Belarus-related business should evaluate their transactions and their supply chains to determine whether it is necessary to wind down any business in the region.

Authors: Leigh Hansson, Alexander Brandt, Eli Rymland-Kelly, Ozra Ajizadeh

Capabilities: International Trade & National Security; Regulatory & Investigations; Shipping

In 2006, President George W. Bush imposed sanctions on Belarus pursuant to Executive Order (EO) 13405, “Blocking Property of Certain Persons Undermining Democratic Processes or Institutions in Belarus.” Almost a decade later, OFAC issued General License No. 2, broadly authorizing transactions with the following nine state-owned companies and their subsidiaries, without actually lifting the sanctions:Belarusian Oil Trade HouseBelneftekhimBelneftekhim USA, Inc.Belshina OAOGrodno Azot OAOGrodno Khimvolokno OAOLakokraska OAONaftan OAOPolotsk Steklovolokno OAOOFAC continuously renewed the general license, so between October 30, 2015 and April 19, 2021, U.S. and non-U.S. persons were permitted to do business with these companies.iWith the issuance of GL 2H, the position has now changed. This new general license implements a 45-day wind-down period, during which persons relying on previous versions of the general license must wind down business and activities with the nine companies and their subsidiaries. Transactions with any of the nine entities that are not ordinarily incident and necessity to wind down existing business are now prohibited, and, with respect to non-U.S. persons, sanctionable.Following the expiration of the wind-down period on June 3, 2021, U.S. persons will be prohibited from engaging in any transactions with these companies or their subsidiaries. Non-U.S. persons determined to have “materially assisted, supported, or provided financial, material, or technological support for, or goods or services in support of” any of the companies or their subsidiaries will risk sanctions. Accordingly, persons with Belarus-related business should evaluate their transactions and supply chains to determine not only whether they are dealing with any of the specifically named companies, but also whether any of their subsidiaries are involved.This action follows the Trump Administration’s December 23, 2020 action in which it designated “one individual and four entities for their roles in the fraudulent August 9, 2020, presidential election in Belarus and the subsequent crackdown on peaceful pro-democracy protests,” and it demonstrates that maintaining democracy in Belarus has bipartisan support in Washington. It also indicates that the United States continues to view sanctions on Belarusian state-owned companies, in particular those operating in the oil industry, as key targets for affecting change.Condemnation, and subsequent sanctions, in respect of the 2020 presidential election has not been limited to the United States. Both the EU and the UK have brought in restrictive measures in the latter part of 2020 and in 2021, including asset freezes against targeted individuals and companies, and restrictions on arms and equipment that may be used for internal repression. These sanctions are not as extensive as the program maintained by the United States (certainly post wind-down), continuing a familiar trend of the United States leading the way in this area of law. 
 
 i. GL 2H, like all of the previous versions thereof, requires U.S. persons to file reports with the U.S. Department of State where a transaction entered into in reliance on the general license exceeds $50,000. This requirement remains in place during the wind-down period.
 If you have questions or would like additional information on the material covered in this Alert, please contact one of the authors – listed below – or the Reed Smith lawyer with whom you regularly work. 
 
 Hansson  Leigh Hansson
Partner, London & Washington, D.C.
L: +44 (0)20 3116 3394
D.C.: +1 202 414 9394
lhansson@reedsmith.com
 Brandt  Alexander Brandt
Associate, London
+44 (0)20 3116 3733
abrandt@reedsmith.com
 
 
 Rymland  Eli Rymland-Kelly
Associate, London & Washington, D.C.
L: +44 (0)20 3116 3287
D.C.: +1 202 414 9287
erymland-kelly@reedsmith.com
 Ajizadeh  Ozra O. Ajizadeh
Associate, Washington, D.C.
+1 202 414 9191
oajizadeh@reedsmith.com
 
 
 reedsmith.comClient Alert 21-115April 2021 
 
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