U.S. Department of the Treasury
July 16, 2014
Statement of Secretary Lew on Today’s Actions
Today’s potent and carefully designed actions, together with today’s designations of arms-related entities, separatists, and Russian government officials, were taken to increase pressure on the Russian government to end its de-stabilizing actions in Ukraine while minimizing costs to the global economy. We continue to coordinate with our international partners and remain in steadfast agreement that the people of Ukraine must be allowed to come together to make their own decisions about the future of their country, as Ukraine’s long-term stability is important for Europe, for Russia, and for the United States. Even as we continue to work with our partners to de-escalate the situation, we remain fully prepared to continue increasing the financial and economic pressure on Russia if it does not cease its provocative behavior.
U.S. Sets New Ukraine-Related Sanctions on Entities, Individuals
US Embassy | 16 July 2014
Washington — In response to Russia’s continued attempts to destabilize eastern Ukraine and its ongoing occupation of Crimea, the U.S. Department of the Treasury July 16 imposed a package of sanctions on entities in the financial services, energy and arms or related materiel sectors of Russia, and on those undermining Ukraine’s sovereignty or misappropriating Ukrainian property.
More specifically, the Treasury Department did the following:
• Imposed sanctions that prohibit U.S. persons from providing new financing to two major Russian financial institutions (Gazprombank OAO and VEB) and two Russian energy firms (OAO Novatek and Rosneft), limiting their access to U.S. capital markets.
• Designated eight Russian arms firms, which are responsible for the production of a range of materiel that includes small arms, mortar shells and tanks.
• Designated the “Luhansk People’s Republic” and the “Donetsk People’s Republic,” which have asserted governmental authority over parts of Ukraine without the authorization of the government of Ukraine; and Aleksandr Borodai, the self-declared “prime minister” of the Donetsk People’s Republic, for threatening the peace, security, stability, sovereignty and territorial integrity of Ukraine.
• Designated Feodosiya Enterprises, a key shipping facility in the Crimean Peninsula, because it is complicit in the misappropriation of state assets of Ukraine.
• Designated four Russian government officials.
These actions do more than build upon previous steps to impose costs on separatists and the Russian government, the department said. By imposing sanctions on entities within the financial services and energy sectors, Treasury has increased the cost of economic isolation for key Russian firms that value their access to medium- and long-term U.S. sources of financing. By designating firms in the arms or related materiel sector, Treasury has cut these firms off from the U.S. financial system and the U.S. economy.
“Russia has continued to destabilize Ukraine and provide support for the separatists, despite its statements to the contrary,” said Under Secretary for Terrorism and Financial Intelligence David S. Cohen.
Treasury Secretary Jacob J. Lew determined that persons operating within Russia’s financial services sector may now be subject to targeted sanctions. Following Lew’s determination, Treasury imposed measures prohibiting U.S. persons and persons within the United States from transacting in, providing financing for or otherwise dealing in new debt of longer than 90 days maturity or new equity for Gazprombank OAO and VEB, their property or their interests in property. As a practical matter, this step will close the medium- and long-term U.S. dollar lending window to these banks and will impose additional significant costs on the Russian government for its continued activities in Ukraine, Treasury said.
Treasury did not block the property or interests in property of these banks, nor did it prohibit transactions with them beyond these specific restrictions. However, the scope of the prohibited transaction types and the number of financial institutions may be expanded under Executive Order. 13662, the department added.
Gazprombank OAO is a Russian financial institution that was originally established to provide financial services to companies in Russia’s energy industry but has expanded to provide services to more than 45,000 companies and 3 million private individuals.
VEB is a Russian state-owned financial institution that acts as a development bank and payment agent for the Russian government.
Secretary Lew determined that persons operating within Russia’s energy sector may now be subject to targeted sanctions. Following the determination, Treasury imposed measures that prohibit U.S. persons and persons within the United States from transacting in, providing financing for or otherwise dealing in new debt of longer than 90 days maturity for Russian energy firms OAO Novatek and Rosneft, their property or their interests in property.
OAO Novatek is Russia’s largest independent natural gas producer.
Rosneft is Russia’s largest petroleum company and third-largest gas producer. Treasury designated Rosneft President and Chairman of the Board Igor Sechin on April 28, 2014.
Treasury also designated and blocked the assets of Almaz-Antey, Federal State Unitary Enterprise State Research and Production Enterprise Bazalt, JSC Concern Sozvezdie, JSC MIC NPO Mashinostroyenia, Kalashnikov Concern, KBP Instrument Design Bureau, Radio-Electronic Technologies and Uralvagonzavod pursuant to Executive Order 13661 for operating in the arms or related materiel sector in the Russian Federation. The designated firms are responsible for the production of a range of materiel, from small arms to mortar shells to tanks. As a result of the July 16 action under Eexecutive Order 13661, any assets of the entities designated that are within U.S. jurisdiction must be frozen. In addition, transactions by U.S. persons or within the United States involving the entities designated under Executive Order 13661 are generally prohibited.
SANCTIONS ON INDIVIDUALS, ENTITIES
The following two entities and one individual are being designated and blocked pursuant to Executive Order 13660 for threatening the peace, security, stability, sovereignty or territorial integrity of Ukraine.
The Treasury Department has determined that the Luhansk People’s Republic (LPR) has asserted governmental authority over a part or region of Ukraine without the authorization of the government of Ukraine. The self-proclaimed LPR has asserted governmental authority through a number of actions, including issuing a declaration of martial law; banning the sale of corporate rights, production facilities, companies and other assets; controlling the border guard checkpoints of Izvarino, Dolzhanskoye and Krasnyi Partizansk on the Ukrainian-Russian border; and shooting down a Ukrainian military transport jet as it attempted to land in Luhansk. The LPR also elected a leader and passed its own constitution on May 11, 2014.
The Treasury Department has also determined the Donetsk People’s Republic to have asserted governmental authority over a part or region of Ukraine without the authorization of the government of Ukraine. “The militia in the self-proclaimed Donetsk People’s Republic is defying the peaceful settlement regime, continues combat operations, and has seized and occupies regional government buildings, using them as its headquarters and firing positions,” Treasury said. Igor Strelkov, the leader of the militia of the Donetsk People’s Republic, rejected Ukrainian President Petro Poroshenko’s peace plan.
Aleksandr Borodai is the self-declared “prime minister” of the “Donetsk People’s Republic” in Ukraine and has vowed to expel Ukraine’s army from his new domain and resist any bid to recapture the city. Borodai was in Crimea as an adviser to Sergei Aksyonov, the separatist prime minister who oversaw the territory’s purported annexation by Russia. Treasury designated Aksyonov on March 17, 2014.
Feodosiya Enterprise, designated July 16, operates a key shipping facility in the Crimean Peninsula for oil imports and exports. Prior to Russia’s purported annexation of Crimea, Feodosiya Enterprise had been controlled by the Ukrainian state-controlled gas company Naftogaz. On March 25, 2014, the separatist self-styled “Crimean Parliament” nationalized Feodosiya Enterprise and decreed that the self-styled “Crimean Ministry of Fuel and Energy” would be the governing body of Feodosiya Enterprise. The separatist “minister of fuel and energy” asserting authority in occupied Crimea has confirmed that, as of April 15, 2014, separatist authorities in Crimea were provided with fuel by Russian oil companies using the storage facility operated by Feodosiya Enterprise.
SANCTIONS ON FOUR INDIVIDUALS
The following four individuals are being designated July 16 for their status as Russian government officials:
• Sergey Besesda heads Russia’s Federal Security Service Fifth Service, also known as the Service for Operational Information and International Communications.
• Oleg Savelyev is Russia’s minister for Crimean affairs. In this capacity, Savelyev is responsible for the integration of occupied Crimea into the Russian Federation following Russia’s purported annexation of Crimea from Ukraine.
• Sergei Neverov is the deputy chairman of the State Duma of the Russian Federation. Neverov is responsible for initiating legislation to integrate the purportedly annexed Ukrainian region of Crimea into the Russian Federation.
• Igor Shchegolev is an aide to the president of the Russian Federation.
As a result of the July 16 actions under Executive Orders 13660 and 13661, any assets of the entities or individuals designated that are within U.S. jurisdiction must be frozen. Additionally, transactions by U.S. persons or within the United States involving the entities or individuals designated under the orders are generally prohibited.
More information on the the individuals and entities designated July 16 is available on the Treasury Department website.
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