U.S. economic sanctions, by their nature, often change without warning. Since sanctions reflect U.S. foreign and national security policy, they must evolve rapidly with world events. Often, it seems that when one door is closed, another is opened. Most recently, President Obama’s December 17 announcement of an opening to Cuba was followed rapidly by the January 2 announcement of tightening North Korea sanctions. Hence our (mostly facetious) Newtonian law of the conservation of economic sanctions: sanctions may be transformed but never created or destroyed.
The Department of Justice’s Kleptocracy Initiative is kicking off 2015 strong. On January 13, 2015, the DOJ filed a civil complaint seeking the forfeiture of nine properties in New Orleans, worth close to $1.53 million. The property was allegedly purchased with corrupt proceeds, traced to $2 million in bribes paid to a former Honduran official.
On December 30 the Commerce Department shifted the oil export landscape as it had existed for 40 years, with only a little administrative sleight-of-hand.
Historic changes in relations between the United States and Cuba (that touch nerves in Hip-Hop and on Capitol Hill) and new U.S. sanctions against Venezuela may provide increased opportunities for U.S. business generally, and electronic communications technologies and infrastructure providers in particular. This week’s Cuba and Venezuela headlines, combined with recent and historic shifts in telecommunications and broadcasting markets in Mexico, on which we reported here, herald historic changes in Latin American electronic communications and infrastructure markets.
On December 18, the President signed legislation passed by Congress that authorizes further sanctions on Russia. The Ukraine Freedom Support Act of 2014 (UFSA) is aimed to assist “in restoring Ukraine’s sovereignty and territorial integrity” and to deter the Russian Government “from further destabilizing and invading Ukraine and other independent countries in Central and Eastern Europe, the Caucasus and Central Asia.” While the legislation authorizes a range of new sanctions on Russia’s defense and energy sectors as well as foreign financial institutions who engage in sanctionable transactions, it also grants the President significant discretion to waive both the industry-wide sanctions and specific transactions on national security grounds.
The Department of Commerce’s Bureau of Economic Analysis (BEA) has reinstated the mandatory reporting requirements of the BE–13, Survey of New Foreign Direct Investment in the United States, which was discontinued in 2009 due to budget restrictions. It is expected to result in the filings of reports from approximately 1,350 U.S. affiliates of foreign companies each year. The survey collects information on the acquisition or establishment of U.S. business enterprises by foreign investors, which was collected on the previous BE–13 survey, and information on expansions by existing U.S. affiliates of foreign companies, which was not previously collected. The statistical data will be used to measure the amount of new foreign direct investment in the United States, assess the impact on the U.S. economy and any potential implications for national security, and based on this assessment, inform future policy decisions.
Today President Barack Obama made a stunning speech announcing steps the United States will take to reduce U.S. sanctions against Cuba. The announcement followed the release of two U.S. citizens held by the Cuban government. Alan Gross was detained by Cuban authorities in 2009 while working as a USAID subcontractor. Separately, a U.S. intelligence officer, not named in the announcement but described by the President as “one of the most important” U.S. intelligence agents in Cuba, had been imprisoned in Cuba for nearly two decades.
In a recent Opinion Procedure Release (OPR), Number 14-02, the U.S. Department of Justice expressly limited successor liability for a US company purchasing a non-US company that had paid bribes in the past. In so doing, DOJ may have given a little bit of comfort to US companies and issuers thinking about purchasing non-US companies. But as described below, we emphasize “little bit.”
Every time there is a new round of reforms under the President’s Export Control Reform initiative, we hear the same advice:
- Controls on certain items are eliminated or reduced (which creates new opportunities for manufacturers and exporters); but
- The new rules bring new complexities, so be careful.
Attorneys in the export control space correspondingly inundate us with articles advising, in effect, call your export control lawyer.