Happy new year everyone. The government is shut down, but there has already been a flurry of activity in 2019 on the economic sanctions and embargoes front. Here is a summary of where we stand on various sanctions regimes.

Russia. On January 10, 2019, the Trump administration defended its decision to ease U.S. sanctions against companies connected to the Russian oligarch Oleg Deripaska. In 2017, the “Countering America’s Adversaries Through Sanctions Act” (CAATSA) passed Congress overwhelmingly and was signed into law by President Trump. As we blogged here and here, CAATSA codified strict Russia sanctions. It also allows Congress to block any termination of sanctions by the Executive. In December 2018, the Treasury department announced that it would lift sanctions on three of Deripaska’s companies: EN+ group, Rusal, and JSC EuroSibEnergo. Though Deripaska would continue to be subject to sanctions personally, Secretary Mnuchin reportedly told members of Congress in a briefing that the three companies had committed to “significantly diminish Deripaska’s ownership and sever his control.” Many lawmakers left the briefing unimpressed, and expressed concern that lifting sanctions would result in a tremendous financial benefit to Deripaska, whose designation by Treasury for sanctions last year reads like a mafia indictment. For now, it is unlikely that Congress is united enough to use its CAATSA powers to maintain the sanctions in the face of the Administration’s decision to lift them. But it is clear that Congressional Democrats intend to exercise their oversight powers when it comes to sanctions (or lack thereof) against Russia.

Iran. On January 9, 2019, Iran’s Supreme Leader said that the re-imposed U.S. sanctions against Iran “do put pressure on the country and the people.” Iran’s economy has been unstable in recent months, particularly due to fluctuations in the Rial. The next day, the Iranian Oil Minister said that Tehran would not comply with the “illegal” U.S. sanctions. And the Iranian Foreign Minister has recently commented on Iran’s positive economic ties with other countries, including India, expressing confidence in countering U.S. sanctions – which he also described as illegal. While U.S. sanctions clearly impact Iran’s economy, it is also clear that Iran has been reaching out to the international community, working to generate sympathy for the position that re-imposition of U.S. sanctions runs counter to UN Security Council Resolutions.

North Korea. At his New Year’s conference on January 10, 2019, South Korean President Moon Jae-in said that North Korean leader Kim Jong-un’s visit to China means that a second summit between the United States and North Korea is imminent. Since the first summit in June 2018, talks regarding denuclearization have stalled. Moon supports inter-Korean economic cooperation that would bolster economic growth in both the North and South. In his New Year’s conference, he indicated that South Korea will resume factory projects in the North Korean city of Kaesong, and stated that and South Korean tours to the North’s Diamond Mountain would resume, but not until international sanctions are lifted.

Venezuela. On January 8, 2018, the U.S. Department of Treasury, Office of Foreign Assets Control (OFAC) added approximately thirty individuals and entities to its List of Specially Designated Nationals (SDN List) pursuant to Executive Order 13850 for their roles in corrupt currency-exchange transactions that generated $2.4 billion in illicit proceeds for Venezuela. Among those sanctioned include persons allegedly involved in a scheme to bribe the Venezuelan Office of the National Treasury to conduct foreign exchange operations that enriched certain exchange houses. OFAC stated that the designations “target individuals who took advantage of a corrupt system within the Venezuelan ONT, stealing billions of dollars from the Venezuelan people since 2008.”

Syria. On January 8, 2018, Senate Democrats refused to vote on a bill introduced by Florida Republican Marco Rubio that included provisions directing the Trump Administration to impose additional sanctions on entities conducting business with the Syrian President Bashar al-Assad’s government. The legislation followed President Trump’s announcement about withdrawing troops from Syria. The bill, backed by Republican lawmakers, also included additional foreign aid for Israel, and provisions that would let state and local governments refuse to conduct business with companies that boycott Israel. Democrats blocked debate of the legislation and have indicated that they will not consider any legislation for debate that does not end the shut-down.

We expect sanctions will continue to evolve rapidly in 2019. And as always, we will keep you updated on developments.