A Broadening Effort for Belarus — U.S. Expands Sanctions on the Belarusian Regime, Coordinating with the EU, UK and Canada

On August 9, 2021, the one-year anniversary of the claimed reelection of Belarusian leader Aleksandr Lukashenka, President Biden issued an “Executive Order on Blocking Property of Additional Persons Contributing to the Situation in Belarus” (August 9, 2021 Executive Order). The Department of Treasury’s Office of Foreign Assets Control (OFAC) implemented the executive order by sanctioning 27 individuals and 17 entities related to the Lukashenka regime.

These U.S. actions were part of a coordinated series of sanctions measures imposed alongside those of the United Kingdom, the European Union and Canada to hold the Belarusian leader and his regime responsible for election misconduct, state-sponsored violence against protesters, and diverting a European air flight over Belarussian territory.

Background
The U.S. sanctions regime for Belarus dates to 2006, when President George W. Bush issued Executive Order 13405 (E.O. 13405) in response to concerns that the 2006 presidential election had been undemocratic. Belarusian leader Mr. Lukashenka, other members of the Government of Belarus (GoB), and several companies were designated as Specially Designated Nationals (SDNs).

The most recent U.S. sanctions actions are in response to the falsification of the 2020 election, the escalating repression of the political opposition and peaceful protesters, and the forced diversion of Ryanair Flight FR4978 to arrest a dissident journalist on May 23, 2021. On May 28, 2021, the Biden Administration announced that it would re-impose full blocking sanctions on nine Belarusian state-owned enterprises that were previously granted relief under a series of General Licenses, including the major petrochemical company, Belneftekhim. On June 21, 2021, OFAC designated 16 individuals, including Lukashenka’s press secretary, and five entities, including the State Security Committee of the Republic of Belarus (the Belarusian KGB) pursuant to E.O. 13405. Concurrently, the State Department issued visa restrictions on 46 Belarusian officials.

The August 9, 2021 Executive Order followed a July visit to Washington, DC, by the Belarusian opposition leader, Svyatlana Tshikhanouskaya, to urge the United States to support Belarusian democratic activists and civil society groups and put further political and economic pressure on the regime.

New Executive Order Offers Expanded Scope to Sanctions
The August 9, 2021 Executive Order broadens the scope of sanctions authority beyond the prior E.O. 13405 to enable the U.S. government to target elements of the Lukashenka regime and his support network across various sectors of the Belarusian economy. Most significantly, the new executive order authorizes the Secretary of the Treasury, in consultation with the Secretary of State, to impose sanctions on the following:

1. Leaders and Officials of Entities Sanctioned Under or Engaging in Conduct Sanctionable under E.O. 13405;
2. Organs of the GoB—Including political subdivisions, agencies, or instrumentalities of the GoB, including the National Bank of the Republic of Belarus;
3. Government Officials—Current or former leaders or officials of the GoB;
4. Targeted Economic Sectors—Defense and related materials sector, security sector, energy sector, potassium chloride (potash) sector, tobacco products sector, construction sector, or transportation sector of the Belarus economy, or any other economic sector as determined by the Secretary of the Treasury, in consultation with the Secretary of State;
5. Activities that Undermine Peace, Stability and Democracy in Belarus—Including (a) actions that threaten the peace, security, stability, or territorial integrity of Belarus; (b) actions that limit the exercise of human rights and fundamental freedoms by individuals in Belarus, or that limit access to the Internet or print, online, or broadcast media in Belarus; (c) electoral fraud or other actions that undermined the electoral process; (d) deceptive or structured transactions or dealings to circumvent U.S. sanctions; or (e) public corruption;
6. Material Assistance—Providing material assistance, sponsorship, or financial, material or technological support, or goods or services, for any activity described in point (5) above or any person blocked pursuant to the August 9, 2021 Executive Order; or
7. Owned or Controlled Entities—Persons that are owned or controlled by, directly or indirectly, the GoB or any person blocked pursuant to the August 9, 2021 Executive Order.

While U.S. officials have the authority to issue sanctions designations on the economic sector participants, agencies, parties and activities described above, U.S. primary sanctions prohibitions apply only after persons have been subjected to sanctions designations.

August 9, 2021 Sanctions Designations
OFAC’s designations significantly broadened sanctions on Belarussian state enterprises, individuals operating as sources of funds for the regime, and security services.

First, OFAC designated two Belarusian state-owned enterprises. Grodno Tobacco Factory Neman (GTF Neman), a Belarusian state-owned tobacco factory and a major source of illicit cigarettes in the EU, was designated for operating in the tobacco products sector. Belaruskali OAO, a global producer of potassium chloride (potash), was designated for operating in the potash sector. OFAC concurrently issued Belarus General License 4 “Authorizing the Wind Down of Transactions Involving Belaruskali OAO,” to provide U.S. persons 120 days to wind down transactions involving Belaruskali OAO or any entity in which Belaruskali OAO owns a 50 percent or greater interest.

Second, OFAC targeted Lukashenka’s “wallets,” meaning persons operating within various economic sectors that receive preferential treatment from the GoB in exchange for demonstrating public support and providing funds both for the regime and Lukashenka’s personal projects. Specifically, OFAC identified the following:

• Energy Wallet—Mikalai Varabei, a Belarusian businessman closely tied to Lukashkenka and eight entities within his business network (six Belarusian companies, one Ukrainian entity, and Russian-based subsidiary). This includes Novopolotsk Limited Liability Company Interservice (Interservice), Closed Joint-Stock Company New Oil Company (NNK), and Limited Liability Company Bremino Group (Bremino Group).
• Tobacco Wallet—Aliaksey Aleksin was designated pursuant to E.O. 13405. Two of his former companies, Inter Tobacco and Energo-Oil were sanctioned for operating in the tobacco products sector, and Belneftegaz, another company with former ties to Aleksin, was designated for operating in the transportation sector.
• Construction Wallet—Dana Holdings Limited (Dana Holdings) (a Cyprus-registered firm) and its Belarus subsidiaries were designated for operating in the construction sector of the Belarus economy. Dana Holdings has connections to Serbia’s Karic family, which financially supported Slobodan Milosevic in the 1990s and is considered close to Lukashenka.

Finally, OFAC expanded sanctions on the Belarus security services, designating the Investigative Committee of the Republic of Belarus (Belarusian SK), a Belarus law enforcement body that has investigated politically motivated criminal cases against human rights organizations and dissidents. OFAC also designated Kanstantsin Bychak, the head of the State Security Committee of the Republic of Belarus’ Investigations Department, and several other security officials. OFAC already had designated the latter entity on June 21, 2021.

As a result of the designations, the property and interests in property of the SDNs, as well as entities directly or indirectly owned 50 percent or more, individually or in the aggregate, by such SDNs, are blocked where U.S. jurisdiction applies.

A Global Effort

The U.S. Government has been coordinating pressure on the regime with the UK, Canada and the EU. Those governments each have adopted a combination of trade, financial and/or aviation sanctions.

• EU Sanctions—As of June 24, 2021, the EU had imposed sanctions on 166 individuals and 15 entities in Belarus. The EU has imposed economic sectoral sanctions that, among other restrictions, prohibit trade in petroleum products and potash, Belarus’ leading exports. The EU also has banned the export of equipment, technology or software intended primarily for use in the monitoring of the internet and of phone communications as well as dual-use goods and technologies for military use. On June 4, 2021, the EU also banned Belarusian carriers from its airspace and airports.
• UK Sanctions—On August 9, 2021, the UK announced a similar package of trade and aviation sanctions as that previously imposed by the EU. In addition, the UK imposed financial measures prohibiting purchases of transferable securities and money-market instruments issued by the Belarusian state, state-owned banks, and the provision of loans. The UK has also engaged in multiple rounds of sanctions designations on specific individuals and entities.
• Canada Sanctions—Canada has issued a series of sanctions on Belarusian officials and entities since September 2020. Most recently, on August 9, 2021, Canada announced new restrictions on certain activities relating to transferrable securities and money market instruments, debt financing, insurance and reinsurance, petroleum products, and potassium chloride products.