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New US Sanctions | Russia to retaliate

OWoN: So Flopsy wants to throw in more sanctions. What a Plonker. Let Putin close all Russian air and sea space. Bypass all US sanctions with Iran etc and call his cards.

The parade of isolation continues. What does this really means when China has Russia's back? Is this perhaps an indirect shot at China more than Russia? Meanwhile both Russia and China build away at their own sphere of influence ignoring the US and its allies.

The biggest loser in this escalation is Europe. Sheep following Flopsy the illegal undocumented loser.




US Unveils Latest Russian Sanctions, Putin Immediately Responds That Russia Drafting Retaliation


Zero Hedge
By Tyler Durden
12 September 2014

Moments ago, as was widely preannounced, the US Treasury unveiled its latest round of Russian sanctions. While the bigger picture was well-known, here are some of the highlights:

  • U.S. SANCTIONS FOCUS ON FINANCIAL, ENERGY, DEFENSE SECTORS
  • U.S. TREASURY ADDS SBERBANK TO SANCTIONS LIST,
  • U.S. TREASURY SANCTIONS AFFECTS GAZPROM, GAZPROM NEFT, LUKOIL, ROSNEFT, AND SURGUTNEFTGAZ
  • U.S. TIGHTENS DEBT FINANCING RESTRICTIONS TO 30 DAYS

As Bloomberg reports, action deepens existing sanctions on Russian financial institutions, expands sanctions on Russia’s energy sector, targets additional energy- and defense-related firms, U.S. Treasury says in statement. "Today’s actions demonstrate our determination to increase the costs on Russia as long as it continues to violate Ukraine’s territorial integrity and sovereignty," Under Secretary for Terrorism and Financial Intelligence David S. Cohen says in statement

Treasury Dept says it “maintains significant scope to expand these sanctions.”

Sberbank added to sanctions list; Treasury also tightens “debt financing restrictions by reducing from 90 days to 30 days the maturity period” for sanctioned banks

Also imposes sanctions that “prohibit the exportation of goods, services (not including financial services), or technology in support of exploration or production for Russian deepwater, Arctic offshore, or shale projects that have the potential to produce oil”

Step affects 5 cos.: Gazprom, Gazprom Neft, Lukoil, Surgutneftegas, and Rosneft, Treasury says

And instantly: PUTIN: GOVT DRAFTING PROPOSALS TO RETALIATE AGAINST SANCTIONS

  • PUTIN SAYS RUSSIA TO RETALIATE ONLY IF IT SERVES ITS INTERESTS
  • PUTIN SEES MORE POSITIVES THAN NEGATIVES IN LATEST SANCTIONS
  • PUTIN SAYS UKRAINE `HELD HOSTAGE' BY OUTSIDE INTERESTS
  • PUTIN SAYS RUSSIA WON'T IMPOSE TRAVEL BANS IN RETALIATION

And Rosneft is pissed, via Bloomberg:

  • Rosneft is improper target for sanctions as co. doesn’t influence political process, spokesman Mikhail Leontyev says by phone.
  • Leontyev declines to comment on effect of sanctions, saying lawyers are studying issue
  • New sanctions are even more groundless, unjust than previous measures
  • Sanctions seem to target EU, U.S. partners; affect shareholders
  • “If the sanctions are meant as a scare tactic, then the object of the scaring is an unlucky choice, because we have no influence over the process”

So back to square one, as Russia and China get progressively closer.

* * *

Full statement from the US Treasury:

*WASHINGTON – *Due to continued Russian efforts to destabilize eastern Ukraine, Treasury Secretary Jacob J. Lew today determined that persons operating within Russia’s defense and related materiel sector may now be subject to targeted sanctions under Executive Order 13662. In addition, the U.S. Department of the Treasury today extended targeted financial sanctions to Russia’s largest bank, deepened existing sanctions on Russian financial institutions, expanded sanctions in Russia’s energy sector, and increased the number of sanctioned Russian entities in the energy and defense sectors.

Treasury Secretary Jacob J. Lew has made a determination that persons operating within Russia’s defense and related materiel sector may now be subject to targeted sanctions under Executive Order 13662. Following Secretary Lew’s determination, Treasury has imposed sanctions that prohibit transactions by U.S. persons or within the United States involving new debt of greater than 30 days maturity issued by Rostec, a major Russian conglomerate that operates in the defense and related materiel sector.

Treasury has added Russia’s largest bank, Sberbank of Russia, to the existing prohibitions on U.S. persons providing equity or certain long-term debt financing. In addition, we have tightened the debt financing restrictions by reducing from 90 days to 30 days the maturity period for new debt issued by the six Russian banks subject to this restriction. These banks are Bank of Moscow, Gazprombank OAO, Russian Agricultural Bank, Sberbank, VEB, and VTB Bank.

Treasury has designated and blocked the assets of five Russian state-owned defense technology firms – OAO ‘Dolgoprudny Research Production Enterprise,’ Mytishchinski Mashinostroitelny Zavod OAO, Kalinin Machine Plant JSC, Almaz-Antey GSKB, and JSC NIIP – for operating in the arms or related materiel sector in Russia.

Treasury has also imposed sanctions that prohibit the exportation of goods, services (not including financial services), or technology in support of exploration or production for Russian deepwater, Arctic offshore, or shale projects that have the potential to produce oil, to five Russian energy companies – Gazprom, Gazprom Neft, Lukoil, Surgutneftegas, and Rosneft – involved in these types of projects. This measure complements restrictions administered by the Commerce Department and is similar to new EU measures published today. U.S. persons have until September 26, 2014 to wind down applicable transactions with these entities pursuant to a general license that Treasury’s Office of Foreign Assets Control issued today.

Treasury has also imposed sanctions that prohibit transactions in, provision of financing for, or other dealings in new debt of greater than 90 days maturity issued by two additional Russian energy companies – Gazprom Neft and Transneft.

“Today’s actions demonstrate our determination to increase the costs on Russia as long as it continues to violate Ukraine’s territorial integrity and sovereignty,” said Under Secretary for Terrorism and Financial Intelligence David S. Cohen. “The United States, in close cooperation with the European Union, will impose ever-increasing sanctions that further Russia’s isolation from the global financial system unless Russia abandons its current path and genuinely works toward a negotiated diplomatic resolution to the crisis.”

Despite the severity of these actions, Treasury maintains significant scope to expand these sanctions, and impose additional sanctions, against individuals and entities under the authorities of Executive Orders (E.O.) 13660, 13661 and 13662 should the Russian Government not take steps to de-escalate the situation in Ukraine.

* *

"Imposition of Sanctions on Several Russian State-Owned Firms Pursuant to E.O. 13661 and E.O. 13662 for Operation in the Defense or Related Materiel Sector in
Russia"

Treasury today has also imposed new sanctions and strengthened existing sanctions targeting firms operating in Russia’s defense sector.""

* *

*Determination about Russia’s Defense and Related Material Sector and Imposition of Sanctions against Rostec.

*Treasury Secretary Jacob J. Lew today made a determination under E.O. 13662 that persons operating within Russia’s defense and related materiel sector may now be subject to targeted sanctions. Following Secretary Lew’s determination, Treasury issued a new directive that imposes sanctions on Rostec, a major Russian conglomerate that operates in the defense and related materiel sector. Directive 3 pursuant to E.O. 13662 prohibits transactions in, provision of financing for, and other dealings in new debt of greater than 30 days maturity issued by Rostec, and its 50 percent or more owned subsidiaries, effectively cutting it off from U.S. debt financing.


*Rostec* is a Russia-based state-owned holding company for Russia’s defense industry. Rostec produces, develops, manufactures, and exports civil, military, and dual-purpose high-technology goods, and is involved in the manufacturing of weapons and military equipment. Rostec-held subsidiaries manufacture and export military products valued in the billions. Treasury designated Rostec’s Director General, Sergei Viktorovich Chemezov, on April 28, 2014, pursuant to E.O. 13661.

*Designation of Additional Defense Technology Companies under E.O. 13661.

*Treasury has also designated and blocked the assets of five Russian defense firms under E.O. 13661 for operating in the arms and related materiel sector in the Russian Federation. The firms designated today under E.O. 13661 include OAO ‘Dolgoprudny Research Production Enterprise,’ Mytishchinski Mashinostroitelny Zavod OAO, Kalinin Machine Plant JSC, Almaz-Antey GSKB, and JSC NIIP. 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 today’s actions under E.O. 13661, any assets of these entities that are within U.S. jurisdiction must be frozen. Additionally, transactions by U.S. persons or within the United States involving these entities are generally prohibited. ""

*OAO ‘Dolgoprudny Research Production Enterprise’* is a Russia-based company, which is primarily engaged in the production of weapons and ammunition, including the Buk missile system, known in the West as “Gadfly” or SA-11 or SA-17.

*Mytishchinski Mashinostroitelny Zavod, OAO* is a Moscow-based company that has produced weaponry and equipment focusing primarily on anti-aircraft missile systems and chassis for tracked military vehicles.

*Kalinin Machine Plant JSC* is a Russia-based, state-run company involved in the production of special purpose products such as weapons, ammunition, and combat anti-air missile system facilities for the Ministry of Defense of the Russian Federation. Kalinin Machine Plant JSC produces artillery guns for infantry and anti-air defense and specializes in the production of launchers and anti-air missiles.

*Almaz-Antey GSKB* is a Moscow-based subsidiary of the Almaz-Antey Concern, which was designated under E.O. 13661 on July 16, 2014. Almaz-Antey GSKB designs and manufactures air defense systems for the Russian Ministry of Defense.

*JSC NIIP* is a Zhukovski-based Russian defense industrial firm owned by the Almaz-Antey Concern. JSC NIIP develops anti-aircraft defense systems, including on-board radar systems for MiG and Sukhoi fighters, and anti-aircraft missile systems for land forces, including the KUB and BUK systems.

"Expansion of Prohibition of Certain Types of Activities with Several Russian State-Owned Financial Institutions Pursuant to E.O. 13662"

Treasury today has imposed new sanctions and strengthened existing sanctions in Russia’s financial sector.

*Imposition of Sanctions against Sberbank of Russia and Lowering of Allowable Maturity for New Debt Issuance for Sanctioned Financial Institutions.

*Treasury has also modified Directive 1 pursuant to E.O. 13662 to lower the allowable maturity for new debt from 90 to 30 days, and has added Sberbank to the list of entities subject to the restrictions in Directive 1. Directive 1 pursuant to E.O. 13662 now prohibits transactions in, provision of financing for, or other dealings in new debt of greater than 30 days maturity and new equity of the banks listed under this Directive, by U.S. persons or within the United States. As a practical matter, this step will further remove access to U.S. dollar financing for these financial institutions, and impose additional significant costs on the Russian Government for its continued provocations.

*Sberbank of Russia *is Russia’s largest financial institution. Sberbank accounts for approximately one-quarter of Russian banking assets and one-third of its banking capital.

"Prohibition of Certain Types of Activities with Several Russian State-Owned Energy Companies Pursuant to E.O. 13662"

Treasury today has imposed new sanctions and strengthened existing sanctions targeting firms operating in Russia’s energy sector.

*Prohibition on Goods, Services, and Technology for Certain Energy Sector Activities.

*New Directive 4 issued pursuant to E.O. 13662 prohibits the provision, exportation, or reexportation of goods, services (except for financial services), or technology by U.S. persons or from the United States in support of exploration or production for deepwater, Arctic offshore, or shale projects that have the potential to produce oil in the Russian Federation, or in maritime area claimed by the Russian Federation and extending from its territory, and that involve five listed Russian energy companies: Gazprom, Gazprom Neft, Lukoil, Surgutneftegas, and Rosneft. Treasury initially imposed sanctions against Rosneft, Russia’s largest petroleum company and third-largest gas producer, pursuant to E.O. 13662 on July 17, 2014. Today’s step, which complements Commerce Department restrictions and is similar to new EU measures published today, will impede Russia’s ability to develop so-called frontier or unconventional oil resources, areas in which Russian firms are heavily dependent on U.S. and western technology. While these sanctions do not target
or interfere with the current supply of energy from Russia or prevent Russian companies from selling oil and gas to any country, they make it difficult for Russia to develop long-term, technically challenging future projects.

*OAO Gazprom* is a Russia-based, government-owned global energy company engaged in gas exploration, production, transportation, storage, processing, and sales. It is one of the largest joint stock companies in Russia.

*Gazprom Neft *is an integrated Russian oil company engaged in the exploration, development, production, transportation, and sale of crude oil and gas, and is also involved in oil refining, marketing of petroleum products, oil field services, and construction and development of exploration wells. Gazprom Neft is majority owned by Gazprom.

*Lukoil OAO* is a Russia-based integrated oil and gas company. Lukoil is engaged in the business of oil exploration, production, refining, marketing, and distribution. The company is an owner of refineries, gas processing, petrochemical plants, and gas station networks located in Russia and abroad.

*Surgutneftegas *is a Russian oil company involved in oil and gas production and exploration, gas processing, power generation, output and marketing of petroleum products, petrochemicals and gas products.

* *

*Imposition of Sanctions against Gazprom Neft and Transneft. *Treasury has added two Russian energy companies, Gazprom Neft and Transneft, to the prohibitions under Directive 2 pursuant to E.O. 13662. Transactions in, provision of financing for, and other dealings in new debt of greater than 90 days maturity for these two companies, and their 50 percent or more owned subsidiaries, by U.S. persons or within the United States are prohibited. This sanction will impair their ability to raise financing in U.S. dollars, which is critical for their exploration and development of new oil fields.

*AK Transneft OAO* is Russia’s government-owned pipeline company. The company provides services for oil and oil products transportation via trunk pipelines systems within the Russian Federation and abroad.

* * *

And the FAQ for today's sanctions as released by the Treasury:

407. May a U.S. person consent to a replacement of its participation by a non-U.S. person in a long-term loan facility that was extended to a person subject to Directives 1, 2, or 3 prior to the sanctions effective date?

A U.S. person is not prohibited by Directives 1, 2, or 3 from engaging in transactions necessary to exit or replace its participation in a long-term loan facility that was extended to an SSI entity prior to the sanctions effective date. This would not constitute dealing in new debt. U.S. persons involved in such facilities should ensure that all newly negotiated drawdowns or disbursements from the facility utilize repayment terms that are not prohibited by the applicable sanctions effective date. See FAQ 394? for additional information on what constitutes a permitted drawdown or disbursement from an existing long-term loan obligation. [9-12-2014]

408. Is a U.S. person permitted under Directives 1, 2, or 3 to extend credit for greater than 30 days (for persons subject to Directives 1 or 3) or 90 days (for persons subject to Directive 2) to a non-sanctioned party for the purpose of purchasing goods or services from a person subject to Directives 1, 2, or 3?

Directives 1, 2, and 3 do not prohibit U.S. persons from extending credit for longer than 30 days (for persons subject to Directives 1 or 3) or 90 days (for persons subject to Directive 2) to non-sanctioned parties for the purpose of purchasing goods or services from an SSI entity, so long as the SSI entity is not the indirect borrower. [9-12-2014]

409. If a person determined to be subject to Directives 1, 2, or 3 makes successive draws under a short-term facility created after the sanctions effective date (e.g., it borrows $100 million with a 15-day maturity, then at the end of the 15 days, the debt “rolls over”), does the facility become prohibited if the SSI borrower makes successive short-term borrowings that cumulatively add up to more than 30 days (for persons subject to Directives 1 or 3) or 90 days (for persons subject to Directive 2)?

Two conditions must be met for short-term facilities created after the sanctions effective date to be permissible. As long as (1) each individual disbursement has a maturity of 30 or 90 days or less (depending on the applicable Directive) and the disbursement is paid back in full before the next disbursement and (2) the lender is not contractually required to roll over the balance for a cumulative period of longer than 30 or 90 days (depending on the applicable Directive) at the borrower’s request (i.e., it has the option to refuse the request for a new short-term loan and terminate the facility), the loan is not prohibited, even though the same borrower may obtain a series of short-term loans from the same lender over a cumulative period exceeding 30 or 90 days (depending on the applicable Directive). U.S. persons may not deal in a drawdown or disbursement initiated after the sanctions effective date with a repayment term of longer than the applicable authorized tenor if the terms of the drawdown or disbursement are negotiated or re-negotiated on or after the sanctions effective date. Such a newly negotiated drawdown or disbursement would constitute a prohibited extension of credit. [9-12-2014]

410. Are U.S. persons prohibited from entering into new contracts after the sanctions effective date with persons subject to Directives 1, 2, or 3 that provide payment terms to the SSI entities of greater than 30 days (for persons subject to Directives 1 or 3) or 90 days (for persons subject to Directive 2)? For instance, if a U.S. person agrees to sell shares or assets to an SSI entity in a corporate transaction that becomes effective on or after the sanctions effective date, is the U.S. person prohibited from agreeing to deferred purchase payments, even if no interest is involved, that may be paid more than the permissible number of days later by the SSI entity?

Directives 1 and 3 prohibit new extensions of credit to SSI entities of greater than 30 days maturity and Directive 2 prohibits new extensions of credit to SSI entities of greater than 90 days maturity, and these prohibitions include deferred purchase agreements extending payment terms of longer than 30 days or 90 days (depending on the applicable Directive) to an SSI entity. Such agreements would constitute a prohibited extension of credit to an SSI entity if the terms were longer than the permissible number of days and the agreement was entered into on or after the sanctions effective date. OFAC does not consider the inclusion of an interest rate to be a necessary condition for establishing whether a transaction represents new debt. [9-12-2014]

411. What does the prohibition contained in Directive 3 under Executive Order 13662 mean? What is the scope of prohibited services?

OFAC issued Directive 3, introducing new prohibitions on all transactions in, provision of financing for, and other dealings in new debt of longer than 30 days maturity of persons determined to be subject to the Directive, their property, or their interests in property. Transactions by U.S. persons or within the United States involving derivative products whose value is linked to an underlying asset that constitutes new debt with maturity of longer than 30 days issued by a person subject to Directive 3 are authorized by General License 1A pursuant to Executive Order 13662.

412. What does the prohibition contained in Directive 4 mean? What is the scope of prohibited services?

OFAC issued Directive 4, introducing new prohibitions on the provision of goods, services (except for financial services), and technology for certain activities involving certain persons operating in the energy sector of the Russian Federation. Directive 4 prohibits the direct or indirect provision, exportation, or reexportation of goods, services (except for financial services), or technology in support of exploration or production for deepwater, Arctic offshore, or shale projects that have the potential to produce oil in the Russian Federation, or in maritime area claimed by the Russian Federation and extending from its territory, and involve any person determined to be subject to Directive 4 or that person’s property or interests in property. The prohibition on the exportation of services includes, for example, drilling services, geophysical services, geological services, logistical services, management services, modeling capabilities, and mapping technologies. The prohibition does not apply to the provision of financial services, e.g., clearing transactions or providing insurance related to such activities.

On September 12, 2014, OFAC issued General License 2, authorizing for 14 days all services and activities prohibited by Directive 4 that are ordinarily incident and necessary to the wind down of operations, contracts, or other agreements involving persons determined to be subject to Directive 4. In order to qualify under this General License, a transaction must (1) occur prior to 12:01 am E.D.T. September 26, 2014, and (2) relate to operations, contracts, or agreements that were in effect prior to September 12, 2014. General License 2 does not authorize any new provision, exportation, or re-exportation of goods, services, or technology except as needed to cease operations, contracts, or other agreements involving affected projects.

Please see this page for the Department of Commerce’s related license requirement on exports of certain goods for deepwater, Arctic offshore, or shale projects that have the potential to produce oil or gas.

413. For the purposes of Directive 4, how does OFAC define "deepwater" projects that have the potential to produce oil?

A project is considered to be a deepwater project if the project involves underwater activities at depths of more than 500 feet.

414. Does Directive 4 apply to projects that have the potential to produce gas?

If a deepwater, Arctic offshore, or shale project in the Russian Federation, or in maritime area claimed by the Russian Federation and extending from its territory, and involving a person named under Directive 4 has the potential to produce oil, then the prohibition applies, irrespective of whether the project also has the potential to produce gas. If the project has the potential to produce gas only, then the prohibition does not apply.

415. For persons determined to be subject to multiple Directives, how do the prohibitions and exemptions listed under one Directive affect prohibitions and exemptions under the other Directives?

Each Directive operates independently of the others. If a transaction involves a person subject to two Directives, for example, a U.S. person engaging in that transaction must comply with the requirements of both Directives. Exemptions in one Directive apply only to the prohibitions contained in that Directive and do not carry over to another Directive. For example, if a person is subject to both Directive 2 and Directive 4, the exemption for the provision of financial services by U.S. persons or in the United States under Directive 4 does not supersede the prohibition in Directive 2 on dealing in debt of longer than 90 days maturity of such a person. For these reasons, when OFAC references a prohibition involving an "SSI entity" in these FAQs or in other guidance, it is referring to an entity subject to the Directive(s) at issue in a particular FAQ or piece of guidance.

416. What does the "sanctions effective date" mean in the context of sectoral sanctions pursuant to E.O. 13662?

For purposes of the sectoral sanctions, "sanctions effective date" means the date a person is determined to be subject to the prohibition(s) of the relevant Directive. When a person has been previously determined to be subject to a Directive and the prohibition in the Directive is subsequently amended, (1) the sanctions effective date for the prohibitions of the original Directive remains the date on which the person was identified as subject to the prohibitions of that Directive, and (2) the sanctions effective date for the amended Directive is the date of the amendment (or other date specified in the amended Directive).

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4 comments :

  1. The Chicago street organizer is such an embarrassment to humanity. From delaying the PPs, to his reckless attempt at trying to play a man's game in foreign affairs - he is reported to be a figure of fun on the world's stage.

    The man cannot even get our borders secure and he now thinks he can push Russia/China around as if he knows how to run the world?

    The man makes Jimmy Carter look like world class material.

    ReplyDelete
    Replies
    1. Seriously Tony, nothing could make Carter look like world class material. These are just various grades of more US tragedies playing out to a bemused Global audience. It seems the Beverly Hill-billies went on to run DC. Although they must have pulled in this rope a dope from the casual s.
      Our world is a very dangerous place when the certifiable now report straight in to DC with full vetting clearances. I suppose after the Bushes and Clinton's anything goes.
      God if only Teddy could resurrect. When Americans were men, and honour was a virtue. Our world is on count down if the Vermin continue unchecked.

      Delete
    2. Just for public awareness, John is referring to the Bull Moose Teddy, and not the Chappaquiddick chick dunker. ;)

      Delete
  2. We are seeing desperation at play here. Soon we will see the final nail in the coffin...UsA and Rockerfeller's are playing out a dangerous game...they are hell bent on not returning to the gold standard and shoring up the UsA economy and basically securing the global economy.

    What is happening is isolationism and everyone will run to Russia's aide to supply that which UsA will not but for sanctions. This is economics 101...

    There is more here than meets the eye, and we see subterfuge playing out here also. There are many irons in the fire:
    Isahell's war crimes with Gaza genocide
    UsA criminals protecting banking cabal for crimes committed with Libor, mortgages, derivatives, etc...stealing of gold.
    UsA stock market rigging and investment pillaging, etc.
    UsA crimes for World Trade Center, stealing gold, stock market manipulation, etc.
    UsA war crimes for waterboarding, etc...against convention...
    UsA Pope resolved/and mandated to give no one amnesty for crimes
    UsA Nazi's running and ruling America
    UsA if forced on new TRN backed by gold, crooks have to give up theri bounty with 0 repayment because funds were stolen from taxpayers...
    Much more crimes and prosecution leading to arrests for treason and trading with the enemy...etc...

    They have much to lose besides changing over currency to pull this country out of economic suicide...doing this will be their hanging.

    Don't let them have the war that they want to dump their stolen money into black project. This is the only way that they can see the economy coming back to any normalcy or any type of real focus to be fixed...there is an implosion happening here between factions...


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