On February 21 and 22, following weeks of clear signals that sanctions would be imposed in response to military activity, the Biden administration issued significant new sanctions in response to the Russian Federation’s recognition of separatist regions of Ukraine and incursions of Russian troops. The new measures impose property-blocking sanctions on two state-owned banks (including their subsidiaries), target secondary market dealings in Russian debt, and impose a near complete prohibition on dealings with the separatist regions of Ukraine. Additionally, the Department of the Treasury took steps that enable it to impose sanctions on any person determined to be operating in Russia’s financial services sector. This appears to be an initial phase of sanctions activity and should military activity continue or escalate, it is likely that sanctions would similarly increase in stringency.

The evolving nature of the U.S. sanctions response is evidenced by a recent announcement that the Biden administration will soon impose sanctions targeting Nord Stream 2 AG, the company behind the $11.3 billion pipeline project that was intended to carry gas from Russia to Germany. Buckley will continue to monitor the situation and provide updates.