BOFIT Viikkokatsaus / BOFIT Weekly 2018/05

Last week,the US addedthe namesof 30 persons and firms to its SDN sanctions list imposed on Russia in response to the Ukraine conflict. New additions to the list included global power engineering company Power Machines, which is owned by business tycoon Alexei Mordashov. The sanctioning was related to supplying turbines to Crimea. Americans are generally forbidden from doing business with companies on the SDN sanctions list and the US assets of those on the list are frozen.

The mandated report on the Countering America's Adversaries Through Sanctions Act, or CAATSA, which was passed last summer, was presented to Congress on January 29. The public part lists 114 representatives of administration and state-owned firms as well as 96 oligarchs being part of the president's inner circle. The report's classified part should include an assessment of parastatal entities and the impacts of possible sanctions imposed on Russian government debt. No new sanctions are currently targeted at the listed persons and parastatal entities, unless they are already subject to earlier sanctions. US treasury secretary Steve Mnuchin says new measures are planned for the coming months, however.

Under CAATSA, the US could have imposed sanctions also on companies that work with the Russian defence contractors designated last autumn. According to the administration, sanctions are not considered necessary at the moment and the threat of sanctions is sufficient.

The possibility of new sanctions has given rise to worries in Russia and thinking about how to mitigate their impact. For example, an amnesty for those who repatriate assets hidden abroad, nondisclosure of information for companies working with public procurement and companies subject to sanctions as well as repurposing the failed Promsvyazbank to create bank to serve defence contractors have been proposed.