There were a great many questions and comments after our first post about how sanctions work: "American Sanctions for Beginners: An ACF Explainer." Since the topic has generated so much interest, let’s continue.
Also, to mark the launch of the blog, we’re ready to share a small insider detail with you: you can see what "sanctions lists" look like inside one of the large companies operating in Russia. We can’t say which company it is (we promised not to), but the screenshots are completely authentic—have no doubt about that.
Once again, the floor goes to Nikita Kulachenkov from ACF’s investigations department:
As expected, the President of the United States signed the sanctions law.
And now, as the law states, he is required, authorized, and encouraged to impose sanctions on certain individuals. Looking through the comments on the post, we noticed a great deal of outrage over the wording that sanctions against certain persons are imposed "at the discretion of the President of the United States." Many took this to be a violation of the principle of private property, the presumption of innocence, and in general an "undemocratic outrage," even interference in Russia’s internal affairs. Let us try to explain why that is not the case: in order to impose sanctions on certain individuals, the President of the United States must first declare a "national emergency" in connection with the circumstances that have arisen—this was done back on March 6, 2014. You could say this is a formality, but only the declaration of a "national emergency" gives the U.S. president the authority to impose sanctions, and it is an extraordinary measure that must be justified.
Most importantly, property is not confiscated—it is blocked. In other words, for as long as the sanctions remain in force, the person cannot dispose of it: use it, sell it, give it away, and so on. No one cancels their ownership rights. The duration of the sanctions is determined by the duration of the "national emergency," which ends by order of the President or the Senate, or automatically after one year. The President may extend the "national emergency" or separately extend the sanctions themselves, but in that case he must report to the Senate every six months on the purpose of the extension.
Property can actually be confiscated in only two cases: By court decision, following an investigation confirming harm to the United States, violations of U.S. law, the illegal origin of funds, and so on. By decision of the President of the United States, but only in the event of military hostilities and the participation in those hostilities of the person or country whose property has been blocked.
Therefore, the statements by the Russian Foreign Ministry and various commentators about violations of every conceivable right and democratic principle do not correspond to reality. We specifically noted that interest will even accrue on blocked funds and, as OFAC regulations put it, "at a commercially reasonable rate." That makes for a rather strange kind of confiscation.
And here, to liven up our study of capitalist legislation, we can look at the first examples of sanctions being put into practice. We already mentioned that, according to unverified information obtained by ACF, one major American corporation initiated the termination of contracts with a company owned by Rotenberg. And here is a screenshot from the financial system of another major international corporation, showing the individuals and legal entities with whom any transactions are prohibited (Denied Parties List).
The screenshot was sent by an anonymous friend of ACF, and we are hugely grateful to him! (By the way, we will soon launch a special-super-secret-encrypted system for receiving confidential information. The system will allow us to receive information anonymously, and if the sender wishes to remain unknown, we ourselves will not know who the sender is.)
According to other unverified information obtained by ACF, a major German IT company (possibly SAP) has suspended the issuance of software licenses to a major Russian railway company (possibly Russian Railways, RZD). The reason is that some of the German IT company’s shares are traded on the New York Stock Exchange, and doing business with companies linked to people on the U.S. sanctions list could damage its reputation.
And finally, the most shocking piece of information: Finnish music fans may not get to see performances by Justin Timberlake and Miley Cyrus!
The reason is that the stadium where he was supposed to perform is owned equally by Gennady Timchenko and Arkady Rotenberg, and the singer’s American agency can no longer hold concerts there. Everything described above confirms that sanctions "merely" exclude certain individuals from the U.S. business environment and from dealings involving the United States, while also making it much harder for them to do business in other countries—but they do not affect their operations inside Russia. It is as if the United States is saying to these fine people: "Please continue working for the good of your native country, but we will no longer be welcoming you as guests." In ACF’s view, that is very democratic.
And most importantly: these "people on the list" are robbing the citizens of Russia, yet it is the United States that imposes sanctions on them. That is deeply frustrating. We would very much like the day to come sooner when it is not some faraway Obama causing trouble for this gang, but Russia’s own law enforcement system.