Sanctions are permanent, until Washington decides otherwise

The Russian diesel deal reveals how US sanctions combine sweeping restrictions with exceptions that serve Washington’s interests

The agreement to supply Russian diesel fuel to the United States has made a considerable political impact, and it comes amid another escalation of the Ukraine conflict during which both sides have been exchanging large-scale missile and drone strikes.

Meanwhile, the European Union has approved its 22nd package of sanctions against Russia, while Washington has adopted another round of punitive measures under the so-called Hellish Sanctions Act.

Yet against this backdrop, the US Treasury has issued a general license authorizing transactions involving the sale, delivery, unloading and import of Russian diesel fuel until April 2027, which, at first glance, appears extraordinary. 

In reality, however, such exemptions are a familiar feature of American sanctions policy as they illustrate a fundamental paradox of the US system: exceptionally severe restrictions coexist with considerable flexibility when Washington’s own interests are at stake.

On one hand, sanctions against Russia, particularly those targeting its energy sector, have become increasingly entrenched, and the latest legislation makes their removal considerably more difficult, adding to an extensive framework of federal laws, presidential orders and administrative regulations accumulated over recent years.

Read more

On the other hand, the American executive retains substantial powers to authorize exceptions, meaning even the harshest sanctions need not prevent transactions that Washington considers necessary.

The latest exemption is particularly revealing because the administration didn’t need to invoke the waiver provisions contained in the new legislation, given that Section 115 of the Lindsey Graham Act, for example, permits exemptions provided the administration submits a written justification to Congress, so instead, the Treasury employed a much simpler mechanism.

Last week, Bradley Smith, director of the Treasury’s Office of Foreign Assets Control (OFAC), signed a general license permitting the diesel transactions. Formally, therefore, the decision was taken not by President Donald Trump, or even by the Treasury secretary, but by a specialized department within the department.

There’s nothing unusual about this procedure. Under the sanctions program targeting what Washington calls Russia’s “malicious activities,” more than 100 general licenses have been issued covering a wide range of transactions, meaning another license is hardly a sensation.

Nor should it be mistaken for the lifting of sanctions because general licenses typically have limited validity and can be revoked before their expiry and a change in the political climate, a shift in Washington’s priorities, or an influx of imported diesel into the American market could be sufficient grounds for withdrawing the exemption.

There are precedents for licenses remaining in force for years. During the improvement in US-Belarusian relations in the 2010s, several major Belarusian enterprises benefited from exemptions that effectively suspended certain restrictions, but when relations deteriorated again in the early 2020s, those licenses were withdrawn.

Read more

In other cases, licenses serve the entirely technical purpose of allowing companies to complete transactions or wind down existing operations without violating sanctions, which means the distinction between the political significance of the Russian diesel agreement and its legal substance is therefore essential.

No sanctions have been lifted and Washington has merely employed an established administrative mechanism that can be reversed at any moment.

Nevertheless, the episode demonstrates something important about American sanctions policy in that even as Congress seeks to make restrictions against Russia increasingly permanent, the executive branch retains considerable room for maneuver.

The US can impose unprecedented economic restrictions while simultaneously creating exceptions whenever its interests demand them.

The legal machinery is already in place, but what ultimately determines how it is used is political will.

This article was first published by Kommersant, and was translated and edited by the RT team