US Senate Democrats, with support from the White House, have introduced the Defending Ukraine Sovereignty Act of 2022 (S. 3488). This bill seeks to deter a Russian “escalation” of hostilities in or against Ukraine through the threat of imposing sanctions against Russian officials and companies, as well as individuals and entities involved in the Nord Stream 2 pipeline.
The bill currently has 41 cosponsors, all Democrats, so they will need to find Republican support for the legislation to secure the 60 votes needed to pass the bill. Republicans are generally pushing to strengthen the proposed measures, such as the inclusion of a provision that would immediately sanction the Nord Stream 2 pipeline, regardless of whether Russia attacks Ukraine. Also, some Republican lawmakers want to see a mandate, rather than just an authorization as included in this bill, for sanctions designed to remove Russian banks out of the SWIFT messaging system. Senate Foreign Relations Chairman Bob Menendez, the sponsor of the measure, has said he is open to merging some Republican ideas into his bill.
Talks are continuing between lawmakers about the contents of a final bipartisan Russia sanctions bill. If Democrats and Republicans in the Senate reach agreement on S. 3488, it is expected to be the primary legislative vehicle for Congress to play a role in the Ukraine-Russia crisis. Senate Majority Leader Chuck Schumer, who is a cosponsor, has used the chamber’s procedure to bypass committee consideration of the measure and bring it directly to the floor.
The bill sets out a variety of possible measures that would be triggered if a determination is made by the President that the Russian Government “is engaged in or knowingly supporting a significant escalation in hostilities or hostile action in or against Ukraine” compared with the level of hostilities prior to December 1, 2021, which is intended to undermine, overthrow, or dismantle the Ukrainian Government (a “Presidential Determination”). Key sanctions-related provisions of S. 3488 in its current form include the following:
- Sanctions on Russian financial institutions. The bill requires the President to designate as “Specially Designated Nationals” (“SDNs”) at least three Russian financial institutions (out of the 12 listed). A number of these financial institutions are already subject to more limited US restrictions and identified on the Sectoral Sanctions Identifications List. This provision would also authorize the President to designate as SDNs other banks owned or operated by the Russian Government.
- Sanctions on Russian extractive industries. The bill provides for SDN sanctions against certain Russian extractive industries, including the oil and gas extraction and production; coal extraction, mining, and production; mineral extraction and processing; and “any other sector or industry with respect to which the President determines the imposition of sanctions” is in US national security interests. This provision could be revised as a result of concerns raised by the Biden Administration to this type of sweeping sanction given its potential to disrupt global energy supplies.
- Sanctions on Russian leaders. The bill specifies a list of twelve officials, including the President and Prime Minister of Russia, plus a category for other senior armed forces and government officials, who must be sanctioned following a Presidential Determination. The sanctions to be imposed would include SDN designations and visa bans and revocations.
- Prohibitions related to Russian debt. The bill also would prohibit all transactions by US Persons in Russian sovereign debt issued after the date of the bill’s enactment into law, including bonds, of the Russian Government. This restriction would build on the restrictions related to the Russian Government under Directive 1 of Executive Order 14024 (which we previously discussed here). In addition, the bill contains a provision requiring the President to impose SDN designations and travel bans on non-US persons who deal in the debt of “not less than 10 entities owned or controlled by” the Russian Government.
- Sanctions regarding the provision of specialized financial messaging services to sanctioned Russian financial institutions. This provision would threaten to impose US sanctions against the SWIFT messaging system (which facilitates global financial transfers) if it continues to work with the financial institutions designated pursuant to the provision noted above. Previous iterations of this measure were more severe and proposed to completely block Russian financial institutions from the SWIFT messaging system. Some Republican lawmakers are seeking a requirement, rather than merely an authorization as included in this bill, for sanctions designed to remove sanctioned Russian banks from the SWIFT messaging system.
- Sanctions on the Nord Stream 2 pipeline. The bill directs the President to impose SDN designations and travel bans on those involved in the planning, construction, or operation of the Nord Stream 2 pipeline or a successor entity. Republicans are seeking the inclusion of a measure that would immediately sanction the Nord Stream 2 pipeline, regardless of further Russian action in Ukraine.
House Foreign Affairs Chairman Gregory Meeks introduced in that chamber a companion version (H.R. 6470) of the Senate bill.
