Treasury makes Russia sanctions fixes

OFAC move incorrectly interpreted by some lawmakers

By: Chris Gillis
Photo: Slavoljub Pantelic/Shutterstock
   U.S. exporters of encrypted communications and other digital technologies on Thursday received some breathing room from the Treasury Department to export their goods to Russia.
   Treasury’s Office of Foreign Assets Control (OFAC) issued a limited exemption to the U.S. sanctions against Russia by placing certain cyber-enabled technology transactions in a so-called “general license” status when dealing with Russia’s Federal Security Service.
   The Federal Security Service (FSB), which was one of five Russian government agencies placed on the OFAC sanctions list by the outgoing Obama administration on Dec. 28, plays a role in issuing licenses to Russian imports of encrypted hardware and software.
   The general license will now allow U.S. companies to request and pay up to $5,000 to the Federal Security Service to obtain licenses, permits, certificates or notifications to proceed with these shipments into Russia.
   It’s not uncommon for OFAC to issue general licenses to allow U.S. companies to engage in specific transactions to address unintended consequences of U.S. sanctions. Until this general license, U.S. companies, such as Cisco and Microsoft, which sell software and hardware that contains encryption, were effectively shut out of the Russian market.
   The Treasury Department’s general license, however, does not authorize the export, reexport or provision of U.S. goods or technology by the Federal Security Service itself.
   The general license was signed by Andrea Gacki, OFAC’s acting director.
   Some Democratic lawmakers on Capitol Hill immediately pounced on the OFAC exemption in the wake of intelligence agencies determining Russia entities attempted to influence the 2016 election.
   “Russia attacked our democracy,” Rep. Eric Swalwell, D-Calif., the ranking member of the CIA Subcommittee of the House Permanent Select Committee on Intelligence, said in a statement. “It should be punished. Instead, President Trump is easing sanctions against its team of hackers, the FSB.
   “Easing these sanctions allows Russia to sharpen its knives and import tools from the United States to hack us again. Congress must act swiftly to re-impose these sanctions so that those who attack America know there’s a price to pay.”
   Nancy Pelosi, the House minority leader, released a statement condemning OFAC’s action.
   "Putin's thugs meddle with an American election, and President Trump gives them a thank you present,” she said. “I have been asking the same question for awhile: What do the Russians have on President Trump?”
   White House press secretary Sean Spicer told a press conference on Thursday that Trump is “not easing sanctions” against Russia, adding it’s “common for Treasury after sanctions are put in place to go back and look at specific carve-outs for different industries or products and services."
   Doug Jacobson, a Washington, D.C. international trade attorney who specializes in sanctions and export controls, shook his head over the various lawmakers’ statements in the press.
“There’s so much misinformation being thrown around out there,” he said. “All they have to do is read the text of the general license, which makes clear that it is very limited in scope.”