On December 2, 2021, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced the expansion of sanctions against Belarus in response to the Lukashenka regime’s continued “disregard for international norms.” The actions taken by OFAC pursuant to Executive Orders 14038 and 13405 include 35 new designations to the Specially Designated Nationals and Blocked Entities (SDN) List and the issuance of a related wind-down license, General License 5 (GL 5), for activities related to two new SDNs, Open Joint Stock Company Belarusian Potash Company (BPC) and BPC subsidiary Agrorozkvit LLC (Agrorozkvit). OFAC also issued Directive 1 imposing restrictions on new debt issued by the Ministry of Finance and the Development Bank of the Republic of Belarus. OFAC published Frequently Asked Questions (FAQs) 939, 940, 941, 942, 943, 944, 945, 946, 947 and 948 on the scope of GL 5 and Directive 1. These actions were taken in coordination with the European Union, United Kingdom and Canada.
The designations target officials and entities playing key roles in disrupting EU border security, shipping ammunition and weapons to foreign conflict zones, and developing military radio-electronics, optics and chassis for missile systems and potash exports. These designations include, among others, state-owned tourism company Republican Unitary Enterprise Tsentrkurort; state-controlled cargo carrier JSC Transaviaexport Airlines and its two aircrafts, EW-78843 and EW-78779; and potash exporters BPC and Agrorozkvit.
OFAC issued GL 5 to provide U.S. persons with 120 days to wind down transactions involving BPC or Agrorozkvit, or any entity in which BPC or Agrorozkvit owns a 50% or greater interest, including the wind-down of such transactions in which Belaruskali OAO has a property interest. GL 5 expires on April 1, 2022. Per FAQ 939, GL 5 does not authorize direct transactions with Belaruskali OAO and does not extend Belarus GL 4, which expires on December 8, 2021.
Directive 1, issued pursuant to EO 14038, prohibits transactions in, provision of financing for, or other dealings by U.S. persons in new debt with a maturity of greater than 90 days issued on or after December 2, 2021 by the Ministry of Finance of the Republic of Belarus or the Development Bank of the Republic of Belarus. FAQ 948 provides that Directive 1 prohibits U.S. persons from entering into derivative contracts linked to underlying assets that constitute prohibited debt thereunder. Pursuant to FAQ 943, the prohibitions of Directive 1 do not apply to any entity that is owned 50% or more by the Ministry of Finance or the Development Bank. Further guidance on the scope of the Directive is available in FAQs 940-947.