Van Hollen, Toomey Release Framework for New Russia Sanctions
Today, U.S. Senators Chris Van Hollen (D-Md.) and Pat Toomey (R-Pa.), both members of the Senate Banking, Housing, and Urban Affairs Committee, put forward a framework outlining new sanctions legislation to hold Russia accountable for its war against Ukraine. The Senators’ framework provides new sanctions authority to the Administration in its efforts to sever funding to Putin’s war machine.
“The U.S. and our allies have taken important steps to hold Russia accountable for its unprovoked war against Ukraine, including sanctions that have hit its economy and Putin’s cronies. However, we have yet to effectively cut off funding to Putin’s war machine by diminishing Russia’s revenues from energy sales. That’s why the Biden Administration’s initiative with the G7 to cap the price of Russian oil exports is crucial. In order to successfully enforce the price cap, it’s clear the administration requires new authority from Congress, which is exactly what our framework will provide. By imposing strong secondary sanctions, our framework also provides the administration with the tools needed to hold accountable the financial institutions supporting those countries involved in rampant war profiteering from Russian exports.
“The Ukrainian people have inspired the world in their fight for freedom and independence, and the sanctions framework we’re releasing today is a critical component in helping them defeat Russian aggression,” the Senators said.
The Senators’ framework follows:
- Price Cap on Russian Oil: The President sets a price cap on Russian seaborne oil and petroleum products in consultation with allies and partners no later than March 2023 - each following year, the price cap is lowered by one third until it reaches the break-even price within 3 years (i.e. Russia is not making any profit from its exports).
- Each year, the President may suspend the price reduction with a determination that such action would result in an unacceptable increase in the global price of oil, subject to a Congressional override.
- Cap enforced with full blocking sanctions or correspondent account and payable through account termination sanctions on foreign financial institutions that engage in transactions that exceed the price cap.
- Foreign financial institutions include, but are not limited to, any foreign entity involved in the trade finance, insurance, reinsurance, and brokerage of Russian oil and petroleum products transactions.
- Stop War Profiteering: Imposition of sanctions with respect to countries increasing purchases of Russian oil, oil products, gas, and coal.
- EIA will provide a public report within 30 days that provides an estimate of the total volume of oil, oil products, gas, and coal imported from Russia to each country prior to Feb. 24, 2022
- The Administration will then certify every subsequent 90 days whether a country’s oil, oil products, gas, and coal imports, by volume, significantly exceed that country’s benchmarks.
- For those countries that have significantly exceeded their pre-war benchmarks, the President must impose full blocking sanctions or correspondent account and payable through account termination sanctions on foreign financial institutions that the President determines have knowingly engaged in a significant transaction or series of transactions relating to the purchase of a covered commodity.
- Sanctions sunset after 7 years or terminate when the President certifies that Ukraine has reached a diplomatic agreement with Russia supported by the U.S. and that it is in the national security interest to terminate these sanctions
- There is a national interest waiver for all sanctions in the bill, subject to Congressional override.
Senators Van Hollen and Toomey previously worked together on North Korea sanctions legislation, the Otto Warmbier BRINK Act, which was signed into law in 2019, and legislation sanctioning those responsible for the crackdown on Hong Kong’s autonomy, the Hong Kong Autonomy Act, which was signed into law in 2020.