The US Senate on Friday finally passed the long-awaited Russia sanctions bill backed by late Senator Lindsey Graham. The vote was 86-11, with supporters of the measure claiming that the sanctions would undermine the main source of revenue for the Kremlin, crippling Moscow’s ability to continue slaughtering Ukrainians.
Sen. James E. Risch (R-Idaho), the chairman of the Senate Foreign Relations Committee, said on the Senate floor that the bill would “cut off the flow of cash that powers Putin’s war machine.”
Sen. Richard Blumenthal (D-Connecticut), who led efforts to pass the bill with Graham before his death, called the new sanctions the “most consequential” that have been enacted since Russia’s full-scale invasion in 2022.
I have previously been critical of the Biden administration for its tepid response to Russia’s full-scale invasion of Ukraine in February 2022.
After Treasury sanctioned Gazprombank in late 2024, waivers were issued to Türkiye and Hungary to continue pouring blood money into Russian president Putin’s pockets. Limited accessibility was initially allowed for Russian banks to ensure the continued ability to pay for gas shipments, funding Russia’s continued bloodshed.
OFAC then granted a general license (GL 115), authorizing transactions that are prohibited by Executive Order (EO) 14024 involving Gazprombank or any entity in which Gazprombank owns a 50 percent or greater interest, that are related to civil nuclear energy.
The Biden administration initially barred Kyiv from retaliating with US-origin weapons against Russian daily attacks against civilians with strikes deep inside Russia and only reversed this clueless strategy at the end of Biden’s term.
And I am also skeptical of the current legislation passed by the Senate. There are always loopholes. There are always concessions. I didn’t want to write about the bill’s progress because an earlier version of the bill languished in the Senate for more than a year, despite having solid, veto-proof majority thanks to President Trump’s opposition.
The current bill has advanced, despite Trump’s continued efforts to alter it and include tariffs in the legislation, as well as additional measures against Iran.
But what’s in it?
I assess that a few changes between the two bills are a mixed bag of effectiveness. I’ll go into the possible loopholes the White House can use to continue shielding Russia from accountability for the bloodshed and slaughter brought on by the full-scale invasion in a bit, but first I’d like to point you to an overview.
Sanctions become largely automatic on enactment. The original bill, S.1241 triggered additional sanctions once the White House made a “covered determination” that Russia refused to negotiate, violated a peace deal, or invaded again. The current proposal requires the President to impose most sanctions within 30 days of enactment regardless of any such finding.
Extensive secondary-sanctions and shadow-fleet measures. The previous legislation did not include provisions targeting vessels, insurers, ship captains, and port operators involved in moving Russian oil, uranium, gas, or coal to evade price caps.
Tariffs: the direct Russia-origin goods tariff became a discretionary ceiling of up to 500 percent in the new bill, instead of a mandatory floor of “not less than 500 percent” in S.1241. In addition, third-country secondary tariffs are now capped at “up to 100 percent” and limited to the five largest importers of Russian oil and gas or the top five countries facilitating Russian sanctions evasion. The previous legislation sought to impose “not less than 500 percent” tariff on any country that buys Russian energy.
Section 117 is new and authorizes the President to end sanctions upon certifying a peace agreement between Russia and Ukraine. However, Congress can pass a joint resolution, rejecting the White House’s certification within 30 business days, needing a 3/5 Senate vote to advance and pass.
Under the old bill, the actionable trigger for a compliance program was a formal presidential act (a covered determination) that would presumably be publicly announced and would almost certainly follow visible diplomatic developments. A bank’s monitoring function under that bill would reasonably center on tracking negotiation status, ceasefire compliance, and any public signal that a determination was imminent. The bill required the President, “not later than 15 days after the date of the enactment... and every 90 days thereafter,” to determine whether Russia (or its proxies) had refused to negotiate, violated a peace agreement, invaded again, or tried to overthrow Kyiv. My concern was that given this administration’s favoritism toward Russia, no determination would ever be made.
Under the current bill, a bank or financial institution must be operationally ready to implement blocking, correspondent-account restrictions, tariff pass-through, and other restrictions by fixed day-counts from enactment, independent of political, diplomatic, or foreign policy developments.
The part that gives me most concern in this bill is Section 115 - the general waiver. According to the legislation, the President can waive any sanction, restriction, or tariff on any foreign person or country on “national security” grounds. And all the White House would need to do is provide Congress a written national-interest certification and an explanatory report before issuing the waiver. There would be no congressional vote, no way to reject this waiver, no waiting period, or specification on how long it can last.
Standard general licenses (GLs) issued by OFAC, including those authorizing routine humanitarian aid, personal remittances, and medical supplies, can stay in effect permanently or until they are explicitly amended, superseded, or revoked by OFAC.
But other GLs are timed to expire, if they are meant to provide US persons time to wind down their activities with a newly designated individual or entity or provide temporary sanctions relief.
Section 115 is not a license. This waiver can be issued by the White House without authorization or permission from the body that passed the law.
In addition, per Section 103(c), Treasury doesn't have to sanction a foreign financial institution for dealing with Russia's major sanctioned banks if the Treasury Secretary simply determines doing so is not consistent with US economic or foreign-policy interests.
Now, if you remember, in December 2023, President Biden signed EO 14114, authorizing secondary sanctions against any foreign financial institution that transacts with Russia’s military-industrial sector. Later, in 2024, the US Treasury assessed that any and all individuals and entities designated pursuant EO 14024 are part of Russia’s pivot to a wartime economy, and therefore subject to secondary sanctions. So any foreign financial institution conducting significant and continued transactions with Russia’s military-industrial sector can be sanctioned, regardless of whether a US nexus is present.
The good news is that Section 103(c) does not seem to conflict with EO 14114 or EO 14024. It provides a small carve-out from the sanctions requirement if Treasury determines that doing so "is not consistent with the economic or foreign policy interests of the United States." It only refers to named Russian banks, such as the Central Bank of Russia, Sberbank, VTB, Gazprombank, and other state-owned Russian banks.
But these are major Russian financial institutions, so the exemption strikes me as significant.
Other concerning loopholes include:
Section 110(c), the financial-messaging-system waiver. Financial messaging systems, such as Russia’s SPFS (Sistema peredachi finansovykh soobscheniy or System for Transfer of Financial Messages) can be spared sanctions if they operate under a comparable foreign sanctions regime the President deems consistent with US interests and have complied with it, or if they provide significant messaging services to US entities. The US Treasury considers SPFS as a massive sanctions evasion risk because Russia uses it an alternative to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network, from which it was booted after the full-scale attack began, to process cross-border payments, and fund its military operations.
Section 114 contains a list of built-in statutory exceptions the White House can use to evade the requirements of the legislation without any certification: humanitarian/agricultural/medical trade; intelligence and law-enforcement activity; international treaty obligations (UN HQ agreement, Vienna Consular Convention); civilian nuclear cooperation agreements; low-enriched uranium/medical isotope imports; official U.S. or UN government business; non-Russian oil merely transiting Russian territory; general licenses issued by Treasury before enactment; a 270-day wind-down/divestment window; vessel crew-safety provisions; and NASA-related space launch activities.
Section 113(b)/(g) authorizes the administration to adjust the secondary country tariff up to 100 percent, based on a written determination, without going through the Section 115 waiver process at all.
It’s tough to say whether this is a further shot across the Kremlin’s bow or simply messaging. The bill’s supporters claim the legislation sends a message to Russia, affirming US support for Ukraine. Senate Minority Leader Chuck Schumer (D-NY) said the bill would send “an unmistakable message to Moscow that America will back Ukraine to the hilt.”
But is it really an “unmistakable message” if it provides an administration that obviously favors Russia in this war with a way to weasel out of the legislation’s requirements?
In addition, many of the individuals and entities included in the “definitions” section of the bill are already designated under other Russia authorities.
I’m happy about the extensive new provisions on tankers, insurers, ship captains, and ports and port operators involved in moving Russian oil, uranium, gas, or coal to evade price caps.
But the top five consumers of Russian energy? Would they be targeted with tariffs?
China, which consistently purchases roughly between 47 and 51 percent of Russia’s crude oil exports by volume
India, which is the second biggest customer of Russian oil buying between 36 and 38 percent of Russian exports
Turkiye at roughly 6 percent
Hungary and Slovakia—both EU members
Does anyone actually believe that this administration would have the chutzpah to slap China with massive tariffs for purchasing Russian oil?
Would it penalize EU allies, China, and Japan just to prevent them from purchasing Russian liquefied natural gas (LNG)? Given the fact that an OFAC sanctions waiver for the Sakhalin-2 project, allowing Japanese firms (such as Mitsui & Co. and Mitsubishi Corp.) to hold stakes, process financial transactions, and import LNG and crude oil from Sakhalin-2, has been routinely renewed every six months since sanctions were first introduced in 2022, I’d say these are some empty threats.
And given the waiver authority, I’d characterize this more as legislation to give Trump the authority to impose tariffs, after the Supreme Court in February ruled that Trump lacked the authority under the International Emergency Economic Powers Act (IEEPA) to unilaterally impose sweeping global and emergency tariffs, rather than increase sanctions pressure on Russia.
Maybe it’s the cynic in me, but I’d love to know your thoughts.
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