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Global Magnitsky: The Swiss Army Knife of Sanctions

The Global Magnitsky Sanctions apply worldwide, without any requirement of a jurisdictional nexus with the United States. They define corruption broadly enough to capture a wide range of conduct and persons. The sanctions target “serious human rights abuse,” but do not define the term. Moreover, the sanctions are readily deployable. No tailored legislation, executive order, or other administrative process—other than a sanctions determination by the Secretary of Treasury in consultation with the Secretary of State—is required to impose sanctions anywhere, anytime. Given their global reach, substantive breadth, and wide applicability, the Global Magnitsky Sanctions have distinct utility value as they can be readily employed for multiple legal, policy and strategic objectives. They are the Swiss Army Knife of sanctions. To date, 78 individuals and entities have been sanctioned for corruption and human rights abuses. The most recent of these sanctions actions, against Turkey, has triggered speculation as to its motives and objectives. This is discussed below, as are some of the provisions that suggest the Global Magnitsky Sanctions were formulated for sweeping applicability and enforcement latitude.

United States Sanctions Malaysia Agent of Iranian Airline

The Treasury Department’s Office of Foreign Assets Control (OFAC) today sanctioned Malaysia-based Mahan Travel and Tourism Sdn Bhd (“Mahan Travel”) pursuant to Executive Order  13,224. Rather then information should be taken as a prompt to other travel agencies or vendors that directly or indirectly “act for or on behalf of Mahan Air” to disassociate from the airline. Such other travel agencies or vendors should, at minimum, review and understand today’s Mahan Travel action, assess their sanctions and related risk (legal, commercial, etc.) and take defensive compliance steps that are appropriate to their sanctions/legal exposure and commercial position. The broader takeaway from today’s OFAC action against Mahan Travel is that it reinforces the fact that U.S. sanctions and other laws are global in reach. Non-U.S. parties should take note of their potential exposure to U.S. sanctions or other legal enforcement actions.

ZTE: Was the Export Ban the Right Penalty?

The sentiments expressed by Senator Rubio and others reflect commercial, competition, policy, and strategic concerns held by business, policy makers, defense and national security officials, and others about China and Chinese firms like ZTE and Huawei. But when raised in the context of and as a justification for a specific legal enforcement action, the sentiments blur the lines between what should primarily be an enforcement based on facts and applicable laws, rather than an instrument for advancing wider policy objectives that are not specifically advanced by the laws applicable to the conduct for which ZTE was penalized. And, while Secretary Ross’ stated rationale to impose the harsher penalty to change ZTE’s behavior may have been sound, the recommendation of the career professionals with expertise in sanctions and export controls enforcement should, perhaps, have carried the day. Secretary Ross’ description of the process leading to the export ban and the mess that has followed it give more reason to ask whether, in the first place, the export ban was the appropriate remedy as a matter of applicable laws and the objectives served by them.

Decoding Trump on Trade: Links Between Economic/Trade Issues and Military Security

Other of Mr. Trump’s statements, including dating back decades, hint that he views trade as “unfair” when other nations fail to compensate the United States for providing the secure conditions under which they trade and prosper. In 1987, Citizen Trump took out full page ads in three major newspapers criticizing U.S. “foreign defense policy” for its lack of “backbone.” Why, asked Mr. Trump, were foreign nations like Japan “not paying the United States for the human lives and billions of dollars we are losing to protect their interests?” In a 1988 interview with Oprah Winfrey, Mr. Trump wondered why Kuwait, “where the poorest people live like kings,” was not paying the United States “25 percent of what they’re making” from oil sales when “we make it possible for them to sell their oil.”  More recently, to extract trade concessions, the President reminded South Korea of its reliance on the United States for its security.

U.S.-China Trade and Tech War on Three Fronts

Much of the talk of trade war between the United States and China, and perhaps other countries, has focused on traditional trade measures and counter-measures like tariffs that strike at the core of international trade: most basically, the movement of goods and services across international borders. But there are two additional fronts of a U.S.-China trade war (thus far): intellectual property and the use of U.S. sanctions and other laws to “coerce and deter” economic rivals like China.

House Bill “Blocks Bailout” of ZTE After Export Ban

On May 17, the House Appropriations Committee unanimously approved a measure to block the Commerce Department from using appropriated funds to alter the export ban (i.e., the “denial order”) that the agency activated against ZTE on April 15, 2018. The ZTE measure was approved as an amendment to the fiscal year 2019 bill funding the Departments of Commerce and Justice, Science, and Related Agencies (“Commerce Appropriations Bill”), which was approved by the Appropriations Committee on May 17.

Trump Administration Supercharged Global Magnitsky Corruption and Human Rights Sanctions

Beyond the parameters of the Global Magnitsky Act, EO 13818 markedly enlarges the range of sanctionable conduct and persons. The differences between the language of EO 13818 and the Global Magnitsky Act are substantive and significant. In several instances, EO 13818 expands sanctions by omitting the Act’s qualifying language, adding new bases for sanctions, and/or leaving key terms undefined. Key instances of EO 13818’s broad and/or uncertain language are discussed below.