State Dept. Places Russian Shipyards on Sanctions List

File image courtesy United Shipbuilding

By The Maritime Executive 10-27-2017 10:21:29

The U.S. State Department has created a list of 39 Russian defense organizations that could be placed under sanctions in response to Moscow’s involvement in the 2016 U.S. presidential election. The draft list, which was delivered four weeks after a Congressional deadline, covers a wide swath of the Russian defense industry, including shipyard owners Kalashnikov Concern, Admiralty Shipyard and United Shipbuilding Corporation.

The entities named have not yet been formally placed on the Treasury Department's sanctions list, nor have they had their assets frozen. The legislation that requires the creation of the list – the Countering America's Adversaries Through Sanctions Act of 2017 – takes effect on January 29. 

In public guidance, the State Department said that it intends to work with affected parties to help them avoid potentially sanctionable transactions, and will emphasize enforcement for defense and intelligence-related transgressions. "If a transaction for goods or services has purely civilian end-uses . . . and does not involve entities in the [Russian] intelligence sector, these factors will generally weigh heavily" against an enforcement action, the department wrote.

This guidance extends to American allies and partners, many of whom buy military equipment from Russian suppliers. As an example, the Indian Navy works closely with the U.S. Navy, and India won the right to buy advanced American defense technology as a "major defense partner" in 2016. But it is also a leading consumer of Russian missile and shipbuilding technology, including the BrahMos cruise/anti-ship missile and the Project 11356 series of frigates. BrahMos is a partnership between Indian consortium DRDO and Russian defense contractor NPO Mashinostroyenia, which is on the sanctions list. The Project 11356 series frigates will be built by Goa Shipyard and by Russia's United Shipbuilding, which is also on the sanctions list. 

Determining enforcement policy for complex circumstances will require staff time, and some in Congress are uncertain whether the State Department has allocated enough resources. The department recently shuttered its Coordinator for Sanctions Policy office, transferring the responsibility for implementation to the Policy Planning Office, which has traditionally had little involvement in the department’s day-to-day operations. In a letter released Thursday, Senators John McCain (R-AZ) and Ben Cardin (D-MD) of the Senate Foreign Relations Committee called for “robust staffing and resources [for] the implementation effort."