Corporate > AG Deal Diary > EU, U.S., Ukraine and Russia Sign Pact to Deescalate Crisis, but Sanctions Threats Still Loom
21 Apr '14

On April 17, 2014, U.S., EU, Russian and Ukrainian representatives endorsed an agreement outlining initial steps to deescalate tensions in Ukraine. For the moment, the agreement may temporarily stall additional U.S. and EU sanctions against Russia. However, Administration officials, including Secretary of State John Kerry and National Security Advisor Susan Rice, emphasized shortly after the agreement’s announcement that the United States would be ready to impose additional sanctions against Russia if it fails to live up to the agreement. Additionally, events over the weekend, including continued resistance by pro-Russian separatists to the agreement and a deadly gun attack, may threaten the agreement and increase the possibility of additional sanctions.

The agreement’s steps specifically include:

  • requiring all parties to refrain from violence
  • disarming illegally armed groups
  • returning all illegally seized buildings to their legitimate owners
  • vacating “all illegally occupied streets, squares and other public places in Ukrainian cities and towns”
  • granting amnesty to protestors who cooperate with these conditions.

Additionally, the agreement calls on “a constitutional process [in Ukraine that] will be inclusive, transparent and accountable.” Notably, the agreement does not include two key U.S. demands voiced by the Obama administration in recent weeks: the pulling of Russian troops from the Ukrainian border and direct talks between Russia and the interim Ukrainian government.  Furthermore, the joint statement does not address Crimea or existing sanctions by the EU and U.S. against Russia.

Events over the weekend, however, have seriously jeopardized the agreement. Pro-Russian separatists, who continue to occupy several government buildings in Eastern Ukraine, have vehemently refused to abide by the terms of the agreement. Russia and Ukraine have also each accused the other of violating the agreement.

Furthermore, in response to continued violence in eastern Ukraine over the weekend, U.S. Senators Bob Corker (R-TN) and Chris Murphy (D-CT) have called on the Obama Administration to impose sanctions immediately on key sectors of the Russian economy, including the petrochemical and banking sectors. Only a few hours after the agreement came into force, Senator Kelly Ayotte (R-NH), who is drafting legislation that would prohibit U.S. banks from engaging in transactions with “sanctioned Russian banks” and bar U.S. citizens from making new investments in Russia, said that the deal should not “be used as an excuse to delay implementation of tougher sanctions” against Russia’s banking and financial sector.

With the situation in eastern Ukraine continuing to deteriorate, we will continue to monitor Obama administration, Congressional and EU statements regarding the possibility of additional sanctions against Russia.