More sanctions news in May 2019

Vladimir Putin, Hassan Rouhani, Recep Tayyip Erdoğan. Photo:
  • Iran: U.S Treasury Department blacklisted members of a network operating in Turkey and the United Arab Emirates helping Iran evade sanctions.
  • Russia: The U.S imposed sanctions on Evrofinance Mosnarbank over its dealings with Venezuela’s oil company PVDSA. The Moscow-based bank is jointly owned by a group of Russian banks and Venezuela’s National Development Fund.
  • Russia: The U.S, EU and Canada imposed additional sanctions on Russian individuals and firms in reaction to an incident in the Kerch Strait between Russian and Ukrainian vessels in November.
  • Zimbabwe: The U.S also expanded its sanctions on Zimbabwe, including President Emmerson Mnangagwa and stated that it would only remove the sanctions after the easing of press restrictions and the suppression of protesters.
  • Congo: The U.S announced sanctions against top officials from the electoral commission for alleged corruption.
  • Venezuela: In a move to further cut off Maduro’s financing, the U.S Treasury imposed sanctions on Venezuela’s gold mining company Minerven and President Trump declared that he could get “a lot tougher” in the future.

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Risk for foreign firms in Cuba

Political Propaganda, Cuba. Photo: Gorupdebesanez

The Trump administration declared that from March 19 lawsuits against Cuban firms will be permitted in U.S. courts.

What’s the legal base? This decision is based on the Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996. This law, better known as Helms-Burton, has held a section (Title III) that allows citizens and firms whose properties were confiscated during the Cuban revolution of 1959 to sue for compensation in U.S. courts. However subsequent U.S. Presidents have suspended this clause every six months since then.

Secretary of State, Mike Pompeo declared:

“We encourage any person doing business in Cuba to reconsider whether they are trafficking in confiscated property and abetting this dictatorship,” 

Further toughening on Cuba. The Trump administration has reversed the policy of rapprochement that the Obama administration launched. Obama eased restrictions on remittances and travel of U.S. citizens to Cuba. The administration also removed Cuba’s designation as a terrorism sponsor and even visited Cuba in 2016 as the first American President since Calvin Coolidge in 1928.

The election of Trump reversed this trend. National Security Advisor John Bolton declared Cuba to be part of the “troika of tyranny” together with Nicaragua and Venezuela.

What’s the risk? At this moment Title III has only been partially rolled out. A complete rollout would also allow those firms to be sued that use confiscated properties. This would create risks for European firms doing business in Cuba. The European Union’s ambassador to Havana, Alberto Navarro sees this as a way for the

Trump administration [ ] trying to create confusion… to scare off investment in Cuba. [ ] We cannot accept that a country tries to impose its laws outside its own borders… that would be a return to the jungle.

The extraterritorial effects of the Helms-Burton legislation, targetting not only U.S. firms but also foreign firms, has been a contentious issue between the EU and the U.S. since its origin and upending the suspension of Title III would only increase the already contentious nature of U.S-EU relations.

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China targets Canadian firm

Blooming Canola field (Brassica napus), located in East Central Saskatchewan. Photo: Nas2 [CC0]

In a further escalation of the conflict between China and Canada over the detention of Huawei CFO Meng Wanzhou, China banned canola imports from Richardson International.

The official reason: The largest Canadian grain processor lost its permit to import in China because hazardous pests were found. According to a spokesperson of China’s Ministry of Foreign Affairs, China detected frequently “hazardous pests in imports of Canadian canola, and in one company’s imports the problem was particularly serious.”

A more probable explanation: Richardson was the only wholly Canadian owned firm that exports canola to China and no other Canadian canola exporters have been affected. China has a history of using food and health safety measures politically. In a dispute with the Philipines over conflicting territorial claims in the South China Sea, China suddenly restricted banana imports. In a more recent conflict with South Korea over the deployment of a THAAD missile shield, it targetted the Lotte supermarket chain with fire safety inspections, forcing Lotte to close its shops definitely in China.

What to look out for: As long as Canada detains Meng Wanzhou, we can expect tensions to rise, and there’s a high probability that China will target other Canadian exporters by this kind of ‘informal’ measures. An alternative for the Chinese is the instigation of consumer boycotts as they happened a few months ago when Chinese websites called for the boycotting of Canadian brands. However, this didn’t stop Chinese consumers to flock to the opening of the first Canada Goose flagship store.

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