On 18 March 2021, US Secretary of State Antony Blinken issued a threat to companies that remain involved in what he called the “Russian geopolitical project”, saying they risked coming under US sanctions if they continued their work.
It is unlikely any of the remaining companies constitute “US Persons” under US law and, if so, the US cannot impose its so-called ‘primary’ sanctions on them because it has no jurisdiction. Instead, it claims the power to impose ‘secondary’ or ‘extra-territorial’ sanctions.
These operate by giving the US Government the power to stop a company trading inside the US, for example by preventing it from opening or using US bank accounts or transacting in dollars. Secondary sanctions therefore have a powerful deterrent effect on global companies and are widely disliked by foreign governments and businesses.
It remains to be seen whether Mr Blinken’s words will have the desired effect, or whether the companies will simply thumb their noses at the US and carry on regardless.