Eurasia Press & News
A general licence such as the one issued by the US Treasury for Russian diesel is not the lifting of financial sanctions, and can be cancelled ahead of schedule at any moment. The political effect of the diesel deal must be separated from its legal nature, writes Ivan Timofeev, Programme Director of the Valdai Discussion Club.
The deal on supplies of Russian diesel to the US has had a staggering political effect. It coincided with yet another turn of the escalation spiral in the Ukraine conflict and an exchange of massed missile and drone strikes. The EU is preparing its 22nd sanctions package. In the US, too, the sanctions machine seemed to have lurched into motion, with the “sanctions from hell” law adopted only recently. And then the US Treasury issues a general licence permitting, until 7 April 2027, transactions related to the sale, delivery, unloading, and import of Russian diesel fuel. Nevertheless, there is little reason to regard exemptions from the sanctions regime on diesel as anything supernatural. From the standpoint of US legal mechanisms, this one is entirely typical.
The paradox of the US sanctions mechanism lies in combining extremely harsh restrictions with the ability to tune them flexibly to America’s current interests. On the one hand, the sanctions against Russia, including those on the energy sector, are “carved in granite.” The aforementioned “sanctions from hell” law (the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026) has made their repeal considerably more difficult. In recent years, a vast body of other federal laws, presidential orders, and administration regulations has also taken shape, enshrining an array of restrictive measures. On the other hand, the president’s powers to introduce exemptions from the sanctions regime have not gone anywhere. Even the most “hellish” sanctions can, where necessary, be given carve-outs. Notably, for the diesel exemptions the executive branch did not even have to use a mechanism laid down in statute. Section 115 of the Graham Act, for example, allows for exemptions provided that the decision is justified in a written report to Congress.
There is, however, a far simpler procedure that does not, strictly speaking, even require a personal decision by Donald Trump. The US Treasury holds delegated powers, among them general licences authorizing particular transactions that would be prohibited without one. Just such a licence was issued on 9 October this year over the signature of Bradley Smith, Director of the Office of Foreign Assets Control (OFAC) at the US Treasury. In other words, the decision was formally taken not even by the Treasury as such, but by one of its specialised offices. Licences of this kind are issued in great numbers. Under the sanctions programme relating to the “harmful foreign activities of the Russian Federation” alone (which, since the start of the special military operation, can be considered the main one), more than a hundred licences covering the most diverse transactions have been issued. So the very appearance of the document can hardly be called a sensation.
But a licence is not the lifting of financial sanctions. It often has an expiry date and can be cancelled ahead of schedule at any moment by decision of the same Bradley Smith or his successor. The reason could be anything—from a change in the political backdrop to a glut of imported diesel on the US market. There are cases where licences remain in force for years. That was so, for example, with large Belarusian enterprises, which were lifted out from under sanctions by means of licences during the warming of relations with Minsk in the 2010s. After the next deterioration in the early 2020s, however, the licences were revoked. In a great many cases, licences serve a purely technical function—to give time to complete certain transactions. Their range of uses is wide.
The bottom line is that the political effect of the diesel deal must be separated from its legal nature.
So far, no sanctions have been lifted. The simplest exemption mechanism has been used, one that can slam shut at any moment. Yet the example also shows the room for manoeuvre enjoyed by the US executive branch and its ability, where the political will exists, to ease restrictions even when they are unprecedentedly harsh.
