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It sounds like the start to a bad joke, but what do the Kremlin, the Chinese Communist Party, the Government of the Islamic Republic of Iran, the Taliban, al-Qa‘ida, the Haqqani Network, the Islamic State, the Pakistani intelligence services, exhausted members of NATO, nearly every Democratic candidate for president in the 2020 election, and the…

In 1998, China announced its “go out” or “go global” policy aimed at encouraging its enterprises to invest overseas. In 2013 this policy was reinforced with China’s introduction of its One Belt, One Road (OBOR) or “Belt & Road” initiative, which seeks to enhance development and trade routes in the region, connecting China with other countries along the ancient Silk road and a new Maritime Silk Road. Significant international anxiety has been expressed about China’s global ambitions generally, and as it pertains to Africa in particular, with some calling China’s OBOR initiative “neo-colonial” and raising concerns about China’s investments in Africa serving as a possible “debt trap.” On the other hand, China’s general policy of non-interference has led African leaders to describe China’s partnership with African countries as a “win-win.”

Below we examine recent trends related to China’s activity in Africa, including China’s 2018 FOCAC pledge of US$60 billion in financing, recent commitments made at the BRICS Summit, and China’s increasing foreign direct investment (FDI) on the continent.

Forum on China-Africa Cooperation (FOCAC)

On September 3, 2018, Chinese President Xi Jinping pledged US$60 billion in financing for projects in Africa. Of this total pledge, US$15 billion will take the form of grants, infrastructure, and concessional loans; US$20 billion will be available in credit lines; US$10 billion for development financing; and US$5 billion to buy imports from Africa. China made a similar US$60 billion pledge in 2015.

At the opening ceremony, President Xi emphasized China’s “five-no” approach to Africa:

[N]o interference in African countries’ pursuit of development paths that fit their national conditions; no interference in African countries’ internal affairs; no imposition of our will on African countries; no attachment of political strings to assistance to Africa; and no seeking of selfish political gains in investment and financing cooperation with Africa.

It is China’s policy of non-interference that leads many African leaders to echo South African President Ramaphosa’s rejection of the view that a new colonialism is taking hold in Africa regarding China’s investment in Africa.
Continue Reading China in Africa: Recent Developments

By official accounts, President Trump’s November visit to China went off well with positive atmospherics, including an unprecedented (for a foreign leader) dinner inside the Forbidden City and the signing of over $250 billion of commercial deals and two-way investment agreements. On the other hand, most western analysts have quickly pointed out that much of…

During the past two weeks, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) and the U.S. Department of State have taken a number of steps toward implementing aspects of the Countering America’s Adversaries Through Sanctions Act (“CAATSA”), a major piece of sanctions legislation passed by the U.S. Congress in July and signed by President Trump in early August. These steps are in addition to those described in our client alert last month.

Specifically, as called for by CAATSA, OFAC on October 31 issued a revised Russia sectoral sanctions Directive 4 that expands the restrictions on U.S. person support for certain unconventional oil projects to reach new such projects being undertaken anywhere in the world where a sectorally sanctioned Russian energy company has a majority voting or 33 percent or greater ownership interest in the project. OFAC also issued related guidance on this expanded sanction. In addition, OFAC issued guidance on the application of secondary sanctions to foreign financial institutions and on the implementation of other measures in CAATSA.

Also with respect to CAATSA, the U.S. Department of State has issued guidance on the imposition of secondary sanctions relating to Russia’s energy export pipelines, investments in special Russian crude oil projects, and a CAATSA provision that requires the President to sanction persons who knowingly engage in significant transactions with parties affiliated with Russia’s defense and intelligence sectors.

With respect to Iran, OFAC issued amended regulations on October 31 implementing CAATSA’s requirement to impose terrorism-related sanctions with respect to officials, agents, or affiliates of Iran’s Islamic Revolutionary Guard Corps (“IRGC”).

Primary Sectoral Sanctions Targeting Russia’s Energy Sector

Since September 12, 2014, OFAC Directive 4 has prohibited U.S. persons from providing goods, services (except for financial services), or technology in support of exploration or production from deepwater, Arctic offshore, or shale projects that have the potential to produce oil in Russia or its territorial waters and that involve a sectorally sanctioned Russian energy company or an entity owned 50 percent or more, directly or indirectly, individually or in the aggregate, by one or more such companies. “U.S. persons” are legal entities organized under U.S. law and their non-U.S. branches; individual U.S. citizens and lawful permanent residents (“green-card” holders), wherever located or employed; and any persons when physically present in the United States.…

Continue Reading Russia and Iran Sanctions: Recent Developments

Administration Also Revises Russia Sanctions, Terminates Most Sudan Sanctions

On October 13, President Trump announced that he would no longer certify to Congress that the suspension of U.S. sanctions against Iran pursuant to the Joint Comprehensive Plan of Action (“JCPOA”) is “appropriate and proportionate” to the steps that Iran has taken to terminate its illicit nuclear program. The President’s much-anticipated announcement does not mean that the United States is withdrawing from the JCPOA, nor does it automatically result in the re- imposition of any U.S. sanctions against Iran. Rather, the President’s announcement gives the Congress 60 days to introduce legislation to re-impose U.S. sanctions that could be considered under expedited procedures. Importantly, although President Trump did not call on Congress to re-impose the pre-JCPOA U.S. nuclear-related sanctions, he did threaten to terminate U.S. participation in the JCPOA in the future if Congress and U.S. allies do not take action to address perceived flaws in the agreement.

At the same time, the Trump Administration expanded sanctions against Iran’s Islamic Revolutionary Guard Corps (“IRGC”), and designated four additional entities for sanctions for their support of Iran’s weapons proliferation activities. Further, Senators Bob Corker and Tom Cotton announced that they would be introducing legislation to address perceived shortcomings in the JCPOA, consistent with President Trump’s request.

The developments of late last week follow several other recent changes in U.S. sanctions involving Russia and Sudan.

On September 29, the Trump Administration, as expected, revised key aspects of the U.S. sectoral sanctions against Russia relating to dealings in debt of certain parties operating in Russia’s financial services and energy sectors. The move was required by the Countering America’s Adversaries Through Sanctions Act (“CAATSA”) discussed in our alert of July 28, 2017.

Finally, on October 12, the Trump Administration terminated most U.S. sanctions against Sudan, which had been substantially suspended since January 2017 pursuant to an Executive Order that President Obama issued in the waning days of his Administration.

Iran
Failure to Make INARA Certification 

The Iran Nuclear Agreement Review Act of 2015 (“INARA”) requires that the President certify to Congress every 90 days that: (1) “Iran is transparently, verifiably, and fully implementing” the JCPOA; (2) Iran has not committed a material breach with respect to the JCPOA, or if it has committed a material breach, then it has cured that breach; (3) Iran has not taken any action that could significantly advance its nuclear weapons program; and (4) suspension of U.S. sanctions against Iran in connection with the JCPOA is “appropriate and proportionate” to the specific and verifiable measures taken by Iran with respect to terminating its illicit nuclear program and is “vital to the national security interests of the United States.”…

Continue Reading Developments in U.S. Iran Sanctions

Following President Trump’s call to China’s President Xi Jinping on February 9, it appeared that U.S.-China tensions, particularly over U.S. policy vis-à-vis Taiwan, had abated for the time being. Trump reaffirmed the U.S. “One China Policy” during the call, and Beijing celebrated that they were able to get Trump back on track on this issue…

Cross-Strait Relations

In her year-end press conference on December 31, 2016, Taiwan President Tsai Ing-wen focused on her administration’s domestic policy agenda but also noted Beijing’s increasing pressure on Taiwan since she took office on May 20. Beijing has cut off high-level communications between the two sides (while maintaining ties with the former KMT party),…

Uncertainty surrounding the policies of the new administration is felt across industries. In particular, U.S. and Israeli defense industries are anxious for details of a ten-year, $38.8 billion military assistance package that was signed in Washington this past September. Whether the terms of the aid package are upended entirely or left mostly unchanged by the current incoming administration will have far reaching consequences on future U.S. and Israeli government procurement.

As discussed in this post, since 2007, U.S. and Israeli defense contractors have become accustomed to navigating the terms of an FY2009-FY2018 assistance program. The new 10-year package, however, presents new, unchartered challenges, for which industry will have to prepare and adapt. To do so effectively, companies will want to (i) glean more specific details regarding the terms of the new aid package, especially in light of changing administrations (ii) work towards increasing their eligibility for defense funding by adapting structurally, either through approved M&A activity or B2B cooperation between U.S. and Israeli companies, and, finally, (iii) engage with experts, policy makers and regulators, to ensure their plans align with any current or future compliance constraints.

What is clear, the changing landscape presents challenges and opportunities for both U.S. and Israeli defense contractors.
Continue Reading Private-Sector Opportunities – and Challenges – in the new $38.8 billion U.S.-Israel Military Assistance Package

At his meeting with visiting Myanmar (Burma) State Counselor Aung San Suu Kyi on September 14, President Obama announced that he intends to issue a new Executive Order that will generally remove longstanding U.S. sanctions on Burma. Given further progress in Myanmar’s transition to a democracy, he argued that “it is the right thing to…