War With Russia Book Review

[Tiana Dubree]

Inparticular, effective April 8, 2022, all items on the Commerce Control List (CCL) require export licenses when destined for Russia or Belarus. Notably, the new license requirements also apply to in-country transfers within Russia and Belarus. Additionally, certain foreign-produced items are now subject to two Foreign Direct Product (FDP) rules and related license requirements that are specific to Russia and Belarus.

U.S. Persons providing services in Russia and Belarus or contemplating business generally involving either destination should also review the prohibitions on transactions involving Russia and Belarus under the regulations of the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC).

Our March 2022 alert (U.S. Government Imposes Expansive, Novel and Plurilateral Export Controls Against Russia and Belarus) contains more details on the first rounds of controls that BIS published on February 24 and March 2. BIS created additional controls, which are described on its website that compiles resources related to the new controls. The site includes press releases announcing the controls as they were created, FAQs explaining certain aspects of the controls and actions BIS has taken to enforce the controls. In addition, Akin Gump continues to track Russia-related changes by the U.S., U.K., European Union (EU) and other jurisdictions on our Russia Trade Controls Resource Center, which is available to subscribers.

As a result, U.S. and non-U.S. companies (and individual U.S. citizens) that engage in transactions pertaining to the advanced computing, artificial intelligence, supercomputer, semiconductor production equipment or semiconductor-related supply chains involving China will need to review closely the complex rules to determine whether their internal compliance programs and business plans need to change. Our October client alert (BIS Imposes New Controls to Limit the Development and Production of Advanced Computing and Semiconductor Capabilities in China) provides more details.

Throughout 2022, BIS added hundreds of entities to the Entity List, including over 355 Russian entities, 27 Belarusian entities, 33 Chinese entities and various entities from Belize, Estonia, Kazakhstan, Latvia, Lithuania, Malta, Pakistan, Singapore, Slovakia, Spain, the U.K., the United Arab Emirates (UAE), Uzbekistan and Vietnam. Many of these entries result in essentially complete prohibitions on the export of items subject to the EAR to the listed entities. In addition, some entities were designated with footnotes (including Footnote 4 entities and Russia/Belarus military end-users) resulting in additional foreign (i.e., non-U.S.)-produced direct products of U.S. software or technology being subject to the restrictions. The newer application of these novel extraterritorial controls over foreign-produced commercial items outside the U.S. were largely limited to shipments to Chinese companies involved in advanced computing and artificial intelligence (AI)-related support for the Chinese government. A significant issue to watch in 2023 is whether the foreign direct product rule will be applied to additional categories of foreign-made commercial items.

On October 7, 2022, BIS amended the EAR to clarify that BIS may add entities to the Unverified List (UVL) due to a sustained lack of foreign government cooperation, which effectively prevents BIS from conducting an end-use check on the entity. On the same day, the Assistant Secretary for Export Enforcement issued a memorandum outlining a two-step policy under which (1) BIS will add entities to the UVL if an end-use check cannot be completed within 60 days of request and (2) BIS will transition entities from the UVL to the Entity List if BIS is still unable to complete an end-use check within 60 days of listing the entity on the UVL. Some companies may be unable to comply with end-use checks due to interference by their home government (e.g., China). Our October client alert (BIS Announces Significant Changes to How It Administers Unverified and Entity Lists) contains more details. On December 16, 2022, pursuant to the above policy, BIS moved nine Russian entities from the UVL to the Entity List and removed 27 entities (26 of which from China) from the UVL.

We anticipate 2023 will also bring continued rulemaking and enforcement similar to that in 2022, with regulators concentrating on individual culpability and admissions of wrongdoing. We expect to see the definition of national security continue to broaden, with even more focus on human rights protections, and to see increased enforcement, with the regulators concentrating on individual culpability and admissions of wrongdoing. Finally, we anticipate extensive licensing requirements and guidance as the technologies, review standards, end-use concerns and multinational considerations grow more complex.

In addition to seeking guidance from the contacts below, OverRuled, currently expected to launch by the second quarter of this year, will provide on-demand to view rule changes, enforcement trends and enforcement by industry. It also houses the Russia Trade Controls Resource Center, which catalogues the Russia-related export controls and sanctions updates from the U.S., U.K. and other countries.

Intelligence officials have begun a review of how their agencies judge the will and ability of foreign governments to fight. The review is taking place while U.S. intelligence continues to have a critical role in Ukraine and as the White House ramps up weapons deliveries and support to Ukraine, trying to predict what Putin might see as escalatory and seeking to avoid a direct war with Russia.

The Senate Intelligence Committee sent a classified letter last month to the Office of the Director of National Intelligence asking about how intelligence agencies assessed both Ukraine and Afghanistan. CNN first reported the letter.

Despite its vast advantages, Russia failed to establish air superiority over Ukraine and failed at basic tasks such as securing its battlefield communications. It has lost thousands of soldiers and at least eight to 10 generals, according to U.S. estimates. Russian and Ukrainian forces are now fighting in fierce, close quarters combat in eastern Ukraine, far from the swift Russian victory forecast by the U.S. and the West.

Other Russian problems were well-known, including low troop morale, a prevalence of drug and alcohol abuse among troops, and the lack of a noncommissioned officer corps to oversee forces and deliver instructions from commanders.

For Zelenskyy, before the war there were tensions, too, with Washington about the likelihood of a Russian invasion and whether Ukraine was prepared. One flashpoint, according to people familiar with the dispute, was that the U.S. wanted Ukraine to move forces from its west to bolster defenses around Kyiv.

Until shortly before the war, Zelenskyy and top Ukrainian officials discounted warnings of an invasion, in part to tamp down public panic and protect the economy. One U.S. official said there was a belief that Zelenskyy had never been tested in a crisis of the level his country was facing.

U.S. intelligence had reviewed private polling suggested strong support in Ukraine for any resistance. In Kharkiv, a mostly Russian-speaking city near the border, citizens were learning to fire guns and training for guerrilla warfare.

Rep. Brad Wenstrup, a member of the House Intelligence Committee, saw that determination firsthand during a December trip. Wenstrup, R-Ohio, witnessed a military ceremony where participants would read the names of every Ukrainian soldier who had died the previous day on the front lines in the Donbas, the region in eastern Ukraine where Moscow-backed separatists have been fighting Ukrainian government forces since 2014.

The representative of Cuba condemned a lack of political will to progress in various fields, in particular that of nuclear disarmament, as requested by all the member States of the Non-Aligned Movement which are parties to the Treaty. Denouncing the weak content of the draft final document relating to that pillar of the Treaty, he considered that its adoption would not have made it possible to reduce the threat of nuclear weapons.

The States parties to the Treaty agreed that the next Review Conference will be held in 2026, after three sessions of the Preparatory Committee, respectively in 2023 in Vienna, in 2024 in Geneva and in 2025 in New York. Review Conferences are held in principle every five years, but due to the COVID-19 pandemic, the tenth Conference, originally scheduled for spring 2020, had to be postponed several times. Holding the eleventh Review Conference in four years will make it possible to partially compensate for the delay in the timetable. The Conference President noted there will therefore be no break between the end of the current cycle and the start of the next.

States parties also agreed to establish a Working Group on Strengthening the Review Process, open to all States parties, to review and make recommendations to the Preparatory Committee for the eleventh Review Conference on measures that would improve the effectiveness, efficiency, transparency, accountability, coordination and continuity of the Treaty review process.

In Chad, the Office for the Coordination of Humanitarian Affairs reports that the country is grappling with an array of challenges that are driving humanitarian needs. These include the arrival of hundreds of thousands of people fleeing the conflict in neighbouring Sudan.

Concurrently, something that gets little to no airplay in the West is the fact that the Russian invasion has ignited a broader debate within the Global South as to what it means to be non-aligned in the contemporary context. There is widespread recognition that the form of non-alignment adopted by developing countries during the bipolar Cold War and institutionalised through the Non-Aligned Movement (NAM) does not resonate with the emerging multipolar system. Moreover, despite the protestations of leading emerging powers that they both identify as and are representative of the Global South, middle and small states are under no illusions as to the impact that power asymmetries with China or India have on global initiatives, not to mention on their own national aspirations.

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