Sanctions Stay in Place Until Washington Decides Otherwise

The Russian diesel deal shows how US sanctions combine sweeping restrictions with exemptions that serve Washington's interests.

The agreement to supply Russian diesel fuel to the United States has significant political impact, and it comes amid an escalating conflict in Ukraine, during which both sides are exchanging large-scale missile and drone strikes.

Meanwhile, the European Union has approved its 22nd package of sanctions against Russia, while Washington has adopted another round of punitive measures under the so-called Hellenistic Sanctions Act.

Despite this, the US Treasury has issued a blanket authorization allowing transactions involving the sale, delivery, unloading and import of Russian diesel fuel until April 2027, which at first glance seems extraordinary.

In reality, however, such waivers are a familiar feature of US sanctions policy, as they represent a fundamental paradox in the US system: exceptionally strong restrictions with considerable flexibility when Washington's own interests are at stake.

On the one hand, sanctions against Russia, particularly those targeting the country's energy sector, have become increasingly entrenched, and the latest legislation makes it significantly more difficult to remove them and adds to the vast framework of federal laws, presidential orders and administrative regulations that have accumulated in recent years.

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On the other hand, the U.S. executive branch retains significant authority to grant exemptions, meaning that it requires even the toughest sanctions not to block deals that Washington deems necessary.

The latter waiver is particularly revealing because the administration did not need to invoke the waiver provisions contained in the new law, given that Section 115 of the Lindsey Graham Act, for example, allows waivers subject to written justification to Congress, so instead, the Treasury used a much simpler mechanism.

Last week, Bradley Smith, director of the Treasury Department's Office of Foreign Assets Control (OFAC), signed a general authorization allowing diesel transactions. So, officially, the decision was made not by President Donald Trump, or even by the Secretary of the Treasury, but by a specialized department within the department.

There is nothing unusual about this method. Under the sanctions program for what Washington calls Russia's "malign activities," more than 100 general authorizations have been issued covering a wide range of transactions, meaning another authorization would hardly be felt.

Also, one should not make a mistake with the cancellation of sanctions because public licenses usually have a limited validity and can be canceled before their expiration, and a change in the political climate, a change in Washington's priorities or the influx of imported diesel into the American market can be sufficient reasons to cancel the exemption.

There are precedents where licenses have remained in force for years. During the improvement of US-Belarus relations in the 2010s, several major Belarusian companies received exemptions that effectively suspended some restrictions, but these permits were revoked when relations deteriorated again in the early 2020s.

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In other cases, the licenses serve the purely technical purpose of allowing companies to complete deals or cease existing operations without violating sanctions, which means it is important to distinguish between the political significance of the Russian diesel deal and its legal nature.

No sanctions have been lifted and Washington has simply used an established administrative mechanism that can be reversed at any moment.

Still, the episode illustrates something important about U.S. sanctions policy: that even as Congress seeks to make restrictions against Russia permanent, the executive branch has considerable room for maneuver.

The United States can impose unprecedented economic restrictions while making exceptions whenever its interests warrant.

The legal machinery is already in place, but what ultimately determines how it is used is political will.