Why Did President Biden Decide to Impose the Last U.S. Sanctions?

No one expected President Biden to impose his last U.S. sanctions against Russia less than two weeks before leaving office. Moreover, he introduced two comprehensive sanctions packages, one after another, on January 10 and January 15, 2024. The widely held explanation that he merely wanted to “spite” his successor, Trump—known for his plans to negotiate with Putin and Zelensky—is unlikely to fully account for the decision. The reasons are likely different. Specifically, since the bulk of U.S. sanctions policy has been implemented under Biden’s administration starting in February 2022, it is not surprising that he decided to reaffirm its key priorities, as they say, “before the curtain falls.”

The first sanctions package, introduced on January 10, focuses on tightening controls over the export of Russian energy resources. The January 15 package targets various schemes to circumvent sanctions, primarily in the financial and defense-industrial sectors of the Russian economy. Thus, two additional significant blows have been dealt to the Russian economy: the export of energy resources, as well as the financial and defense-industrial sectors.

U.S. Sanctions of January 10, 2025

According to the U.S. Deputy National Security Advisor, the sanctions package introduced on January 10, 2025, is “the most significant to date” among all sanctions targeting Russia’s energy sector.

This package primarily introduces sectoral sanctions against Russia’s energy sector. From this day forward, merely operating within the energy sector entails heightened risks for companies, their shareholders, and top executives. A ban is imposed on the provision of any services related to the oil business, specifically:

“The export, reexport, sale, or supply, directly or indirectly, from the United States or by a person who is a U.S. citizen or resident, regardless of their location, of oil-related services to any person located in the Russian Federation.”

The U.S. sanctions list includes major entities such as Gazprom Neft, Surgutneftegas, their subsidiaries, and related companies, including refineries, extraction enterprises, oil traders, and over 150 maritime vessels involved in transporting Russian oil. Many of these vessels belong to the so-called “shadow fleet,” which bypasses sanctions under various flags, including those of Panama, Gabon, Barbados, and other neutral countries. Major insurance companies providing maritime transport coverage, such as Ingosstrakh and AlfaStrakhovanie, have also been added to the OFAC SDN List.

Among other energy sector companies listed are Kuzbassrazrezugol, Mining and Coal Preparation Complex Denisovskiy, Liskinskii Zavod Montazhnykh Zagotovok, and others. The sanctions list also targets prominent individuals, including V. Vorobyov, CEO of Lukoil; A. Dyukov, CEO of Gazprom Neft; V. Chernov, CEO of Bashneft; N. Maganov, CEO of Tatneft; and A. Likhachev, head of Rosatom, among others.

U.S. Sanctions of January 15, 2025

As a follow-up to the January 10 sanctions package, President Biden’s last U.S. sanctions, announced on January 15, primarily target companies and entities that create or use various schemes to evade American sanctions, including through foreign jurisdictions such as China and Kyrgyzstan. This time, the OFAC SDN list includes over 250 individuals and entities, approximately 150 linked to Russia’s military-industrial complex. Dozens of foreign companies facilitating the evasion of U.S. sanctions, particularly in China and Kyrgyzstan, have also been added to the list.

A significant development in the January 15 sanctions is the reclassification of around 100 companies already on the OFAC SDN list under Executive Order (E.O.) No. 14024. These companies now have an additional basis for their inclusion under E.O. No. 13662. Organizations sanctioned under E.O. No. 13662 are categorized into three annexes: (1) financial sector entities, (2) energy sector entities, and (3) military-industrial complex entities.

Annex 1: Financial Sector Entities

The list includes Russia’s leading financial institutions such as Sberbank, VTB Bank, Vnesheconombank, Rosbank, Alfa-Bank, Bank Zenit, Sogaz Insurance Company, AvtoVAZ, Moscow Exchange, National Clearing Center, National Settlement Depository, Promsvyazbank, Russian Direct Investment Fund, Sovcombank, Tinkoff Bank, Tochka Bank, and others.

Annex 2: Energy Sector Entities

Among the industrial giants sanctioned under both E.O. No. 14024 and No. 13662 are Zvezda Shipbuilding Complex, Severstal, Mechel, Gazprom Invest, United Metallurgical Company, Tikhoretsk Machine-Building Plant, Arctic LNG-1, Arctic LNG-2, and others.

Annex 3: Military-Industrial Complex Entities

This list includes Rostec, Russian Space Systems, Kamaz, Sverdlov Plant, Mikron, Volga-Dnepr Airlines, United Aircraft Corporation, Skolkovo, Russian Helicopters, and others.

Key Distinction Between the Two Orders

A notable aspect of these lists is the legal difference between the two executive orders. While the President issued E.O. No. 14024, which a subsequent presidential decision can revoke, E.O. No. 13662 has been integrated into U.S. federal law. As a result, its repeal would require action by the U.S. Congress.

Were Biden’s Last Sanctions Coordinated with Trump?

According to a long-standing American tradition, the outgoing presidential administration avoids taking any decisive steps in the final months of its term that could complicate the actions of the incoming administration. Beyond simple courtesy, this tradition has rational foundations. Firstly, no matter how the outgoing U.S. president feels about the newly elected one, it makes no sense to enact any regulatory decisions that are clearly at odds with the new president’s agenda, if only because he can cancel them on the very first day after his inauguration.

Moreover, according to the same established tradition of transitions between administrations, all actions of the outgoing administration are coordinated with the incoming one, thus ensuring a degree of continuity that is often not immediately apparent to someone with no professional interest in politics. This continuity and coordination may appear either as a formal courtesy during the power transition or as a performance in the style of “good cop, bad cop.”

In this case, both sanctions packages were undoubtedly coordinated with the incoming Trump administration. This is evidenced by the fact that Trump did not react to them. Imagine what his reaction might have been if these actions by the outgoing Biden administration had truly surprised him… The goal of these U.S. sanctions, taken at the crossroads of two administrations, is most likely to create additional leverage for Trump, who plans to negotiate with Russia from a position of strength.

Conclusion

The last U.S. sanctions indicate that the U.S. sanctions policy toward Russia is serious and long-term. There is much speculation about the new U.S. course under Trump’s leadership, but this will remain uncertain until he assumes the presidency and dispels any doubts. One thing can be said with confidence: he will not be able to change the U.S. sanctions policy toward Russia by 180 degrees, and most likely, he does not want to. The stakes are too high, and the advantages are in his hands, not his opponents’. Why would he give them up so easily?

If you or your company are facing issues related to U.S. sanctions, contact us for a free case evaluation. We will quickly assess the situation and offer a solution.