- within Finance and Banking topic(s)
On March 26, 2026, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) provided significant relief from U.S. economic sanctions for Belarus’ Ministry of Finance, the Belarusian Bank of Development and Reconstruction (“DBRB”), and the Belarusian company Belaruskali OAO (“Belaruskali”), as well as several affiliated entities.
By way of background, in June 2006, President George W. Bush issued Executive Order (E.O.) 13405 to impose sanctions on certain individuals for “undermin[ing] Belarus’ democratic processes or institutions.” More than a decade later, on August 8, 2021, President Joseph Biden Jr., in conjunction with actions taken by the European Union, Canada, and the United Kingdom, issued E.O. 14038, “Blocking Property of Additional Persons Contributing to the Situation in Belarus,” to expand sanctions on certain entities and persons in Belarus. This executive order was based on perceived new human rights abuses and deviation from the global democratic standards by the Government in Belarus, including diversion of a Ryanair passenger jet to the capital of Belarus, Minsk, and the subsequent detention of a prominent journalist aboard the plane, Roman Protasevich.
Pursuant to E.O. 14038, OFAC designated Belaruskali, which is one of the largest state-owned producers of potash fertilizers in the world. The assets of an entity designated by OFAC are subject to freezing, and U.S. persons are generally prohibited from engaging in any transactions with it, unless OFAC issues a general license or grants a special license. In other words, Belaruskali was for all intents and purposes cut off from engaging in the U.S. marketplace.
Additionally, in furtherance of E.O. 14038, OFAC issued Directive 1 in December 2021 to prohibit a U.S. person from participating in or dealing with new Belarusian sovereign debt, issued by the Ministry of Finance or the DBRB, with a maturity of greater than 90 days. As a result, it had become all but impossible for Belarus to issue new sovereign debt in capital markets in the Western world. OFAC made it clear that this prohibition extended to both the primary and secondary debt markets. Directive 1 did not, however, prohibit any other activities involving the Ministry of Finance or the DBRB or their property or interests in property.
Recent high level diplomatic discussions between the U.S. and Belarus have prompted the Trump Administration to partly reverse course. Specifically, in March 2026, a special envoy of President Trump visited Belarus and met with the President of Belarus. Following that visit, the Government of Belarus released 250 prisoners identified by the U.S. as unjustly detained for political reasons.
Subsequently, on March 26, 2026, OFAC rescinded Directive 1, removing the legal impediment for U.S. banks, investors, and other persons and entities, to transact in sovereign debt for Belarus, irrespective of maturity. This change does not, however, dismantle the broader Belarus sanctions framework—sanctions under E.O. 14038 and E.O. 13405 otherwise remain in place, meaning U.S. persons are still prohibited from transacting with any individuals or entities that remain on the Specially Designated Nationals (SDN) List, and must continue to apply the 50 Percent Rule (which prohibits transactions with entities in which a blocked entity owns at least 50 percent interest).
Importantly, in parallel to rescinding Directive 1, OFAC removed Belaruskali from the SDN List, effectively unblocking its property and interests in property. Now, U.S. persons may engage in transactions with Belaruskali without requiring a license, provided no other sanctions apply. This also means U.S. financial institutions are no longer required to freeze funds involving Belaruskali, and dealings—such as payments, contracts, and trade financing—can resume in the ordinary course.
Takeaways
The combined effect of lifting Directive 1 and delisting a major state-owned enterprise from the SDN List signals a broader policy shift under the current U.S. administration toward calibrated economic re-engagement with Belarus, but one that continues to rely heavily on counterparty-specific restrictions, rather than comprehensive sectoral prohibitions. Accordingly, residual risk remains. U.S. entities should conduct their due diligence with appropriate legal counsel to ensure that the delisted entity is not owned 50 percent or more by blocked persons, and that no other sanctioned parties are involved in the transaction chain.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
[View Source]
