25 May 2022 12:40

U.S. sanctions against GAZ Group go into effect May 25

MOSCOW. May 25 (Interfax) - U.S. sanctions against Russian automotive group GAZ that the U.S. Treasury Department has deferred for the past four years will go into effect on May 25.

The last deferral for GAZ, which expired on April 27, was extended by the sanctions committee until May 25.

The Office of Foreign Assets Control (OFAC), the U.S. Treasury Department office responsible for applying sanctions, previously regularly extended the sanctions deadline for GAZ from the moment that the group and its owner Oleg Deripaska were hit by sanctions in 2018 by issuing the necessary licenses. But this time, for the first time in four years, a license was not published upon the expiration of the deadline.

The list of questions and answers published by OFAC along with the last license repeatedly stressed that after its expiration U.S. residents would only be able to carry out any transactions with the Russian automotive group and subsidiaries with special permits.

Unlike previous licenses, the new one prohibited the use of funds blocked as of May 2018, which until then GAZ could use to finance a list of permitted operations.

GAZ has repeatedly said that the sanctions are having a negative impact on its financial position. In April 2019, during a visit to GAZ's plant in Nizhny Novgorod accompanied by foreign journalists, Deripaska told Bloomberg that the U.S. sanctions going into effect would "lead to the bankruptcy and nationalization" of the company. In the event of nationalization, thousands of GAZ employees could lose their jobs, he said, adding that the group has a workforce of over 40,000.

Sources told Interfax that Deripaska expected to resolve the problem of sanctions by bringing in a foreign equity investor, possibly Volkswagen. However, a potential deal could not be agreed with the Russian authorities and after February 24 such negotiations became impossible.