H.R. 5632: Preventing Escalation and Advancing Caucasus Engagement Act

This bill, known as the Preventing Escalation and Advancing Caucasus Engagement Act, or PEACE Act, aims to impose sanctions on Azerbaijan in response to acts of military aggression against Armenia. Here’s a breakdown of the main components of the bill:

Statement of U.S. Policy

The bill outlines U.S. policy goals regarding Armenia and Azerbaijan, specifically to:

• Support the sovereignty and territorial integrity of both Armenia and Azerbaijan.
• Encourage direct negotiations between the two countries to reach a fair peace agreement.
• Utilize sanctions to deter military actions instead of resorting to negotiations.
• Support Armenia’s efforts to secure a long-term peace agreement and strengthen its ties with the U.S.

Imposition of Sanctions

The President of the United States is authorized to impose sanctions if it is determined that Azerbaijan has engaged in hostile actions against Armenia. Upon such determination, the following actions will take place:

• The President must issue a certification to Congress regarding Azerbaijan's actions.
• Sanctions will be imposed on individuals and entities involved in these hostile actions.
• Sanctions will also apply to foreign financial institutions aiding Azerbaijani actions.

Definition of "Hostile Actions"

Hostile actions are defined as military aggressions causing significant loss of life or compromising another country's sovereignty and territorial integrity.

Entities Subject to Sanctions

The bill specifies that sanctions can target:

• A senior official in the Azerbaijani government linked to hostile actions.
• Military units or civilian agencies from Azerbaijan engaged in aggression against Armenia.
• Foreign individuals or entities that support or facilitate these actions.

Type of Sanctions

The sanctions involve:

• Blocking property of targeted individuals in the U.S.
• Ineligibility for U.S. visas and entry for those involved in hostile actions.
• Revocation of existing visas of targeted individuals.
• Restrictions on foreign financial institutions that facilitate transactions with Azerbaijani institutions engaged in oil trade.

Exceptions and Waivers

Certain transactions may be exempt from sanctions, including:

• Sales of agricultural commodities, food, medicine, and medical devices to Azerbaijan.
• Humanitarian assistance transactions.

The President has the discretion to waive sanctions if deemed in the national interest and must report the reasons for any such waiver to Congress.

Termination of Sanctions

Sanctions may be lifted if individuals demonstrate a genuine commitment to cease hostilities for a specified period. The President also has the authority to terminate sanctions against foreign financial institutions if Azerbaijan stops its hostile actions.

Reporting Requirements

The President must submit regular reports to Congress regarding Azerbaijani actions and the effectiveness of the sanctions imposed under this Act. An initial report must be submitted within 30 days of enactment, with follow-ups every 90 days.

Expiration of the Act

The provisions of this Act are set to expire seven years after its enactment unless renewed or extended.

Severability Clause

If any part of this bill is deemed invalid, the remaining sections will remain in effect.

Relevant Companies

• GOOGL - Google: Potential for restrictions on operations involving Azerbaijani entities.
• XOM - ExxonMobil: May face limitations in oil and gas investments or transactions related to Azerbaijan.
• CVX - Chevron: Similarly at risk regarding operations in the Azerbaijani petroleum sector.