Gov. Newsom Issues Executive Order Directing Further Action Against Russian Investment

California Governor Gavin Newsom issued a new Executive Order during the weekend that directs state agencies and departments to end all agreements with contractors who are currently subject to sanctions imposed by the federal or state government due to the Russian-Ukrainian War.

The order became the latest action or proposed action against Russia following the beginning of the Russian invasion of Ukraine last month. Last week, Newsom called on state pension funds to leverage  funds away from Russian investment and halting Russian debt purchases, with state lawmakers writing up a similar bill that would have the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS) state pension funds to divest completely from any Russian assets. While Newsom’s proposal did not come with any estimated economic impact, the proposed bill would take away at least $1.7 billion in investment with Russia.

Newsom’s announced Executive Order gives all state agencies and departments 45 days to review all contracts for commodities, services, and technology to see if they are complying with all state and federal sanctions. For those that do, the agencies and departments must end all contracts with individuals and entities that are targeted by the sanctions and refraining from entering any new contracts with them until the end of sanctions. In addition, all grantees and contractors currently in agreements that are worth at least $5 million are to report on sanction compliance and what measures have been taken since the Russian invasion of Ukraine.

“Russia’s brazen and lawless military assault on Ukraine demands our support for the Ukrainian people and exacting an immediate and severe cost upon the Russian government,” Gov. Newsom wrote. “The California Constitution is explicit in the fiduciary duties that are required of us on behalf of the hundreds of thousands of Californians who have invested in these systems. These fiduciary obligations and our moral imperative before these atrocities demand that you act to address Russia’s aggressions and immediately restrict Russian access to California’s capital and investments.”

The Executive Order came less than 24 hours after Newsom met with the San Francisco Consul General of Ukraine Dmytro Kushneruk on Friday. Following the meeting, Newsom promised continued support of Ukraine and Ukraine’s government by the state.

“California stands with Ukraine and the Ukrainian community in California – one of the largest in the country,” said Governor Newsom on Friday. “Our state shares many close ties with Ukraine and will continue our efforts to support the nation’s brave fight for the fundamental rights and freedoms of its people.”

Continued sanction support against Russia

While Newsom’s actions were met with widespread approval, political analysts note that Newsom’s building up of Ukrainian support comes less than a week before the State of the State address, currently scheduled for March 8th. Many also noted that establishing support now may go a long way and help with cementing his reelection bid in November.

“While it was the right move on many levels, it also builds up Newsom before some big political things coming up,” said Raymond Cooper, a Bay Area-based pollster, to the Globe. “The vast majority of Californians are on Ukraine’s side. While what Newsom is doing is making sense on a federal and state level for adding and making sure sanctions are in place, and has been approved of members of both parties in Sacramento, there’s also the personal side to it.”

“Support now raises his profile and will likely be little centerpiece to his state of the state. He needed a lot of positives to balance out the trouble the state and many local areas are in now, and support for Ukraine helps do that. And since he is establishing major support now, it becomes a major issue in the election that he doesn’t need to fumble for an answer for. He can say he has always supported Ukraine and was the one making sure that sanctions were in effect. For Newsom, the announcements and actions against Russia might just prove to be a boon later this election year as a result. No matter what any opponent says, he has something good he can point to. He doesn’t have a winning hand, but he sure as hell has an ace up his sleeve now.”

Newsom is set to deliver his state of the state speech on Tuesday, one week after President Joe Biden gave his state of the Union address at the U.S. Capitol.