April 6, 2018

Treasury Department Imposes New Sanctions on Russian Individuals and Entities

Oleg Deripaska
Alexander Torshin
Viktor Vekselberg
Mikhail Fradkov

The Treasury Department issues new sanctions against seven Russian oligarchs and 12 companies they own or control, as well as 17 Russian government officials. Notably, eight of the sanctioned Russian entities are owned or controlled by oligarch Oleg Deripaska, who has extensive business and political ties to former Trump campaign manager Paul Manafort. The sanctions also include Viktor Vekselberg, whose cousin and CEO of his company’s “U.S. investment vehicle”, Columbus Nova, donated $250,000 to Trump’s inauguration; Alexander Torshin, who met with Donald Trump Jr. during the 2016 NRA convention; and Mikhail Fradkov, a Russian politician who heads a state-run think tank in Russia that reportedly developed a plan in 2016 for the Russian government to influence the U.S. presidential election.

Despite the Trump team’s efforts to lift US sanctions on Russia, including former National Security Adviser Michael Flynn’s comment about the sanctions being “ripped up” once Trump took office, the House and Senate passed a bipartisan Russia sanctions bill in July 2017. This bill imposed new sanctions on Russia, and restricted the White House’s ability to remove existing sanctions. In retaliation, Putin ordered the U.S. to drastically cut its diplomatic staff in Moscow by 755 employees. Trump signed the new sanctions bill into law in August, but called the bill flawed and stated that it includes “unconstitutional provisions.” He also thanked Putin for slashing U.S. diplomatic staff, saying that doing so would “save a lot of money.”

The U.S. government has historically used sanctions as a tactic against Russia; one notable example is the 2012 Magnitsky Act. Named for Sergei Magnitsky, a Russian lawyer who died in jail after uncovering a tax fraud scheme involving “a total of $230 million linked to the Kremlin and individuals close to the government.” Magnitsky was beaten, isolated, and denied access to lawyers and medical assistance. In response to this abuse, President Obama signed the Magnitsky Act, which sanctioned various Russian government officials and businessmen; the sanctions banned these individuals from entering the U.S. and froze any assets they had in U.S. banks. Russia responded by banning all U.S. adoptions of Russian children. Russian lobbyists have since worked tirelessly to have the sanctions repealed; most significantly, Russian lawyer Natalia Veselnitskaya has claimed that she attended the infamous June 9, 2016 meeting in Trump Tower to discuss the Magnitsky Act and the Russian adoption ban. President Obama signed a second round of sanctions in 2014, after Russia’s annexation of Crimea. These sanctions further targeted individuals within Putin’s inner circle, including high-ranking officials in the Russian oil and finance sectors. In December 2016, in response to Russian interference in the U.S. election, President Obama “expelled 35 Russian diplomats and closed two Russian compounds” in the U.S.

In 2017, Congress passed the Countering America’s Adversaries Through Sanctions Act (CAATSA), which targets people and entities linked to Russian military/intelligence agencies, the Russian oil and gas industries, and any entity linked to Russian cyberattacks. In what some have considered to be a response to Trump’s pro-Russian rhetoric, the bill also “established a review process that allows Congress to block any effort by Trump to ease or lift [the] sanctions.” Although Trump signed the bill into law, the deadline for implementing the sanctions passed on October 1, 2017, without any guidance from the Trump administration on how to proceed with implementing the signed bill. After missing the first deadline, the State Department issued guidelines about which individuals and entities would ultimately be sanctioned on October 26, 2017.

The Trump administration’s eventual rollout of the sanctions again indicated their lack of interest in meaningfully implementing CAATSA. On January 29, the administration released a statement claiming that “since the enactment of [CAATSA]” the government estimated “that foreign governments have abandoned planned or announced purchases of several billion dollars in Russian defense spending,” apparently asserting—without evidence—that the mere passage of the bill had achieved the desired outcome. The next day, the Treasury Department released a list of oligarchs and Kremlin-linked figures intended to comply with CAATSA; however, subsequent reporting revealed that the lists were copied from a Forbes list of Russian billionaires and the Kremlin’s own website, respectively. When the administration finally complied with CAATSA and announced new sanctions on March 15, 2018, the list of sanctioned individuals was mainly comprised of those already indicted by the Special Counsel investigation and oligarchs who had previously been sanctioned; this round of sanctions was effectively meaningless. Another round of sanctions was announced on April 6, this time placing restrictions on a group of Russian oligarchs and government officials. While these sanctions were more forceful, this round of sanctions was also clearly incomplete. Although the administration hinted that more were to come, they have thus far failed to implement additional sanctions directly targeting those responsible for the 2016 election interference or directly impacting Russia’s energy or defense sector.

On multiple occasions Trump administration officials have taken seemingly tough stances on Russia sanctions, only to be undermined after the fact by the President. In March, 2018, suspected Russian agents tried to assassinate a former Russian spy and his daughter in the United Kingdom. The Trump administration’s initial reaction was tepid, though later it expelled 60 Russian diplomats and closed the Russian consulate in Seattle in a rebuke of the attack. Trump himself, however, was reportedly furious that the United States had removed more diplomats that other nations, believing that it contributed to a media narrative that viewed the US as especially tough on Russia. A similar case came only the next month, after Syria’s Russia-backed President, Bashar al-Assad, used chemical weapons on his own citizens. Nikki Haley, the United States’ Ambassador to the United Nations, announced that the Trump administration would be rolling out additional sanctions on Russia in retaliation for the attack. Shortly thereafter, Trump himself reportedly decided to walk back Haley’s claim, and ordered the State Department to call the Russian embassy and assure them no more sanctions were coming down the pipe.

Trump Administration