The Trump administration’s newest sanctions on Russia are another step in the right direction, argue Alina Polyakova and Benjamin Haddad. But after the attack on a former Russian spy in the United Kingdom, much more can and should be done to deter Moscow. This post first appeared in The American Interest.
Yesterday, the Trump administration announced a new set of sanctions targeting the Russian individuals and entities involved with the Internet Research Agency that were indicted by Special Counsel Robert Mueller in February. The FSB and the GRU—the main Russian intelligence services—were also on the list. The move should have not surprised anyone. Those that were caught off guard should have been closely watching the Trump administration’s actions on Russia rather than fretting over the president’s tweets. In a hearing on March 5, Secretary of Treasury Steven Mnuchin announced his intention to move forward with new Russia sanctions in the next few weeks. Targeting the indicted individuals was the logical way to do it.
Though in the works for a while, the sanctions were announced yesterday to coincide with the United Kingdom’s expulsion of 23 Russian diplomats in retaliation for a breathtakingly reckless nerve gas attack on a former Russian spy, Sergei Skripal, in Salisbury that Downing Street has pinned on the Kremlin. It was accompanied by President Trump himself expressing solidarity and support for our allies as they stand up to Russia. “It certainly looks like the Russians were behind it,” the president told reporters. “Something that should never ever happen. We’re taking it very seriously, as are I think many others.”
Much more can and should be done to deter Moscow. But just because the response to Russian provocations may not have been as strong as we might have liked to have seen, it’s important to remember that the Trump administration has been acting—baby steps, perhaps, but in the right direction. From providing weapons to Ukraine to increasing spending for European security, and most recently to striking a convoy of Russian mercenaries near Deir Ezzor, Syria—it all adds up to a stronger response than the dominant narrative implies. Still, one glaring gap in the administration’s policy all along has been the lack of enthusiasm for implementing sanctions against Russia for its interference in the 2016 elections. This has led to accusations of complacency—and far worse.
One glaring gap in the administration’s policy has been the lack of enthusiasm for implementing sanctions against Russia.
Are the critics right? It is worth looking at exactly why the Trump administration has proved reluctant until now to implement these new measures. To do so fairly, reviewing a little recent history is in order.
Last summer, the U.S. Congress, fearing that President Trump would remove Obama-era sanctions against Russia without just cause, passed a comprehensive set of legislation named the Countering America’s Adversaries Through Sanctions Act (CAATSA). Under the threat of a veto override, President Trump reluctantly signed the legislation into law on August 2, 2017. Trump’s Treasury Department imposed additional sanctions on Russian entities for their connection to Ukraine on January 26, 2018, but three days later, it also announced that it would hold off on new CAATSA-specific sanctions on Russian defense and intelligence sectors. On that same day, the administration also released a much-anticipated “Kremlin list”—a compilation of regime-connected oligarch billionaires and other political actors—in compliance with Section 241 of CAATSA. The list turned out to be a sloppy mash-up of a list of Russia’s most wealthy individuals as compiled by Forbes and the Russian government’s own official website. It quickly became a key piece of evidence for those accusing Trump of stalling on sanctions.
The “stalling” narrative, however, is not completely fair; reality, as it turns, is more complicated than it is portrayed to be in the media. For one, though the public roll-out of the “Kremlin list” was indeed mishandled, meaningful work was done in preparing it. Congress intended the report to “name and shame” a corrupt Kremlin elite, while also serving as a basis for future personal sanctions. The amateurishly-compiled public list was roundly mocked by the very people it was supposed to terrify, so by that measure it was a failure. But the public report was accompanied by a second classified version. In private conversations, those who have seen the “real” list have praised it for its professional, detailed analysis spanning over 100 pages. Why keep such good work a secret? The obvious answer is that the classified report contained sensitive intelligence. And if the intention was to keep the Kremlin elite nervous, keeping a “real” list out of view has certainly accomplished that.
Furthermore, the Trump administration has legitimate concerns regarding CAATSA. Under the Obama administration, Ukraine-related sanctions were imposed by executive order. Those sanctions are now legislation, which means that the president would need a waiver from Congress to remove any sanctions. Administration officials negotiating with Russians on Ukraine often raise this constraint as hampering their ability to convince their counterparts that they will be rewarded if they come to the negotiating table.
CAATSA, like almost any bill, is also far from perfect as written. Specifically, it poses potential risks for American and European companies alike. According to Ambassador Daniel Fried, who led sanctions coordination under the Obama administration, “[t]he act includes several provisions so broadly scoped that careless implementation could damage American interests” and lead to “potentially damaging consequences.” Specifically, the legislation allows for new discretionary authority to impose sanctions on energy and arms-related deals with Russian companies and financial institutions. As CAATSA was being drafted, Europeans lobbied against the bill because of concerns surrounding the European energy market. And while the main European concerns on energy were addressed in the final version, the law, if implemented aggressively, could still have far-reaching effects, risking U.S.-EU unity on sanctions. For this reason, Fried and other experts have urged the administration to avoid imposing sanctions mandated under some of the more broad reaching sections.
The Trump administration’s decision to disband the sanctions coordination office once led by Fried was rightfully criticized. However, this does not mean that the State Department and Treasury have not been in constant contact with European allies, especially on clarifying how they would be approaching CAATSA. Many European diplomats have, in fact, remarked to us that communication with this administration—on sanctions and other issues—has been consistent and effective. According to one Senate staffer, the State Department, together with European counterparts, has been tracking and blocking deals that would have violated CAATSA, effectively stopping “billions” in deals with Russian interests.
So the Trump administration has finally used the Congressional mandate to impose sanctions on Russia for its meddling in the U.S. elections. Is it enough? Hardly. The measures announced yesterday by Treasury are a step in the right direction, to be sure, but we hope they are only a first step. As the Skripal case unfolds, the Trump administration will have ample opportunity to stand beside a key U.S. ally as it formulates a muscular response. Doing so would not only be the right thing to do, but it would go a long way to dispel concerns among critics who say that it has been dragging its feet to retaliate. It would be wise to not squander this chance.
The administration ought to consider using the secret “Kremlin list” to roll out personal sanctions against individuals close to Putin. Or if the administration wanted to induce maximum panic among the Russian elite, it could sanction individuals who were not listed in the unclassified version—just to keep them guessing. CAATSA authority could also be used to sanction propagandists associated with Russian state media as well as the Russian defense industry and individuals associated with support for Syrian president Bashar Assad.
The United Kingdom for its part can also do much more to tackle Russian dirty money laundered through London real estate and British financial institutions. According to some reports, money laundered through the U.K. is estimated at £48bn. According to Transparency International, £4.4 billion worth of U.K. properties are bought with suspicious wealth and more than a fifth of these properties were purchased by Russian individuals. Restrictions on investment visas have already been put in place in 2015 but more could be done against anonymous companies and dubious real estate investments. The U.K. should also strongly consider passing its own version of the Magnitsky Act. Taken together, these measures would go at the heart of Putin’s power structure. If British authorities blink, however, they will have telegraphed enduring weakness to the Kremlin.
This isn’t your father’s Cold War: Russia has been very effective at leveraging and gaming the loopholes and contradictions of the liberal order to advance their interests. Building Western resilience demands that we have an honest look at our systems, and address the weaknesses that have been so flagrantly exploited. The same way Russian electoral interference depends on the very real grievances of voters, brazen Russian behavior on Western soil is ultimately possible because we haven’t closed the door to their kleptocratic elites. For Donald Trump and Theresa May, who both rode to power on a wave of populist anger, rooting out the rotten core of our system could even prove to be a political winner with their base.