Why Did the Trump Administration Pass the Buck on Sanctioning Russia?
This week’s highly anticipated news on additional Russia sanctions landed with a thud. For weeks, both Moscow and Washington had been astir about the impending steps the Trump administration would take against Russia based on legislation reluctantly signed by the president nearly six months ago and overwhelmingly supported by Congress. The law, called the Countering America's Adversaries Through Sanctions Act, or CAATSA, called for three analytical reports and the imposition of no less than five punitive measures, out of a possible 12, against Russia for interfering in the 2016 U.S. presidential election. The administration instead chose to impose zero new sanctions, saying the current ones were working and the “mere threat” of additional steps had had enough impact. Now we’re left grappling with two questions: Why did the Trump administration reject Congress’ mandate to further punish Russia? And what does its inaction portend for future U.S. policy toward Russia?
Of greatest interest among the analytical reports was one including a list of Russian oligarchs and officials considered most closely linked to (and supportive of) the Putin government who could be hit by new financial restrictions. Here too the administration soft-pedaled, but left room for maneuver. After months of nail biting by Russian elites, the Treasury Department released the list with minutes to go before the midnight deadline on Jan. 29. Instead of drawing on in-depth research, Treasury opted to use a simplistic threshold: Any Russian individual with a fortune estimated at more than $1 billion, no matter his or her political allegiances, could possibly face some forthcoming punishment. Even worse, the 96 oligarchs were cribbed from Forbes magazine’s list of rich Russians, while the 114 names of state officials were copied from government websites. Russian officials mocked the list’s authors for their perceived laziness and ignorance of domestic Russian politics. President Vladimir Putin himself dismissed the list as an empty threat, while leading business daily Vedomosti said the move scared no one in Russia. Many U.S. experts were left angry, seeing a real opportunity to punish Russia thrown to the wayside. That said, the report could still do damage to Russian economic interests, both because it leaves open the possibility of future sanctions and because it creates further uncertainty for business dealings with the targeted individuals and companies.
Passing the Buck
Why has the Trump administration seemingly passed the buck on punishing Russia? The only real takeaway from this week’s events is that we simply don’t know the true reasoning behind the administration’s decision. But a look back at how the original debate over the CAATSA legislation unfolded, as well as official U.S. statements on the approach to Russia, offer a few hints about why things have developed in this direction.
Recall that Trump officials came out repeatedly against CAATSA not only for conflicting with their desired approach toward Russia (read: kid gloves), but also for the perceived overreach of the legislative branch into matters traditionally reserved for the executive. Declining to follow Congress’ orders for the moment puts the ball back into the president’s court. First, it allows Trump’s team to keep the door open to cooperation with Russia on other issues of presumably higher priority, such as North Korea and Syria. Second, it alters the balance of power between the branches over foreign policy decision-making. The administration will decide if and when to pursue further action against Russia, effectively cutting out the legislative backstop that so many members of Congress had called for last year.
By ignoring the strict mandate to impose new sanctions, the Trump administration is basically goading Congress to call its bluff. CAATSA is one of the few bipartisan achievements of the current session, passed by a collective vote in the two houses of 517-5. The Trump administration is gambling that that level of across-the-aisle harmony was simply a flash in the pan. And there may be some truth to that. On Russia policy, as on much else, Congress is not only intensely divided along partisan lines, but distracted by the never-ending stream of scandals and accusations emanating from the Mueller investigation. The risk of another government shutdown still dominates the legislative agenda, and congressional Republicans are increasingly impatient talking about anything Russia-related. The Democrats will struggle to translate their angry rhetoric over the sanctions into new policies. In all likelihood, the issue of sanctions will be swallowed up by the next news cycle.
Finally, even this non-action on CAATSA has demonstrated the U.S.’s ability to disrupt Russian economic activity. In many respects, the oligarch list was largely designed to be a psychological tool, and some of that damage has already been inflicted. The talk of the town in both Washington and Moscow over the last month was which Russian oligarchs would be sanctioned. Many scurried to hire armies of lobbyists to prevent themselves from making the list, and Russian companies rushed to take out loans ahead of the deadline. Labelling any oligarchs, no matter their relationship with the regime, as complicit with corruption and election meddling contributes to their image as toxic business partners. Even threatening to take action and then not doing so disrupts the ability of Russian firms to plan long-term investments and build relationships with foreign entities. The Trump government may honestly believe that enough is being done to curb Russia’s economic prospects, something some Obama-era officials might agree with.
Relations Going Forward
Thus, the lingering ambiguity about the future of sanctions policy may all be part of Trump’s deal-making strategy. Notwithstanding Russian elites’ public derision of the Treasury Department’s list, they are still guessing about what is coming next. Movements in the bond markets suggest that investors aren’t overly concerned, and may even be expecting a softening of the existing sanctions. But Treasury Secretary Steven Mnuchin said on Jan. 30 that there was a “classified version” of the report and new sanctions were forthcoming. And if Congress gets its act together and decides to act independently, the ultimate measures may be even stronger than what the Trump administration could have minimally imposed this week. Proposals have been floated in the past about excluding Russia from the SWIFT banking system, something Andrei Kostin, the head of the Russian bank VTB, said would be tantamount to a “declaration of war” andSberbank head Herman Gref said would "make the Cold War look like child's play." So it’s still much too early to declare the death of the sanctions regime.
In the short run though, Russian officials have to believe they’re sitting pretty. Protests this past weekend over the upcoming presidential election attracted smaller crowds than expected, and the brief arrest of main oppositionist Alexei Navalny only “troubled” the U.S. State Department. Putin clearly sees little international risk in carefully stage-managing his all but guaranteed re-election next month, and there is little evidence the U.S. will take a strong stance either way. He can also still run on his claims to be protecting Russia from perceived U.S. aggression. For now, officials in Moscow can sit back and enjoy the circus they see in Washington, knowing full well that they benefit from the internal turmoil roiling their main geopolitical rival.
Sadly, the biggest outcome of the pass on new sanctions is that Russia's interference in U.S. elections has still gone (and will continue to go) unpunished. U.S. lawmakers are already sounding the alarm about possible Russian interference in Mexican elections, and Trump’s own CIA director has warned of future meddling in the upcoming 2018 midterms. No matter what the Trump administration’s reasons for stalling on sanctions, the Russians can only read Washington’s inaction as a sign of weakness. More than a year has passed since Russian hackers reportedly influenced American voters. But the general public is only slightly closer to knowing the full truth about what happened, and the U.S. government seems uninterested in determining who was guilty of what and holding anyone accountable for their actions.
Updated: An earlier version of this article incorrectly identified the number of state officials on the Treasury Department's "Kremlin list" as 144 instead of 114 and incorrectly attributed Herman Gref's words to Andrei Kostin.
David Szakonyi is an assistant professor of political science at George Washington University, a research fellow at the International Center for the Study of Institutions and Development at the Higher School of Economics in Moscow and, for the 2017-2018 academic year, an academy scholar at the Weatherhead Center for International Affairs at Harvard University.
The opinions expressed in this commentary are solely those of the author.