Do You Think More Russia Sanctions The Answer? Treasury, State Preparing Reports That Go Beyond Punishment For Election Meddling

 

Congress and millions across the country have cried out to punish Russia over its meddling and interference in the 2016 election that saw President Donald Trump rise to the nation’s highest political office.

But, just days before the Treasury and State Departments have to file congressionally-mandated reports detailing potential new sanctions,

a closer look at the issues involved reveal the undertaking goes far deeper than simply punishing Russia’s economy or payback for election interference.

Experts explained to Newsweek the impact current sanctions have already had on Russia’s economy, particularly in the energy sector, while the Treasury and State Departments, respectively, detailed the agencies involved and how U.S. policy will be applied.

The process is complex, involves European allies, Russian President Vladimir Putin and his backers and may not really break from policies the U.S. has adhered to for years.

In July Congress overwhelmingly passed the Countering America’s Adversaries Through Sanctions Act of 2017 (CAATSA). The act, signed by the president in August despite his protest, charged the Trump administration to sanction companies and individuals within Russia’s defense and intelligence sectors.

The act stipulated Congress could stop Trump from removing sanctions, he challenged it as unconstitutional, which only led to further accusations of the billionaire having ties to Russia he has not disclosed.

Those supposed ties were also exacerbated when the administration missed a key CAATSA deadline. The administration had until early October to list the companies and people subject to sanctions but did so three weeks late.

Eventually, 33 companies linked to Russia’s defense sector and six individuals tied to the intelligence sector were named. Should companies around the world do business with those Russian entities and people named, they could be subject to penalties.

Russian President Vladimir Putin delivers a speech while attending the Forum of Small Towns and Historical Settlements in the town of Kolomna, some 100 km south of Moscow, on January 17, 2018. AFP via Getty Images/Alexander Nemenov

The administration has until Monday to submit the reports about possible new sanctions, and the U.S. Ambassador to Russia, John Huntsman, confirmed earlier this month they would be published by the deadline.

Where the reports stand just before the deadline is somewhat unclear, but the undertaking involves several government agencies.

Treasury is “actively working” to meet CAATSA’s deadline for the reports on Russian oligarchs and the potential expansion of sanctions to include sovereign debt and derivative products, a department spokesperson told Newsweek. Further details or the status of the Treasury reports were not disclosed.

State is currently working with Treasury’s Office of Terrorism and Financial Intelligence and the Office of the Director of National Intelligence on the oligarchs report.

Experts agree the sanctions currently in place against Russia have hurt its economy and, thus, those oligarchs who support Putin. Russia’s been subject to sanctions by the U.S., the European Union and others over its annexation of the Crimea from Ukraine in 2014, for supporting the separatist war and meddling in elections there, as well as for human rights abuses under the Magnitsky Act, assistant professor at Harvard University’s Department on Government Yuval Weber said.

It’s in dispute exactly how much the sanctions have directly affected Russia’s economy, but its oil industry has clearly been hit, according to Weber.

“The real damage to the Russian economy over previous years is that the price of oil fell and the economy was (and is) dependent on that,” he said. “As oil is sold in dollars, fewer dollars bidding for rubles created a huge decline in the value of the ruble, which in turn really hurt an economy dependent on imports for everything from food products to oilfield services.”

Furthermore, the very threat or possibility of future sanctions can also act as a deterrent to U.S. businesses, or other firms around the globe, looking into prospective work with a Russian firm, former undersecretary of Commerce for Industry and Security and senior Defense Department official Mario Mancuso said.

“Every time you set a sanction, the effective impact of that sanction is actually broader,” Mancuso said. “If you’re in international business and you read the sanctions regulations and you know that you can do business with a certain Russia person…you may nevertheless choose not to undertake the transaction even if it’s permissible because you may think, ‘wait a second, when will the other shoe drop?’ And the U.S. government knows that.”

A State Department official familiar with its efforts on the reports stressed the U.S.’s sanctions policies toward Russia firmly call for Putin’s government to back out of Ukraine and to abide by the Minsk agreements. The 2015 deal was struck between Germany, France, the Ukraine and Russia to maintain a ceasefire and for Ukraine to eventually gain its full sovereignty.

Secretary of State Rex Tillerson and President Donald Trump listen as Republicans take turns speaking to the media at Camp David on January 6, 2018 in Thurmont, Maryland. Getty Images/Chris Kleponis-Pool

“Our Russia sanctions policy has been carefully calibrated to incentivize Russia to fully implement its Minsk commitments, withdraw from occupied Crimea, and cease malicious cyber intrusions and other malign activities that threaten our national security,” the State official told Newsweek.

The official added: “We have been clear that the path to a better relationship runs through Ukraine, and our policy with respect to Ukraine has not changed. ”

Secretary of State Rex Tillerson said in June of last year the U.S. did not want to be “handcuffed” to the agreement, explaining it was possible the Ukraine and Russia could find some peace outside of the deal’s parameters.

But Tillerson was also in support of sending United Nations peacekeepers to Ukraine to better install the Minsk accords, The Washington Post reported.

But Russia, too, has used sanctions as a sort of public relations tool to make it appear as if the U.S. and the West have hindered Russians from purchasing European goods. The effort is for Putin to retain power or save face and for his backers to maintain support, Columbia University political science professor and Russia expert Elise Giuliano said.

“This has negatively impacted many Russian citizens who consume European goods,” Giuliano said. “Many Russian citizens don’t even realize that they can’t buy these goods anymore because of Russia’s decision to impose sanctions on trade with Europe. They think these are part of the West's sanctions on Russia. ”