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Opinion
June 29, 2018 www.intellinews.com I Page 20
COMMENT:
The US sanction on Russia muddle
Lindsay Mackenzie in Glasgow
Just days before the 2018 FIFA World Cup kicked off in Russia the United States imposed a new set of sanctions on the host country. Five Russian compa- nies and three citizens were targeted. They were ac- cused of aiding Russia's security services in carrying out cyberattacks against the US. “The United States is engaged in an ongoing effort to counter mali- cious actors working at the behest of the Russian Federation and its military and intelligence units to increase Russia's offensive cyber capabilities”, Treasury Secretary Steve Mnuchin said.
These new sanctions come as the fallout contin- ues from the April 6 round of sanctions. Then, seven Russian oligarchs, their businesses, and 17 government officials were targeted because they, according to the US Treasury, profit from Moscow's kleptocracy and advance its “malign activity”.
The biggest name was Oleg Deripaska. He and his companies – including En+ and Rusal – were hit hard. So hard, in fact, that within two weeks the US Treasury announced that the sanctions against Rusal would be lifted if Deripaska ceded control.
There has since been a scramble to put distance between the two. Deripaska has resigned from the board. At the end of May, Rusal's chief executive and seven other board members, seen as close to Deri- paska, quit. At the start of June, En+ (which controls 48% of Rusal) hired investment bank Rothschild to sell part of Deripaska's stake, while a New York based recruitment agency began looking for new directors. Ties are being severed where possible.
The US sanctions on Russia targeted oligarch Oleg Deripaska, but have no clear goals
The sanctions, then, are clearly having an impact. Deripaska has become a financial pariah. The future of Rusal – which without sanction relief will struggle to pay its dollar-denominated debt
– remains unclear. Taken together with January's imperfect “Countering America’s Adversaries Through Sanctions Act” (better known, thankfully, as CAATSA), Russia's growth outlook has taken
a dent. Morgan Stanley recently raised the risk
of recession should sanctions become tighter. A high oil price would not save the economy, it said. Moscow's relationships with defence partners are under threat, including lucrative deals with India. While the Kremlin has managed to mitigate some of the worst effects of sanctions since 2014, the long-term picture is far from rosy.
Policy-making on the hoof
Yet the sanctions have clearly fallen short in properly countering Russia's behaviour and deserve further scrutiny. Whether one celebrates the downfall of someone like Deripaska or not,
in sanctioning his companies, particularly Rusal, the US targeted a global metal industry player without taking into account the impact on international markets.
Washington has also misjudged the importance of someone like Deripaska to the Kremlin. Indeed, few of the necessary boxes in designing an effective sanction policy have been ticked. All of this raises serious questions about the decision making within the US Treasury, and the broader administration's strategy vis-a-vis Russia.