The European Union is pushing Congress to support Treasury Department plans to lift sanctions on a Russian aluminum company controlled by a Vladimir Putin ally, saying the sanctions have harmed European factories.
Aluminum plants “in Austria, France, Germany, Ireland, Italy, Sweden, and the United Kingdom have faced increased prices and significant challenges in maintaining their daily operations” since the U.S. imposed sanctions last year on companies controlled by Russian businessman Oleg Deripaska, said a Jan. 4 letter signed by ambassadors from the E.U. and the named countries.
The E.U. published the letter, sent to House Speaker Nancy Pelosi and Senate Minority Leader Charles E. Schumer, on Friday, a day after House Democrats expressed concern about Treasury’s plans to lift the sanctions on Rusal and two additional companies controlled by Deripaska.
On Thursday House Democrats said Treasury Secretary Steven Mnuchin failed to convince them in a closed briefing that the United States should lift the sanctions, calling for more information and a delay.
“This, with stiff competition, mind you, was one of the worst classified briefings we’ve received from the Trump administration,” House Speaker Nancy Pelosi (D-Calif.) said after the briefing. “The secretary barely testified. He answered some questions, but he didn’t give testimony.”
Asked whether House Democrats were considering introducing a resolution of disapproval to try to stop Treasury from easing the sanctions, as Schumer has done in the Senate, Pelosi said: “We’ll see.”
Treasury has said Deripaska will remain under personal sanctions but sanctions against the three companies could be lifted because the businessman had agreed to reduce his ownership below 50 percent.
Mnuchin disputed Pelosi’s description of the briefing, saying he was “somewhat surprised to see the speaker’s comment...We gave them close to an hour and a half and answered all their questions.”
In an emailed statement before the briefing, Mnuchin said the sanctions had met their goal. “One of the goals of sanctions is to change behavior, and the proposed delistings of companies that Deripaska will no longer control show that sanctions can result in positive change,” Mnuchin said.
Rep. Lloyd Doggett (D-Tex.), however, said he still has questions about whether Deripaska is really ceding control.
“I think there’s a real question about whether he’s effectively divested his stake, and we need more facts about that,” Doggett said after the briefing.
Washington’s sanctions on Rusal and two other Deripaska-controlled firms, enacted last year, clobbered the oligarch financially, sinking the market value of his publicly traded companies. They also caused havoc far beyond Russia. Global aluminum prices spiked, battering U.S. and European companies and prompting complaints from European allies.
European governments began warning the State Department last summer that the sanctions were hurting European factories.
A holding company connected to Deripaska and Rusal lobbied the Trump administration heavily to lift the sanctions. The chairman of the company hired Mercury Public Affairs and former U.S. senator David Vitter to call on the State Department and other officials.
The Treasury Department informed Congress on Dec. 19 that it intended to lift the sanctions on Rusal and the other two firms in 30 days because the companies had agreed to reduce Deripaska’s ownership stake below 50 percent.
The letter suggested Treasury wanted to lift the sanctions in part because of the havoc they caused in metals markets. The letter noted that aluminum prices soared and that “Rusal subsidiaries in the United States, Ireland, Sweden, Jamaica, Guinea and elsewhere faced imminent closure.”
Deripaska will not receive any cash as a result of the transactions necessary to reduce his ownership of Rusal or the other companies, Treasury said in the letter. And any future dividends he is entitled to from his reduced ownership stake will be placed into a blocked account, it said.