The Trump administration, under fire from lawmakers for not punishing Moscow over election meddling, said Monday it will not implement Russia-related sanctions mandated by Congress last year because the threat itself is acting as a “deterrent.”
The decision was made public after nightfall on deadline day for implementing sanctions against those who do business with Russian defense and intelligence firms, as required under a 2017 law.
Since the law took effect six months ago, said State Department spokeswoman Heather Nauert, “We estimate that foreign governments have abandoned planned or announced purchases of several billion dollars in Russian defense acquisitions.”
The decision was less concrete than some lawmakers envisioned when the Countering America’s Adversaries Through Sanctions Act passed last summer. Though also mentioning Iran and North Korea, the law was billed as a U.S. response to Moscow’s interference in the 2016 presidential election.
A list of potential targets was drawn up last month in anticipation of Monday’s deadline for implementing secondary sanctions. Instead, a State Department official said there is no need for them to be put into place now “because the legislation is, in fact, serving as a deterrent.”
The official, speaking on the condition of anonymity under State Department rules, said future sanctions would fall on foreign governments and business entities that buy from Russia, not the Russian firms, the official said.
More details were provided to Congress in classified briefings, and some Democrats were angered. Rep. Eliot Engel (D-N.Y.), the top Democrat on the House Foreign Affairs Committee, said he was “fed up” with the administration’s failure to punish Russia over election interference.
“The Trump administration had a decision to make whether they would follow the law and crack down on those responsible for attacking American democracy in 2016,” he said in a statement. "They chose instead to let Russia off the hook yet again.”
Though the administration’s decision did not pile on more sanctions for the time being, the State Department used language it usually reserves for its most bitter enemies, such as Iran and North Korea. The official said the legislative threat of sanctions would impose a cost on Russia for its “campaign of malign influence and destabilization.”
The sanctions decision was announced as the Treasury Department was preparing to release a blacklist of Russia’s richest tycoons linked to President Vladimir Putin. The list carries no penalties , but many wealthy Russians fear they could be sanctioned in the future and have their overseas assets seized.
The provision for what’s been called the oligarchs list has caused a great deal of agita among the elites of Russia. Even without legal teeth, its imminent release has been front-page news in Russia. It has fueled panicked rumors that hundreds of people may be named, not only the moguls but their spouses and children, too.
“It’s an example of public shaming,” said Adam Smith, a former Treasury Department adviser on sanctions. “It’s not clear what the government will do with the list. We don’t know how banks and financial institutions will use it. It’s just not good to be on the list, because of the potential for what could happen.”
Russia has pledged to protect the businesses and individuals named. It also has vowed to retaliate and even turned the allegation of election meddling against the United States by accusing it of interfering with Russia’s presidential vote set for March.
“We really do believe that this is a direct and obvious attempt to time some steps to coincide with the election in order to exert influence on it,” Kremlin spokesman Dmitry Peskov told reporters Monday.
Adding to the uncertainty is President Trump’s seeming reluctance to punish Russia and Putin.
The law calls for the list to categorize “indices of corruption,” listing political and business figures by “their closeness to the Russian regime and their net worth,” including the assets they hold outside Russia.
Congress also asked Treasury to analyze how sanctions would affect Russia’s sovereign bonds, which could increase borrowing costs and devalue the ruble.
The Kremlin already has taken defensive actions. Putin recently announced amnesty for Russians who repatriate their assets from overseas, which could shield an estimated $200 billion currently held in offshore tax havens.
At the least, the U.S. law underscores the woefully deteriorated state of relations between the United States and Russia and lawmakers’ frustration that Trump has not moved more aggressively to acknowledge and pursue the allegations of Russian interference in U.S. elections.
“The weird part of this is, while the relationship is bad between Moscow and Washington, it’s worse between the White House and Congress,” Smith said. “Congress took action arguably against the White House desires. It’s not clear how meaningful the list is, given the executive branch manages foreign policy.”