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Biden wants Putin to behave.  So why not go after your money?

Faithful leaves

Officials in the Biden administration argue that past US sanctions against Russian oligarchs have not worked out as Washington hoped and that there is no guarantee that futures will.

In 2014, Obama unveiled economic sanctions against several Russian oligarchs and collaborators close to Putin, in an attempt to punish Moscow for its invasion of Ukraine. The targets included Gennady Timchenko, founder of a major commodities trading company in the oil and energy markets, and Yuri Kovalchuk, Putin’s personal banker.

Former President Donald Trump’s administration announced similar measures in April 2018, targeting several other Russian tycoons and government officials. The Trump administration cited a range of Russian activities, including interference in the U.S. election, as the reason for the move.

Those sanctioned included aluminum magnate Oleg Deripaska and companies linked to him. The Trump administration then lifted corporate sanctions after facing a lobbying campaign that highlighted how the sanctions disrupted global metals markets. In the years that followed, questions arose as to whether Deripaska violated an agreement that led to the lifting of sanctions against the companies.

Overall, however, neither Obama’s nor Trump’s sanctions against Russian oligarchs appeared to deter Putin from taking steps that undermine American interests, administration officials and others have said. In fact, because the US sanctions made it more difficult for these tycoons and their families to access US and other financial systems, they may have led to greater loyalty to Putin.

“In many cases we have seen that the oligarchs then became more dependent on patronage and state contracts from the Russian state,” said a senior official in the Biden administration.

The official added that it is too simplistic to call the Russian government a kleptocracy or to say that Putin’s only interest is money. “He clearly has other ambitions on the geopolitical scene beyond making money and making money for himself and his cronies,” the official said.

Analysts point out that the development of sanctions is a complex process that requires meeting certain thresholds of evidence. Just the fact that a person is rich and friends with Putin is not enough.

Some also say that the anti-Putin crusaders overestimate America’s knowledge and access to where Putin and his friends hid their funds in the world. Also, even if the United States manages to freeze some of Putin’s pal’s assets, that person will likely still live quite comfortably.

“We don’t really know where all the money is,” said a former US official familiar with the matter. “It’s hidden so deep you don’t know where it’s going to pop up.”

Escalating worry

There are many other reasons to avoid a crackdown on kleptocrats at this time, according to administration officials and outside analysts.

On the one hand, the chair may want to retain some leverage for later use. Biden has indicated that he wants to give Putin time to prove whether he can be a constructive partner, including on issues such as the fight against ransomware. After the June summit, U.S. officials were heartened by a remark from a senior Russian security official that Russia was willing to work with the United States to tackle cybercriminals.

It’s also possible that instead of having a chilling effect, imposing sanctions on Putin’s wealthy friends could lead to escalating retaliation. Even actions that only somewhat undermine Putin’s control – for example, by weakening his power base when his associates realize they can’t access their money – could hurt Russia’s economy in the last few years. no harm to the European economy and, ultimately, to the US economy.

Taken to extremes, the movements that could lead to Putin’s downfall could prove to be even more destabilizing in unpredictable ways. US officials, remembering the chaos of the post-Cold War era, are aware that Russia’s massive arsenal of nuclear weapons could fall into the wrong hands.

Biden, who has decades of foreign policy experience, never trusted Putin, a former KGB officer. But the president also understands the larger geostrategic calculations involved, analysts and former officials said.

“There’s no way President Biden is looking to personalize this with Putin,” a former senior US official said. “As long as you will see gloves coming off, it will be in a narrow and targeted manner. “

Analysis paralysis

For many Putin critics, this is not enough.

The United States has not sufficiently sanctioned Putin’s pals, or even the good ones, they argue. They also reject the idea that past sanctions against the oligarchs made no difference, claiming that without those sanctions, Putin could have done even more to frustrate the West.

“He didn’t withdraw from Ukraine,” Browder said of Putin, “but how much more territory would it have taken if we hadn’t sanctioned the oligarchs?

Russian dissidents linked to Navalny – whose poisoning and detention triggered its own US sanctions against Moscow, and more are still awaited – – gave the Biden administration a list of 35 people to target. The list includes oligarchs as well as alleged perpetrators of human rights violations. Several of those listed are already facing US sanctions.

U.S. officials appear willing to examine the list, said Leonid Volkov, a senior Navalny official, who met a range of prominent figures while in Washington earlier this year.

However, “they have made it very clear that they have no desire to go ahead with sanctions alone, so they want to do it with partners,” he said.

Volkov agreed that a coordinated sanctions effort would be more powerful than the United States acting alone, especially given the number of Russian tycoons who keep their money in real estate or other assets in Europe. But he also noted that such coordination takes time and could face roadblocks from world leaders who are friends of Putin.

In the meantime, the Navalny Foundation intends to continue its investigations, compiling sets of evidence that the Biden team and others can turn to if and when they decide to go after the Russian kleptocrats and their friend at the top of the Kremlin.

“Our point is that this has to be a priority,” Volkov said.

Browder said Biden’s team reminded him of the Obama years, when many of the same officials over-analyzed situations so much that they came across as timid, if not downright frozen. This included Obama, who was keen to avoid an escalation with Moscow.

“These people are all crazy politicians. They are not gunmen, they are political freaks, ”said Browder. “In many ways that’s a good thing, but sometimes you need gunslingers. “

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