US sanctions: Nervous Russian elite ′realize Putin made a serious mistake′ | Americas| North and South American news impacting on Europe | DW | 19.01.2018
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US sanctions: Nervous Russian elite 'realize Putin made a serious mistake'

Hundreds of Russian oligarchs could be included on a list of potential US sanctions in the upcoming "Kremlin Report." DW spoke to former US diplomat Daniel Fried about growing anxiety within the Russian elite.

Media reports suggest concern is growing in Russia about a detailed report that the US government will submit to Congress at the end of January about oligarchs with close ties to President Vladimir Putin. Washington is expected to impose fresh penalties on Russia for alleged interference in the 2016 US election, and around 300 oligarchs fear being named and included on a sanctions list. Former US diplomat Daniel Fried used to oversee sanctions at the State Department and spoke to DW about the upcoming "Kremlin report," growing anxiety within the Russian elite, and new sanctions.

DW: There have been many rounds of sanctions before, but the Russian elite seems to be very concerned this time. Why?

Daniel Fried: I think that the Russian elite has realized Putin's aggression against Ukraine, against the West in general and the United States in particular has consequences for them. They sense that the US is seriously angry about what Russia attempted to do in our elections and this sanctions law is partly a response — and that Putin cannot protect them. Whatever deal the Kremlin had or thought it had with the Trump campaign hasn't worked out in practice. And so Putin's inner circle, and its connections in the business world are going to be publicized, and Putin can't stop that.

Read more: US and Russia chief diplomats show 'readiness' to talk despite escalating tensions

What will be in that report? Any new names?

I don't know. My impression is that the Trump administration is taking this seriously. The report and the list will discriminate between Russians who should be on it and those who should not. It is not a question of wealthy Russians; it is a questions of those Russians particularly tied to Putin. I think that's the intent of law. I do not think it should be hundreds and hundreds of people. The list should be so well constructed that when we read the names on it, knowledgeable observers will say: Aha, these are the right names!

What criteria would you apply?

I think you have to go after those wealthy businessmen particularly tied to Putin. Those conduits for Kremlin money or people holding or directing funds for Putin and possibly children of such people who have, for reasons not connected to their own merit, been given lucrative positions at the top of state enterprises. I would say that the list should go after people who are part of the corrupt Kremlin network, not simply Russians who got rich in the 1990s.

Read more: Why would Russia be selling natural gas to the US? 

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Risking a return to Russia

What consequences will the report and the list have?

Being on the list has no legal consequence. It can simply be sent to Congress and that's the end of it. However, I think being on the list will increase the odds that people on it will be sanctioned in the future, and there will be a reputational problem if Western businesses and banks continue to work with them. Whether the Trump administration will move to actually sanction these people is another question. And there needs to be a pause, I think, where the administration considers what its next step should be. Finally, I think the administration should leave open the possibility of adding new names to the list or subtracting names based on new information. If the list is supposed to provide a disincentive for people to be agents of the Kremlin, then you have to continue the disincentive.

Read more: Kalashnikov stays tight-lipped ahead of new US sanctions 

Daniel Fried

Daniel Fried is a former ambassador to Poland and coordinator for US embargoes

You have developed sanctions before — what's special now?

First, the US-sanctions against Russia over Ukraine were not unilateral sanctions. We negotiated them with Europe, including with Germany. It was a successful effort, because it was collective. The Americans and the Europeans have already sanctioned some of Putin's cronies  — Timchenko, the Rottenberg brothers. I think the answer has to do with the timing: In the Trump administration maybe the Russians expected sanctions would end. And, secondly, it's open-ended and could be a large report.

The Russians went after our election system — what did they expect would we do? Do they know us so little they thought they could go after our elections and start flooding social media with their bots and trolls and we wouldn't react? They had to know us better. I think some in the Russian business class are coming to realize that Putin made a serious mistake.

Read more: US-Russian exchange provides optimism in 'Cold War' freeze  

Major western sanctions

It looks like the report puts the Trump administration in a dilemma: If the new sanctions are too soft, the US might look weak in Russian eyes. If they are too hard, Putin will retaliate.

We mustn't talk ourselves into paralysis by worrying what the Russians are going to do to us. We should keep thinking about what we are going to do ourselves. I think the Trump administration will have to answer the question: What now? But they don't have to go immediately from publication of this list to sanctions. They could, for example, say that future sanctions are possible but we hope that Russia will back down from its aggression — that it will negotiate in good faith and implement the settlement in Donbass along the lines of Minsk, refrain from attacking our elections or elections on Europe and back down from its disinformation aggression. There are lots of things that the Trump administration could do. As we did in the Obama administration, sometimes making it clear that we are ready to escalate could be a useful deterrent. These are probably the things that senior people and the professionals in the US government are thinking about.

Ambassador Daniel Fried is a former assistant secretary for European affairs in the US State Department and served as Coordinator for Sanctions Policy in the Obama administration. He retired in February 2017 and is now a Distinguished Fellow at the Atlantic Council, a US think tank.  

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