Third Way Think Tank / Flickr Senator Chuck Schumer at Third Way...
Third Way Think Tank / Flickr

This weekend Senate Minority Leader Chuck Schumer (D-NY) announced that he will soon force a Senate vote on a resolution to disapprove the US Treasury Department’s removal of sanctions on three Russian natural-resource companies controlled by Russian oligarch Oleg Deripaska. Although Senate Majority Leader Mitch McConnell (R-KY) normally has tight control over Senate votes, the 2017 Countering America’s Adversaries Through Sanctions Act (CAATSA) provides that the Senate Minority Leader can force a vote on the issue.

The sanctions were ordered by Treasury in April 2018. Treasury said that Deripaska was accused of extortion, racketeering, bribery, ordering a murder, and having links to Russian organized crime. (The April 2018 Treasury statement did not mention that former Trump campaign manager Paul Manfort owed Deripaska a lot of money and that Deripaska was pressuring Manafort to pay.)

After April, Treasury delayed enforcing the sanctions while being heavily lobbied by Deripaska and his associates, and Treasury and Deripaska eventually negotiated a deal announced in December, in which Deripaska will reduce his ownership stake from 70% to 45% in exchange for Treasury’s removing sanctions on his companies. (The sanctions will remain in place for Deripaska himself.) The 25% reduction will come via transfers to (a) a charity founded by Deripaska, (b) the Swiss commodities firm Glencore (which has done business with Deripaska for some time), and (c) the Russian bank VTB, the same bank allegedly that was to arrange financing for Trump Tower Moscow. However, the deal is off if the House and Senate both vote to disapprove it; hence Schumer’s move.

The politics of this for Democrats are pretty simple: Trump is in the Russians’ pocket, and why is Trump relaxing sanctions on companies that might still be controlled under the table by a wily and criminal Deripaska? On Thursday in a closed-door session at the House, Steven Mnuchin was presumably asked this question and did not answer well: Nancy Pelosi told reporters “The secretary barely testified.

Logo of the US Treasury Dept. Office of Foreign Assets Control
Logo of the Office of Foreign Assets Control founded 1950 and one of the most powerful federal agencies you’ve never heard of. People with money do not want to be in the crosshairs of its Office of Global Targeting.

However, the technical aspects of this are more complicated than they might appear. Deripaska’s companies are heavily involved in the world economy, and enforcing sanctions against his companies would hurt European and American industry as well. Brian O’Toole, who was a senior advisor to the director of the Treasury Department’s Office of Foreign Assets Control (OFAC) during the Obama administration, argued in December that the Deripaska–Treasury deal is about as good as we could get and would meet the “goals of removing Deripaska’s influence and preventing him from benefiting from the sale of his shares”. Together with Samantha Sultoon (also a veteran of OFAC under Obama), he wrote last week that the deal was an “arrangement worthy of careful consideration and approval”.

By continuing to hold Deripaska’s feet to the fire, Pelosi and Schumer are playing political hardball. Regardless of the technical details, it’s good politics to keep up the pressure on unsavory Russian oligarchs. By doing so, Pelosi and Schumer also pressure Trump and the Republican Senate, who won’t look good publicly supporting the likes of Deripaska. Although few American voters will switch from R to D merely because of the upcoming Senate vote, this episode will help remind them of the close relationship between Russia and America under a Republican administration, a relationship that Americans are becoming more dubious of.

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