Trump’s tough sanctions mark turning point toward Moscow

The latest sanctions against Russian oligarchs and officials are the Trump administration’s most forceful action to date against Russia and mark the ascendancy of officials who have argued for a more aggressive American response to Moscow’s attacks on the United States and our allies. President Trump may still hold out hope for a summit with Vladimir Putin, but his administration has embarked on a campaign of steadily escalating pressure on Russia.

The sanctions are a welcome development. Combined with the recent expulsion of 60 Russian spies operating in the United States, the sanctions send a clear message to President Putin and his inner circle that they will face ongoing and escalating costs for challenging the United States at home and around the globe. But for the United States to effectively counter Russia’s malign activities, this action needs to be the start, not the end, of a serious response to the Russian threat.

{mosads}The Trump administration needs to convince Europe to align its sanctions more closely with the United States. Trump and Congress should broaden the range of financial tools America is bringing to bear against Russia. Perhaps most importantly, Trump himself needs to publicly embrace his administration’s tougher line towards countering the Russian threat.

First, incoming national security adviser John Bolton and Mike Pompeo, slated to be the next secretary of State, should launch a dialogue with key European governments about sanctions on Russia. There has been a growing gap between U.S. and European sanctions on Russia since last July, when Congress enacted the Countering America’s Adversaries Through Sanctions Act (CAATSA), and Trump’s action this week widened that gap considerably. Russian oligarchs and companies generally do more business in Europe than in the United States, so convincing Europe to align sanctions more closely with America would significantly increase the costs to Moscow.

Dialogue with Europe should focus on the policy goals of trans-Atlantic sanctions on Russia as well as on specific sanctions designations. The new U.S. sanctions reflect concern about a wide range of Russian activities, including disinformation campaigns designed to subvert elections, cyberattacks, and support for Syrian dictator Bashar Assad, as well as ongoing U.S. concern about the Russian intervention in Ukraine that was the initial basis for U.S. sanctions on Russia in 2014.

European sanctions, however, remain much more narrowly focused on Russia’s occupation of Crimea and support for separatists in Eastern Ukraine. Moreover, European sanctions do not currently target other malign Russian activities. This “goals gap” between U.S. and European sanctions represents a significant difference between the U.S. and European approaches towards Russia. Closing this gap would send Putin a critical message of transatlantic unity in fighting Russian aggression.

Second, the United States needs to broaden the range of tools used to challenge Russian aggression. U.S. sanctions prohibit designated Russian oligarchs and their companies from doing business on American soil and freeze bank accounts that they own in the United States. But federal laws continue to allow illicit Russian money to flow into the country. As several media investigations have found, lax U.S. disclosure laws regarding corporate ownership have enabled Russians oligarchs and other foreign businessmen to use shell companies to purchase real estate and other assets in the United States without fully disclosing the identities of those behind the transactions.

Congress should urgently pass legislation to strengthen corporate ownership disclosure requirements. The Treasury Department, meanwhile, should take a page from recent actions against North Korea and Venezuela to provide banks with more information about what suspected Russian money laundering looks like so that banks can keep illicit Russian money from entering the United States in the first place.

The United States also needs to begin developing tools to put increased pressure on the Russian state itself. Sanctions on Russian oligarchs clearly rattle Moscow and increase tensions between Putin and his cronies. But evidence suggests that, by themselves, sanctions on oligarchs will not force Russia to change course. After the U.S. imposed sanctions on a handful of Russian oligarchs in 2014, sanctioned oligarchs responded by retrenching inside Russia and have generally weathered the sanctions.

Indeed, one Russian oligarch sanctioned in 2014, Arkady Rotenberg, later won a Russian government contract to build a bridge between Russia and the Crimean peninsula, while a second Russian oligarch, Gennady Timchenko, had a net worth of $16 billion in 2017, according to Forbes, which was $2 billion higher than 2013, the year before he was sanctioned. The Trump administration needs develop creative strategies to squeeze the finances of the Russian state itself and publicly signal a willingness to implement broader sanctions if Russia does not step back from aggression against the United States and our allies.

Finally, and perhaps most importantly, Trump himself needs to publicly embrace a tougher line against Russian aggression. While his administration has clearly signaled a more aggressive posture towards Moscow, Trump’s personal unwillingness to clearly condemn Russian aggression and ongoing bid to improve ties with Putin encourages Russia to continue its aggression by offering Putin hope that the United States will not maintain its new, more aggressive policy towards Russia.

Trump’s public posture also undermines efforts to convince Europe to toughen its approach to Russia by strengthening pro-Russian leaders in Europe who would like a softer approach to Moscow. Bolton and Pompeo should try to convince Trump to strike a tougher public line and to publicly embrace the tough actions his administration has already taken.

Peter Harrell is an adjunct senior fellow at the Center for a New American Security. He previously served as deputy assistant secretary for counter threat finance and sanctions at the U.S. Department of State.