Europe

Acting against Putin, U.S. imposes sanctions on businessmen close to Kremlin

FILE PHOTO: Vehicles are parked near office building of Rosoboronexport company in Moscow

FILE PHOTO: Vehicles are parked near the office building of Rosoboronexport company in Moscow, Russia March 1, 2016. REUTERS/Grigory Dukor/File Photo

By Lesley Wroughton and Patricia Zengerle

WASHINGTON (Reuters) – The United States imposed major sanctions on Friday against 24 Russians, striking at allies of President Vladimir Putin in one of Washington’s most aggressive moves to punish Moscow for what it called a range of “malign activity,” including alleged meddling in the 2016 U.S. election.

The action, taken under pressure from the U.S. Congress, freezes the U.S. assets of “oligarchs” such as aluminum tycoon Oleg Deripaska, a close associate of Putin, and lawmaker Suleiman Kerimov, whose family controls Russia’s largest gold producer, Polyus.

The sanctions are largely a reply to what U.S. intelligence agencies say was Russian interference in the presidential election, although the Treasury Department painted them as a response to a series of adversarial actions by Moscow.

U.S. President Donald Trump has been under fire for not taking strong action against Russia after a series of diplomatic disputes reminiscent of the Cold War era and the sanctions could complicate his hopes for good relations with Putin.

Relations already had worsened in recent months as the United States expelled Russian diplomats over a poisoning case in Britain and imposed sanctions on Russians for alleged links to cyber attacks.

The latest sanctions are aimed at seven Russian oligarchs and 12 companies they own or control, plus 17 senior Russian government officials. They freeze the U.S. assets of the people and companies named and forbid Americans in general from doing business with them.

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OLIGARCHS AND ELITES

In addition to Deripaska and Kerimov, other businessmen on the sanctions list include Viktor Vekselberg, key owner of Renova holding group who Forbes magazine ranks as Russia’s 9th richest businessman with a net worth of $14.4 billion. He is famous for bringing back a collection of Faberge eggs to Russia.

Also targeted is Kirill Shamalov, a minority shareholder with petrochemical company Sibur. Shamalov married Putin’s youngest daughter Katerina in 2013, multiple sources who were at the wedding told Reuters. After the marriage, he swiftly grew his wealth through investments in Sibur but unconfirmed media reports say Shamalov and Putin’s daughter have since split.

Deripaska and other oligarchs on the list were not immediately available for comment but a spokesperson for Deripaska’s industrial group Basic Element said:

“The Company regrets this development and is currently analyzing the situation with its legal advisors.”

In announcing the sanctions, Treasury Secretary Steven Mnuchin said in a statement, “The Russian government operates for the disproportionate benefit of oligarchs and government elites.”

He said Moscow “engages in a range of malign activity around the globe, including continuing to occupy Crimea and instigate violence in eastern Ukraine, supplying the Assad regime with material and weaponry as they bomb their own civilians, attempting to subvert Western democracies, and malicious cyber activities.”

Russian Security Council Secretary Nikolai Patrushev said, however, Moscow’s contacts with the U.S. government would not be brought to an end by the sanctions. Russia denies interfering in the U.S. election.

The sanctions could hurt the Russian economy, especially the aluminum, financial and energy sectors, and are a clear message to Putin and his inner circle of U.S. displeasure.

Shares in some Russian companies targeted by the sanctions plummeted but the broader market and rouble showed little reaction to the new round of geopolitical tensions.

Shares in EN+ Group, which was put on the sanctions list and manages Deripaska’s aluminum and hydropower assets, were down 19.7 percent on the London stock exchange.

Rusal, a Russian aluminum giant also included on the list, fell 10 percent on the Moscow Exchange. Deripaska stepped down as president of Rusal in February.

Russian state companies under the U.S. sanctions will receive additional government support, Russian Industry and Trade Minister Denis Manturov said, according to Interfax.

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RUSSIA AND TRUMP

Daniel Fried, the U.S. government’s former coordinator of sanctions policy under former President Barack Obama, said the sanctions list “is a solid piece of work.”

“It doesn’t do anything dumb, like go after Russian gas exports. It goes after oligarchs that deserve it,” said Fried, now at the Atlantic Council in Washington.

U.S. intelligence agencies last year accused Russia of using hacking and disseminating false information and propaganda to disrupt the 2016 elections and eventually try to ensure Trump defeated Democratic candidate Hillary Clinton.

Special Counsel Robert Mueller is investigating whether Trump’s election campaign colluded with Russia, something that Trump denies. Mueller has indicted 13 Russians and three organizations in his probe.

Elizabeth Rosenberg, a former senior U.S. Treasury Department official, said the sanctions were significant, although there is more to do.

“I would hasten to say that Russia hawks may welcome this but wouldn’t find it satisfying. And by no means would this be the sum total of what the U.S. government should do to advance its concerns,” said Rosenberg, now a senior fellow at the Center for a New American Security think tank.

Trump has faced fierce criticism – including from fellow Republicans – for doing too little to punish Russia for the election meddling, aggression in Ukraine, and support of President Bashar al-Assad in Syria’s civil war.

He angered many members of Congress by failing for months to implement sanctions on Russia that lawmakers passed nearly unanimously last year.

But pressure for the United States to take action against Russia, especially from U.S. lawmakers, has been increasing.

Putin’s government has been blamed for the poisoning of a former Russian double agent living in Britain last month and the United States and several European states announced plans to expel more than 100 Russian diplomats in response.

In February, the White House blamed Russia for the international “NotPetya” cyber attack, which has been called the most destructive and costly in history.

On March 15, the Trump administration said it would impose sanctions on 19 people and five entities, including Russian intelligence services, for cyber attacks stretching back at least two years.

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(Reporting by Lesley Wroughton and Patricia Zengerle; Additional reporting by Doina Chiacu, Tim Ahmann and Susan Heavey in Washington and Andrew Osborn, Katya Golubkova, Gleb Stolyarov and Oksana Kobzeva, Denis Pinchuk and Gabrielle Tetrault-Farber in Moscow; Writing by Alistair Bell; Editing by Yara Bayoumy and Bill Trott)

 

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