Biden government officials argue that past US sanctions against Russia’s oligarchs have not been as successful as Washington hoped and that there is no guarantee that it will in the future.
In 2014, Obama exposed economic sanctions against several Russian oligarchs and aides near Putin in order to punish Moscow for invading Ukraine. Targets included Gennady Timchenko, founder of a large commodities trading company in the oil and energy markets, and Yuri Kovalchuk, Putin’s private banker.
Former President Donald Trump’s administration announced similar moves in April 2018, targeting several more Russian tycoons and government officials. The Trump administration cited a number of Russian activities as the reason for the move, including meddling in US elections.
The sanctioned individuals included the aluminum tycoon Oleg Deripaska and companies affiliated with him. The Trump administration later lifted sanctions on the companies after exposing itself to a lobbying campaign highlighting how the sanctions rocked global metals markets. In the years that followed, the question has arisen whether Deripaska broke an agreement that led to the lifting of sanctions against the companies.
Overall, however, neither the Obama nor Trump sanctions on Russian oligarchs seemed to deter Putin from taking action that undermines US interests, government officials and others said. Since US sanctions made it difficult for these tycoons and their families to gain access to American and other financial systems, they may have resulted in greater loyalty to Putin.
“In many cases, we have seen the oligarchs become more dependent on the patronage and state contracts of the Russian state,” said a senior official in the Biden government.
The official added that it is too easy to characterize the Russian government as a kleptocracy or to say Putin’s only interest is money. “He obviously has other ambitions on the geopolitical stage than just money and enriching himself and his cronies,” said the official.
Analysts point out that developing sanctions is a complex process that requires compliance with certain thresholds of evidence. The mere fact that a person is rich and friends with Putin is not enough.
Some also say that anti-Putin crusaders overestimate America’s knowledge and access to the places where Putin and his friends have hidden their funds around the world. Plus, even if the US manages to freeze some of a Putin’s pal’s wealth, that person will likely still be living reasonably comfortably.
“We don’t know exactly where all the money is,” said a former US official familiar with the subject. “It’s hidden so deep that you don’t know where it will turn up.”
Fear of escalation
There are many other reasons to avoid the kleptocrats for the time being, say administrators and outside analysts.
For one, the president may want to keep some leverage for future use. Biden has signaled that he wants to give Putin time to prove whether he can be a constructive partner, including on issues like the fight against ransomware. After the June summit, US officials were encouraged by a remark from a senior Russian security official that Russia was ready to work with the United States to crack down on cyber criminals.
There is also the possibility that sanctions against Putin’s wealthy friends, rather than deterring them, could lead to an escalating cycle of retaliation. Even actions that only slightly undermine Putin’s control – such as by weakening his power base when his employees realize they cannot access their money – could damage Russia’s economy to the point that it harms Europe’s economy, and ultimately the American economy.
Taken to extremes, steps that could lead to the overthrow of Putin could prove even more destabilizing in unpredictable ways. US officials recall the post-Cold War chaos and are aware that Russia’s vast nuclear arsenal 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, analysts and former officials said.
“There is no way President Biden is going to try to personalize this with Putin,” said a former senior US official. “Insofar as you will see gloves, it will be tight and targeted.”
For many Putin critics, that’s not enough.
The United States didn’t sanction Putin’s cronies enough, not even the right ones, they argue. They also reject the notion that past sanctions against the oligarchs made no difference, saying that without these penalties, Putin may have done even more to frustrate the West.
“He hasn’t withdrawn from Ukraine,” Browder said of Putin, “but how much more territory would he have claimed if we hadn’t sanctioned the oligarchs?”
Russian dissidents linked to Navalny – whose poisoning and detention sparked their own US sanctions against Moscow, with even more expected – have given the Biden government the list of 35 people to target. The list includes oligarchs as well as suspected human rights abusers. Several of the listed people have already faced some US sanctions.
US officials appear ready to consider the list, said Leonid Volkov, a senior Navalny aide who met with a number of leading figures in Washington earlier this year.
“However, they have made it very clear that they do not feel like continuing the sanctions alone, so they want to do it with partners,” he said.
Volkov agreed that coordinated sanctions efforts would be stronger than acting alone by the United States, especially considering how many Russian tycoons keep their money in real estate or other possessions in Europe. However, he also noted that such coordination takes time and could encounter obstacles from Putin-friendly world leaders.
Meanwhile, Navalny’s Foundation intends to continue its investigation and put together packages of evidence that the Biden team and others can turn to if they decide to hunt down Russia’s kleptocrats and their friend in the Kremlin.
“Our point is that this has to be a priority,” said Volkov.
Browder said Biden’s team reminded him of the Obama years, when many of the same officials over-analyzed situations to the point of appearing shy, if not frozen. Including Obama, who wanted to avoid an escalation with Moscow.
“These people are all great politicians. They’re not gunslingers, they’re politics winks, ”Browder said. “That’s good in many ways, but sometimes you need a few gunslingers.”