Trump administration officials told lawmakers in Congress on Aug. 21, that Washington’s sanctions on Russia are having a significant impact on the Kremlin and the oligarchy that props it up and threatened that more punitive actions are in store if Moscow refuses to change course.
The White House has targeted Russia for a broad range of malign activities around the world, including the occupation of Crimea, the enabling of the Assad regime in Syria, and the destabilization of Western democracies.
Senior officials told the Senate Committee on Foreign Relations about how sanctions on Russian oligarchs have decimated their net worths, crippled their businesses, and cast them out of the international community.
“Though Russia’s malign activities continue, we believe its adventurism undoubtedly has been checked by the knowledge that we can bring much more economic pain to bear using our powerful range of authorities and that we will not hesitate to do so if its conduct does not demonstrably and significantly change,” Acting Deputy Treasury Secretary Sigal Mandelker told the lawmakers.
Unlike North Korea and Iran, which are both subject to broad sanctions from the United States, Russia has an economy that is heavily integrated with the global financial system and America’s allies in Europe. As a result, the Treasury Department has had to issue surgical sanctions that would maximize pressure on the Kremlin while minimizing “while minimizing unintentional spillovers to the United States, our European allies, and the global economy,” said Assistant Secretary Marshall Billingslea.
Since President Donald Trump took office, his administration sanctioned 217 Russian individuals and entities. Treasury’s Office of Foreign Assets Control (OFAC) issued blocking sanctions on 14 Russian banks and 124 Russian financial institutions.
Members of Congress, where both chambers are controlled by Trump’s fellow Republicans, have called for more action—including threatening sanctions “from hell”—to punish Russia for malign activity, including alleged cyber attacks attempting to influence U.S. elections.
“Treasury has made countering Russian aggression a top priority, and consequently, our actions to date have resulted in an unprecedented level of financial pressure against those working on behalf of the Kremlin and in key sectors of the Russian economy targeted by U.S. sanctions,” Assistant Secretary Marshall Billingslea told lawmakers. “Treasury will continue to do its part to impose costs in response to Russian malign activity, leveraging all of the tools and authorities that we have.”
Russian oligarchs Oleg Deripaska and Viktor Vekselberg were mentioned by two Treasury Department officials as examples of the impact that sanctions are having on the Moscow oligarchy. Since being sanctioned, Deripaska’s net worth shrunk by 50 percent while shares of his investment fund, EN+, plummeted from $12.20 to $5.40 on the London Stock Exchange. Vekselberg’s net worth dropped by more than $3 billion while foreign governments seized his assets abroad.
“Our actions are having an impact. Research by the State Department’s Office of the Chief Economist shows that on average sanctioned Russian firms see their operating revenue fall by a quarter; their total asset valuation fall by half; and are forced to fire a third of their employees,” said A. Wess Mitchell, the assistant secretary of state for European and Eurasian affairs.
In separate actions on Aug. 21, the Treasury Department imposed new sanctions on two Russians, one Russian company, and one Slovakian firm over actions it said helped another Russian company avoid sanctions over cyber-related activities. The United States also announced sanctions on Russian shipping over the transfer of refined petroleum products to North Korea in violation of U.N. restrictions.
Russian Deputy Foreign Minister Sergei Ryabkov said on Aug. 21 that new U.S. sanctions were groundless and promised a response from Moscow.
In a statement, published on the ministry website, he also said the sanctions were introduced under a “false pretense.”
Reuters contributed to this report.