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US versus Russia: Washington publishes its ‘non sanctions’ list

Alexander Mercouris

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Six months after President Trump very grudgingly signed into law a bipartisan bill voted for overwhelmingly seeking sanctions against US ‘enemies’ such as Russia and Iran, the Trump administration, as it was legally mandated to do, has produced its ‘name and shame’ list of prominent Russians.

The best thing that can be said about the list is that it is bizarre.  The senior Russian government officials named in the list appear to have been indiscriminately chosen because they appear in the Kremlin’s and the Russian government’s directories of prominent officials.  As for the wealthy individuals in the list, it seems that they have simply been transplanted onto the list from Forbes.

Some attempt does seem to have been made to keep certain Russian officials of actual or reputed pro-Western views off the list.  Russia’s Central Bank Chair Elvira Nabiullina is not on the list, and nor is the liberal former Finance Minister Alexey Kudrin.  Unsurprisingly, neither is Anatoly Chubais, the ultra liberal Yeltsin official who masterminded Russia’s disastrous and hugely corrupt privatisation drive in the 1990s.

All I would say about the exclusion of Nabiullina and Kudrin from the list is that irrespective of their views both are currently loyal to Putin, and their exclusion from the list will cause them nothing but trouble in Russia.

As for Chubais, any list genuinely intended to ‘name and shame’ individuals responsible for creating corruption in Russia should certainly include him.  Arguably no other single individual bears a heavier weight of responsibility for the explosion of corruption which took place in Russia than him.

Not all prominent people in Russia who might be broadly described as pro-Western liberals have however managed to avoid inclusion in the list.

German Gref, Russia’s liberal former Economics Minister and close ally of Alexey Kudrin, who is now Chair of Sberbank, is included in the list.  Presumably he is there because Sberbank – Russia’s biggest bank – forms such an essential part of Russia’s financial architecture.

Sberbank by the way is one of the state owned Russian banks which were targeted by the sectoral sanctions imposed on Russia by the US and the EU in July 2014.  Far from being hurt by the sanctions it is now in rude health.

As for the other wealthy Russians in the list, it seems that anyone in Russia who is or is reputed to be a billionaire is automatically included.  These seems to be the case irrespective of whether they are pro-Putin or not.

Putin himself – much to his chagrin – is not on the list.  It is not clear why.

To say that publication of the list has been an anti-climax would be an understatement.  After months of speculation about what new ferocious sanctions the US was about to impose on Russia and on the people named in the list, it is not an exaggeration to say that a mountain has moved and produced a mouse.

Some Democratic Congressmen were unable to hide their anger, and in testimony before the Senate Banking Committee US Treasury Secretary Steven Mnuchin tried to appease them by assuring them that more sanctions against Russia were indeed on the way.  Whether however they will ever come and how severe they will be if they do is however another matter.

Alongside the ‘name and shame’ list but attracting far less publicity was a classified report the US Treasury Department provided to Congress which was described by Bloomberg in this way

An accompanying report on the effect on Russia’s sovereign debt from possible U.S. sanctions was classified, Senator Bob Corker confirmed in a statement on Tuesday. Congress had requested an unclassified version of the report.

The fact that this report was classified shows the sensitivity and legal difficulty of action against the sovereign debt of Russia, one of the world’s leading economic powers.

It is known that some Democratic Congressmen have been lobbying for action against Russia’s sovereign debt.  As I discussed recently, in practical terms that means action to stop US investors buying Russian sovereign bonds.  As I also discussed recently, that would be unlikely to deter other foreign investors, and given the current state of the Russian economy it would have only a limited effect anyway.

The fact that this report is classified suggests that the Treasury Department and the Federal Reserve Board are advising against it.

It is clear that other wilder proposals to seize Russia’s financial reserves in the US or to disconnect Russian banks from the SWIFT interbank payment system have been dropped.

Why after all the threats and bluster has the US come up with so little?

It is possible that at a certain level President Trump’s well known wish for better relations with Russia has had a certain influence.  However the problem for the US is that ultimately Russia is simply not vulnerable to sanctions.  I discussed this recently in an article for RussiaFeed

Summary

What all these proposals have in common is that they highlight is the simple fact that the sectoral sanctions which were imposed by the West on Russia in 2014 have failed.

The sanctions did not break the Russian economy, or cause a popular revolution in Russia, or lead to an oligarchs’ coup against Putin – all things their advocates variously predicted would happen because of them.

Nor have they achieved their stated purpose, which is to force Russia to change its policies towards Ukraine….

The key point is that the Russian economy is many orders of magnitude bigger and more sophisticated than the sort of economies – such as those of Cuba, Iran, Iraq, Libya, North Korea and Venezuela – upon which the US has imposed sanctions previously.  Applying the supposed lessons of the impact of sanctions on those economies in the case of Russia makes no sense, even if those lessons had been learnt correctly, which they have not. Unlike all those economies Russia’s economy is far bigger, already possessing the technology, capital and resources it needs to develop autonomously.

As a self-sufficient continental economy sanctions on Russia almost by definition can have only a limited impact, and one which over time must diminish anyway.

As it happens the most effective sanctions the West could have imposed on Russia, both in terms of their impact on the Russian economy and their limited impact on the economies of the West, were the sectoral sanctions which were imposed in 2014.

Those sanctions did stop for a time the flow of capital from the West into Russia at a time when Russia was facing heavy debt repayments and when the price of its main export products – oil and gas – was collapsing.  The result was to deepen the recession caused by the collapse of oil and gas prices whilst further lowering the value of the rouble in a way which intensified the inflation spike.

With oil prices now rising, most short term Russian foreign debt repaid, and with the rouble floating, none of the sanctions discussed in this article look like they can have anything like the impact on Russia that the sanctions imposed in 2014 did.

The fact that the Russian economy successfully – in fact almost effortlessly – adjusted to those sanctions despite the difficult conditions ought to serve as a warning that further sanctions against Russia will not work, and…..are counter-productive.

As for the idea that slapping sanctions on wealthy Russians will provoke them into launching a coup against President Putin, to anyone genuinely familiar with the situation in Russia the idea is absurd.

What putting the names of such people on a ‘name and shame’ list and threatening them with sanctions is far more likely to do is get them finally to heed President Putin’s call to repatriate their money from abroad.

President Putin has been pushing hard for this ever since the first round of sanctions was imposed on Russia back in 2014.

Wealthy Russians and the Russian business community in general have however proved to deaf to these calls, presumably calculating that they would be exempted from Western sanctions which were intended to target only those people close to the Kremlin.

Now that they know that anyone listed in Forbes is a likely target they may finally reconsider.  That at least is what the Financial Times seems to think

The threat of further sanctions may inadvertently help the Kremlin achieve the long-elusive goal of getting oligarchs to repatriate capital stashed in the west: the finance ministry is preparing to issue a $3bn bond on discounted terms for Russia’s top businessmen. “Everyone is thinking long and hard about it,” says a former member of Mr Putin’s cabinet.

A sanctions policy that actually advances President Putin’s objectives makes little sense.  It is strange that no one in Washington seems to realise it.

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High-ranking Ukrainian official reports on US interference in Ukraine

It is not usually the case that an American media outlet tells the truth about Ukraine, but it appears to have happened here.

Seraphim Hanisch

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The Hill committed what may well have been a random act of journalism when it reported that Ukrainian Prosecutor General, Yuriy Lutsenko, told Hill.tv’s reporter John Solomon that the American ambassador to that country, Marie Yovanovitch, gave him a “do not prosecute” list at their first meeting.

Normally, all things Russia are covered by the American press as “bad”, and all things Ukraine are covered by the same as “good.” Yet this report reveals quite a bit about the nature of the deeply embedded US interests that are involved in Ukraine, and which also attempt to control and manipulate policy in the former Soviet republic.

The Hill’s piece continues (with our added emphases):

“Unfortunately, from the first meeting with the U.S. ambassador in Kiev, [Yovanovitch] gave me a list of people whom we should not prosecute,” Lutsenko, who took his post in 2016, told Hill.TV last week.

“My response of that is it is inadmissible. Nobody in this country, neither our president nor our parliament nor our ambassador, will stop me from prosecuting whether there is a crime,” he continued.

Indeed, the Prosecutor General appears to be a man of some principles. When this report was brought to the attention of the US State Department, the response was predictable:

The State Department called Lutsenko’s claim of receiving a do not prosecute list, “an outright fabrication.” 

“We have seen reports of the allegations,” a department spokesperson told Hill.TV. “The United States is not currently providing any assistance to the Prosecutor General’s Office (PGO), but did previously attempt to support fundamental justice sector reform, including in the PGO, in the aftermath of the 2014 Revolution of Dignity. When the political will for genuine reform by successive Prosecutors General proved lacking, we exercised our fiduciary responsibility to the American taxpayer and redirected assistance to more productive projects.”

This is an amazing statement in itself. “Our fiduciary responsibility to the American taxpayer”? Are Americans even aware that their country is spending their tax dollars in an effort to manipulate a foreign government in what can probably well be called a low-grade proxy war with the Russian Federation? Again, this appears to be a slip, as most American media do a fair job of maintaining the narrative that Ukraine is completely independent and that its actions regarding the United States and Russia are taken in complete freedom.

Hill.TV has reached out to the U.S. Embassy in Ukraine for comment.

Lutsenko also said that he has not received funds amounting to nearly $4 million that the U.S. Embassy in Ukraine was supposed to allocate to his office, saying that “the situation was actually rather strange” and pointing to the fact that the funds were designated, but “never received.”

“At that time we had a case for the embezzlement of the U.S. government technical assistance worth 4 million U.S. dollars, and in that regard, we had this dialogue,” he said. “At that time, [Yovanovitch] thought that our interviews of Ukrainian citizens, of Ukrainian civil servants, who were frequent visitors of the U.S. Embassy put a shadow on that anti-corruption policy.”

“Actually, we got the letter from the U.S. Embassy, from the ambassador, that the money that we are speaking about [was] under full control of the U.S. Embassy, and that the U.S. Embassy did not require our legal assessment of these facts,” he said. “The situation was actually rather strange because the funds we are talking about were designated for the prosecutor general’s office also and we told [them] we have never seen those, and the U.S. Embassy replied there was no problem.”

“The portion of the funds, namely 4.4 million U.S. dollars were designated and were foreseen for the recipient Prosecutor General’s office. But we have never received it,” he said.

Yovanovitch previously served as the U.S. ambassador to Armenia under former presidents Obama and George W. Bush, as well as ambassador to Kyrgyzstan under Bush. She also served as ambassador to Ukraine under Obama.

Former Rep. Pete Sessions (R-Texas), who was at the time House Rules Committee chairman, voiced concerns about Yovanovitch in a letter to the State Department last year in which he said he had proof the ambassador had spoken of her “disdain” for the Trump administration.

This last sentence may be a way to try to narrow the scope of American interference in Ukraine down to the shenanigans of just a single person with a personal agenda. However, many who have followed the story of Ukraine and its surge in anti-Russian rhetoric, neo-Naziism, ultra-nationalism, and the most recent events surrounding the creation of a pseudo-Orthodox “church” full of Ukrainian nationalists and atheists as a vehicle to import “Western values” into a still extremely traditional and Christian land, know that there are fingerprints of the United States “deep state” embeds all over this situation.

It is somewhat surprising that so much that reveals the problem showed up in just one report. It will be interesting to see if this gets any follow-up in the US press.

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President Putin signs law blocking fake news, but the West makes more

Western media slams President Putin and his fake news law, accusing him of censorship, but an actual look at the law reveals some wisdom.

Seraphim Hanisch

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The TASS Russian News Agency reported on March 18th that Russian President Vladimir Putin signed off on a new law intended to block distorted or untrue information being reported as news. Promptly after he did so, Western news organizations began their attempt to “spin” this event as some sort of proof of “state censorship” in the oppressive sense of the old Soviet Union. In other words, a law designed to prevent fake news was used to create more fake news.

One of the lead publications is a news site that is itself ostensibly a “fake news” site. The Moscow Times tries to portray itself as a Russian publication that is conducted from within Russian borders. However, this site and paper is really a Western publication, run by a Dutch foundation located in the Netherlands. As such, the paper and the website associated have a distinctly pro-West slant in their reporting. Even Wikipedia noted this with this comment from their entry about the publication:

In the aftermath of the Ukrainian crisis, The Moscow Times was criticized by a number of journalists including Izvestia columnist Israel Shamir, who in December 2014 called it a “militant anti-Putin paper, a digest of the Western press with extreme bias in covering events in Russia”.[3] In October 2014 The Moscow Times made the decision to suspend online comments after an increase in offensive comments. The paper said it disabled comments for two reasons—it was an inconvenience for its readers as well as being a legal liability, because under Russian law websites are liable for all content, including user-generated content like comments.[14]

This bias is still notably present in what is left of the publication, which is now an online-only news source. This is some of what The Moscow Times had to say about the new fake news legislation:

The bills amending existing information laws overwhelmingly passed both chambers of Russian parliament in less than two months. Observers and some lawmakers have criticized the legislation for its vague language and potential to stifle free speech.

The legislation will establish punishments for spreading information that “exhibits blatant disrespect for the society, government, official government symbols, constitution or governmental bodies of Russia.”

Insulting state symbols and the authorities, including Putin, will carry a fine of up to 300,000 rubles and 15 days in jail for repeat offenses.

As is the case with other Russian laws, the fines are calculated based on whether the offender is a citizen, an official or a legal entity.

More than 100 journalists and public figures, including human rights activist Zoya Svetova and popular writer Lyudmila Ulitskaya, signed a petition opposing the laws, which they labeled “direct censorship.”

This piece does give a bit of explanation from Dmitry Peskov, showing that European countries also have strict laws governing fake news distribution. However, the Times made the point of pointing out the idea of “insulting governmental bodies of Russia… including Putin” to bolster their claim that this law amounts to real censorship of the press. It developed its point of view based on a very short article from Reuters which says even less about the legislation and how it works.

However, TASS goes into rather exhaustive detail about this law, and it also gives rather precise wording on the reason for the law’s passage, as well as how it is to be enforced. We include most of this text here, with emphases added:

Russian President Vladimir Putin has signed a law on blocking untrue and distorting information (fake news). The document was posted on the government’s legal information web portal.

The document supplements the list of information, the access to which may be restricted on the demand by Russia’s Prosecutor General or his deputies. In particular, it imposes a ban on “untrue publicly significant information disseminated in the media and in the Internet under the guise of true reports, which creates a threat to the life and (or) the health of citizens, property, a threat of the mass violation of public order and (or) public security, or the threat of impeding or halting the functioning of vital infrastructural facilities, transport or social infrastructure, credit institutions, energy, industrial or communications facilities.”

Pursuant to the document, in case of finding such materials in Internet resources registered in accordance with the Russian law on the mass media as an online media resource, Russia’s Prosecutor General or his deputies will request the media watchdog Roskomnadzor to restrict access to the corresponding websites.

Based on this request, Roskomnadzor will immediately notify the editorial board of the online media resource, which is in violation of the legislation, about the need to remove untrue information and the media resource will be required to delete such materials immediately. If the editorial board fails to take the necessary measures, Roskomnadzor will send communications operators “a demand to take measures to restrict access to the online resource.”

In case of deleting such untrue information, the website owner will notify Roskomnadzor thereof, following which the media watchdog will “hold a check into the authenticity of this notice” and immediately inform the communications operator about the resumption of the access to the information resource.
The conditions for the law are very specific, as are the penalties for breaking it. TASS continued:

Liability for breaching the law

Simultaneously, the Federation Council approved the associated law with amendments to Russia’s Code of Administrative Offences, which stipulates liability in the form of penalties of up to 1.5 million rubles (around $23,000) for the spread of untrue and distorting information.

The Code’s new article, “The Abuse of the Freedom of Mass Information,” stipulates liability for disseminating “deliberately untrue publicly significant information” in the media or in the Internet. The penalty will range from 30,000 rubles ($450) to 100,000 rubles ($1,520) for citizens, from 60,000 rubles ($915) to 200,000 rubles ($3,040) for officials and from 200,000 rubles to 500,000 rubles ($7,620) for corporate entities with the possible confiscation of the subject of the administrative offence.

Another element of offence imposes tighter liability for the cases when the publication of false publicly significant information has resulted in the deaths of people, has caused damage to the health or property, prompted the mass violation of public order and security or has caused disruption to the functioning of transport or social infrastructure facilities, communications, energy and industrial facilities and banks. In such instances, the fines will range from 300,000 rubles to 400,000 rubles ($6,090) for citizens, from 600,000 rubles to 900,000 rubles ($13,720) for officials, and from 1 million rubles to 1.5 million rubles for corporate entities.

While this legislation can be spun (and is) in the West as anti-free speech, one may also consider the damage that has taken place in the American government through a relentless attack of fake news from most US news outlets against President Trump. One of the most notable effects of this barrage has been to further degrade and destroy the US’ relationship with the Russian Federation, because even the Helsinki Summit was attacked so badly that the two leaders have not been able to get a second summit together.

While it is certainly a valued right of the American press to be unfettered by Congress, and while it is also certainly vital to criticize improper practices by government officials, the American news agencies have gone far past that, to deliberately dishonest attacks, based in innuendo and everything possible that was formerly only the province of gossip tabloid publications. The effort has been to defame the President, not to give proper or due criticism to his policies, nor credit. It can be properly stated that the American press has abused its freedom of late.

This level of abuse drew a very unusual comment from the US president, who wondered on Twitter about the possibility of creating a state-run media center in the US to counter fake news:

Politically correct for US audiences? No. But an astute point?

Definitely.

Freedom in anything also presumes that those with that freedom respect it, and further, that they respect and apply the principle that slandering people and institutions for one’s own personal, business or political gain is wrong. Implied in the US Constitution’s protection of the press is the notion that the press itself, as the rest of the country, is accountable to a much Higher Authority than the State. But when that Authority is rejected, as so much present evidence suggests, then freedom becomes the freedom to misbehave and to agitate. It appears largely within this context that the Russian law exists, based on the text given.

Further, by hitting dishonest media outlets in their pocketbook, rather than prison sentences, the law appears to be very smart in its message: “Do not lie. If you do, you will suffer where it counts most.”

Considering that news media’s purpose is to make money, this may actually be a very smart piece of legislation.

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US continues to try to corner Russia with silence on Nukes

Moscow continues to be patient in what appears to be an ever more lopsided, intentional stonewalling situation provoked by the Americans.

Seraphim Hanisch

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TASS reported on March 17th that despite Russian readiness to discuss the present problem of strategic weapons deployments and disarmament with its counterparts in the United States, the Americans have not offered Russia any proposals to conduct such talks.

The Kremlin has not yet received any particular proposals on the talks over issues of strategic stability and disarmament from Washington, Russian Presidential Spokesman Dmitry Peskov told TASS on Sunday when commenting on the statement made by US National Security Adviser John Bolton who did not rule out that such talks could be held with Russia and China.

“No intelligible proposals has been received [from the US] so far,” Peskov said.

Earlier Bolton said in an interview with radio host John Catsimatidis aired on Sunday that he considers it reasonable to include China in the negotiation on those issues with Russia as well.

“China is building up its nuclear capacity now. It’s one of the reasons why we’re looking at strengthening our national missile defense system here in the United States. And it’s one reason why, if we’re going to have another arms control negotiation, for example, with the Russians, it may make sense to include China in that discussion as well,” he said.

Mr. Bolton’s sense about this particular aspect of any arms discussions is correct, as China was not formerly a player in geopolitical affairs the way it is now. The now all-but-scrapped Intermediate Range Nuclear Forces Treaty, or INF, was a treaty concluded by the US and the USSR leaders Ronald Reagan and Mikhail Gorbachev, back in 1987. However, for in succeeding decades, most notably since the fall of the Soviet Union, the US has been gradually building up weaponry in what appears to be an attempt to create a ring around the Russian Federation, a situation which is understandably increasingly untenable to the Russian government.

Both sides have accused one another of violating this treaty, and the mutual violations and recriminations on top of a host of other (largely fabricated) allegations against the Russian government’s activities led US President Donald Trump to announce his nation’s withdrawal from the treaty, formally suspending it on 1 February. Russian President Vladimir Putin followed suit by suspending it the very next day.

The INF eliminated all of both nations’ land based ballistic and cruise missiles that had a range between 500 and 1000 kilometers (310-620 miles) and also those that had ranges between 1000 and 5500 km (620-3420 miles) and their launchers.

This meant that basically all the missiles on both sides were withdrawn from Europe’s eastern regions – in fact, much, if not most, of Europe was missile-free as the result of this treaty. That is no longer the case today, and both nations’ accusations have provoked re-development of much more advanced systems than ever before, especially true considering the Russian progress into hypersonic and nuclear powered weapons that offer unlimited range.

This situation generates great concern in Europe, such that the UN Secretary General Antonio Guterres called on both Moscow and Washington to salvage the INF and extend the Treaty on Measures for the Further Reduction and Limitation of Strategic Offensive Arms, or the New START as it is known.

“I call on the parties to the INF Treaty to use the time remaining to engage in sincere dialogue on the various issues that have been raised. It is very important that this treaty is preserved,” Guterres said at a session of the Conference on Disarmament in Geneva on Monday.

He stressed that the demise of that accord would make the world more insecure and unstable, which “will be keenly felt in Europe.” “We simply cannot afford to return to the unrestrained nuclear competition of the darkest days of the Cold War,” he said.

Guterres also urged the US and Russia to extend the START Treaty, which expires in 2021, and explore the possibility of further reducing their nuclear arsenals. “I also call on the United States and the Russian Federation to extend the so-called New START Treaty before it expires in 2021,” he said.

The UN chief recalled that the treaty “is the only international legal instrument limiting the size of the world’s two largest nuclear arsenals” and that its inspection provisions “represent important confidence-building measures that benefit the entire world.”

Guterres recalled that the bilateral arms control process between Russia and the US “has been one of the hallmarks of international security for fifty years.”

“Thanks to their efforts, global stockpiles of nuclear weapons are now less than one-sixth of what they were in 1985,” the UN secretary-general pointed out.

The Treaty between the United States of America and the Russian Federation on Measures for the Further Reduction and Limitation of Strategic Offensive Arms (the New START Treaty) entered into force on February 5, 2011. The document stipulates that seven years after its entry into effect each party should have no more than a total of 700 deployed intercontinental ballistic missiles (ICBM), submarine-launched ballistic missiles (SLBM) and strategic bombers, as well as no more than 1,550 warheads on deployed ICBMs, deployed SLBMs and strategic bombers, and a total of 800 deployed and non-deployed ICBM launchers, SLBM launchers and strategic bombers. The new START Treaty obliges the parties to exchange information on the number of warheads and carriers twice a year.

The new START Treaty will remain in force during 10 years until 2021, unless superseded by a subsequent agreement. It may be extended for a period of no more than five years (that is, until 2026) upon the parties’ mutual consent. Moscow has repeatedly called on Washington not to delay the issue of extending the Treaty.

 

 

 

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