How President Trump is gaining leverage on Putin (as his critics smirk)

Criticism and mockery accompanied publication of the US Department of the Treasury’s long-awaited report on the Russian authorities and President Putin's closest associates (the “oligarchs list”). But a close analysis of the context and form of the report indicates that President Trump may once again gain leverage as his clueless critics smirk at his presumed incompetence.  

The open part of the report, submitted by Treasury 11 minutes before the statutory expiry date, contains the names of 210 individuals, including high-ranking officials from Russia's Presidential Administration, government members, and representatives of large businesses with a fortune of more than $ 1 billion.

Publication of the report was mandated by the Countering America's Adversaries Through Sanctions Act, passed by Congress in July 2017. The bill resembles a politico-strategic document in the form of a law, the purpose of which is to force President Trump to remain within the agenda of the political establishment and not to let him pursue any political rapprochement with Russia.

The document provoked many negative reactions among prominent members of Congress, academic experts and media. The list was criticized for being devised in an amateurish and primitive way. The list’s authors included some people that advocated normalization of relations with the United States, in particular, and the West in general, as well as some businesspeople that are not related to the closest circle of Putin and are not part of the Russian corruption hierarchy pyramid. At the same time, the creators of the report were accused of missing some odious representatives of the ruling regime that caused severe damage to the United States and its allies by their actions, who deserve to be at the top of that list.

The authors of the report were also reproached for lack of professionalism and absence of specific goals. There was widespread joking that Trump's had provided Congress with some names from the Kremlin phone book and Forbes Magazine’s Russian edition. The Atlantic Council, a think-tank, charged that the Department of the Treasury had changed the document at the last minute, so that Congress received an entirely different list from what was prepared originally by the White House experts.

In Russia, the reaction was completely mixed. The ruling political elite perceived the publication of the "oligarchs list" with sarcasm, mocking the administration of the US President for the simplicity of the document. Nevertheless, I am deeply convinced that this reaction was in fact aimed at an internal audience, especially the ruling elite. The goal was to show that this list does not pose any threats to the Russian authorities and Putin personally. Meanwhile, the Russian President's Press Secretary, Dmitry Peskov, accused the US of interfering in the presidential elections in the Russian Federation.

In fact, this document comprises the entire political and economic elite of Russia.  The architects of the whole process have sent an alarm to warn them about potential forthcoming disaster – sanctions – but gave the enough time to avoid restrictions on the part of the United States. These billionaires now face a choice in what to do to protect themselves and their wealth.

Most of these entrepreneurs hold dual or even triple citizenship. Considering the fact that the legal system of Russia does not guarantee the right to private property and anyone can lose his or her property at the will of one person, it is logical to assume that much of their accumulated wealth already has been exported from Russia to other countries or offshore zones. According to various sources, over the past 22 years, the outflow of capital from Russia has amounted to about $700 billion.

It should also be noted that most of these businesspeople are not tax residents of the Russian Federation, since they do not reside on its territory for more than six months during a year.  While living abroad, especially in the USA and EU, many have managed to establish strong business relations with large Western companies, take part in large-scale investment projects, purchase expensive real estate and personal property, and open and maintain accounts in Western banks, as well as get long-term loans at low interest.

But having been included in what is seen as a blacklist of the US Treasury, they face a dilemma: remaining loyal to the Russian ruling regime and risking losing major parts of  their wealth from forthcoming sanctions, or trying to shield themselves and their capital through American lobbying organizations, leaving Russia, and taking away as much as possible of their remaining wealth there.

From a business standpoint, the first option is less attractive, as the potential for the security and growth of their wealth in Russia is limited, owing to the existing tough economic and political circumstances, while the possible loss from US sanctions could be considerable. Consequently, it is likely that the majority of them will prefer to keep their fortunes, business ties and contacts overseas, leaving Russia.

It is also important to note that many of these people originally acquired most of their wealth in conjunction with the state, having by various means appropriated its financial flows or natural resources. This means that they obtained crucial information about the peculiarities of the corruption pyramid and the schemes used in Russia. This kind of knowledge is of enormous value to the United States.

Given all the above-mentioned context, it is possible to say with near certainty that America's lobbying organizations will be put to work in the upcoming months by Russian oligarchs, and new folders with compromising materials that are extremely dangerous for Putin's administration will appear at the disposal of the US federal investigative bodies.

Thus, the Trump Administration is likely to gain a significant lever of influence on the political and economic elite of Russia. If it is put to efficient use, it will be possible to shake the monolithic power structure created by Putin, and seed distrust among the ruling elite of the country. If we take into account the fact that this process takes place on the eve of the presidential elections in Russia, it becomes much more threatening for the Russian authorities.

In this context, the seemingly pro forma statement by Putin's Press Secretary, accusing the United States of America of interfering in the presidential elections in the Russian Federation, may actually have some truth to it.

Artur Ghazinya PhD, is Head of the Center for European Studies.

Criticism and mockery accompanied publication of the US Department of the Treasury’s long-awaited report on the Russian authorities and President Putin's closest associates (the “oligarchs list”). But a close analysis of the context and form of the report indicates that President Trump may once again gain leverage as his clueless critics smirk at his presumed incompetence.  

The open part of the report, submitted by Treasury 11 minutes before the statutory expiry date, contains the names of 210 individuals, including high-ranking officials from Russia's Presidential Administration, government members, and representatives of large businesses with a fortune of more than $ 1 billion.

Publication of the report was mandated by the Countering America's Adversaries Through Sanctions Act, passed by Congress in July 2017. The bill resembles a politico-strategic document in the form of a law, the purpose of which is to force President Trump to remain within the agenda of the political establishment and not to let him pursue any political rapprochement with Russia.

The document provoked many negative reactions among prominent members of Congress, academic experts and media. The list was criticized for being devised in an amateurish and primitive way. The list’s authors included some people that advocated normalization of relations with the United States, in particular, and the West in general, as well as some businesspeople that are not related to the closest circle of Putin and are not part of the Russian corruption hierarchy pyramid. At the same time, the creators of the report were accused of missing some odious representatives of the ruling regime that caused severe damage to the United States and its allies by their actions, who deserve to be at the top of that list.

The authors of the report were also reproached for lack of professionalism and absence of specific goals. There was widespread joking that Trump's had provided Congress with some names from the Kremlin phone book and Forbes Magazine’s Russian edition. The Atlantic Council, a think-tank, charged that the Department of the Treasury had changed the document at the last minute, so that Congress received an entirely different list from what was prepared originally by the White House experts.

In Russia, the reaction was completely mixed. The ruling political elite perceived the publication of the "oligarchs list" with sarcasm, mocking the administration of the US President for the simplicity of the document. Nevertheless, I am deeply convinced that this reaction was in fact aimed at an internal audience, especially the ruling elite. The goal was to show that this list does not pose any threats to the Russian authorities and Putin personally. Meanwhile, the Russian President's Press Secretary, Dmitry Peskov, accused the US of interfering in the presidential elections in the Russian Federation.

In fact, this document comprises the entire political and economic elite of Russia.  The architects of the whole process have sent an alarm to warn them about potential forthcoming disaster – sanctions – but gave the enough time to avoid restrictions on the part of the United States. These billionaires now face a choice in what to do to protect themselves and their wealth.

Most of these entrepreneurs hold dual or even triple citizenship. Considering the fact that the legal system of Russia does not guarantee the right to private property and anyone can lose his or her property at the will of one person, it is logical to assume that much of their accumulated wealth already has been exported from Russia to other countries or offshore zones. According to various sources, over the past 22 years, the outflow of capital from Russia has amounted to about $700 billion.

It should also be noted that most of these businesspeople are not tax residents of the Russian Federation, since they do not reside on its territory for more than six months during a year.  While living abroad, especially in the USA and EU, many have managed to establish strong business relations with large Western companies, take part in large-scale investment projects, purchase expensive real estate and personal property, and open and maintain accounts in Western banks, as well as get long-term loans at low interest.

But having been included in what is seen as a blacklist of the US Treasury, they face a dilemma: remaining loyal to the Russian ruling regime and risking losing major parts of  their wealth from forthcoming sanctions, or trying to shield themselves and their capital through American lobbying organizations, leaving Russia, and taking away as much as possible of their remaining wealth there.

From a business standpoint, the first option is less attractive, as the potential for the security and growth of their wealth in Russia is limited, owing to the existing tough economic and political circumstances, while the possible loss from US sanctions could be considerable. Consequently, it is likely that the majority of them will prefer to keep their fortunes, business ties and contacts overseas, leaving Russia.

It is also important to note that many of these people originally acquired most of their wealth in conjunction with the state, having by various means appropriated its financial flows or natural resources. This means that they obtained crucial information about the peculiarities of the corruption pyramid and the schemes used in Russia. This kind of knowledge is of enormous value to the United States.

Given all the above-mentioned context, it is possible to say with near certainty that America's lobbying organizations will be put to work in the upcoming months by Russian oligarchs, and new folders with compromising materials that are extremely dangerous for Putin's administration will appear at the disposal of the US federal investigative bodies.

Thus, the Trump Administration is likely to gain a significant lever of influence on the political and economic elite of Russia. If it is put to efficient use, it will be possible to shake the monolithic power structure created by Putin, and seed distrust among the ruling elite of the country. If we take into account the fact that this process takes place on the eve of the presidential elections in Russia, it becomes much more threatening for the Russian authorities.

In this context, the seemingly pro forma statement by Putin's Press Secretary, accusing the United States of America of interfering in the presidential elections in the Russian Federation, may actually have some truth to it.

Artur Ghazinya PhD, is Head of the Center for European Studies.