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US Sanctions against Russia: The Forecast for 2018

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It must be clear that the letter and spirit of PL 115-44 define Russia in legislative terms as an adversary to the United States, which should be actively opposed and subjected to a comprehensive pressure. In fact, PL 115-44 sets the framework for US policies with regard to the Russian Federation, which to a great extent obviates opportunities for partnership and constructive cooperation. Russia should have no illusions about a reversal of course in the near future. We must also avoid underestimating the efficiency of the tools to pressure us. These trends need to be thoroughly analyzed and monitored.

So, the executive authorities will submit at least seven reports to Congress in 2018, which can be divided into three groups.

The first group includes reports drawn up mostly by the US Department of the Treasury. The U.S. Treasury is the key, if not the only, sanctions policy tool. Congress instructs the U.S. Treasury to work closely with the CIA, the Department of State and other agencies whose data may significantly expand capabilities of financial intelligence. The most expected document in this group is a report on Russian oligarchs and parastatal entities to be prepared by February 2018 and which contains a list of senior Russian political figures as well as oligarchs and entrepreneurs close to the “Russian regime.” Congress wants the submission of an assessment of the relationship between the said individuals and President Vladimir Putin or other members of the Russian ruling elite and an identification of any indices of corruption with respect to those individuals. The report should also include the estimated net worth and known sources of income of those individuals and their family members, including assets, investments, other business interests, and relevant beneficial ownership information and an identification of the non-Russian business affiliation of those individuals.

But being included in the report does not automatically mean that individuals or entities will face sanctions. Nevertheless, the Act unambiguously indicates that the report is a mechanism for their expansion. At least it is required to assess the potential impacts of imposing secondary sanctions with respect to Russian oligarchs, Russian state-owned enterprises, and Russian parastatal entities, including impacts on the entities themselves and on the economy of the Russian Federation, as well as on the economies of the United States and allies of the United States.

In theory, the report may include an unlimited number of Russian individuals and entities. But the algorithm and methodology of its compilation within so brief a timeframe is still a big question. It requires processing a huge amount of information, since, in fact, the case in point is Russia’s entire public sector. This significantly increases the risk of erroneous assessments, which may later affect the United States itself. In theory, the Americans may also choose to present a compact report that will include what they think are the most anti-Western figures. But one nicety involved is that the Act’s current wording does not imply that the report should be constantly updated and therefore the anti-Russia lobby can do what it will to expand the lists as much as possible.

The next report is to appear in February as well. It concerns opportunities for expanding sanctions against individuals or entities blacklisted by the Department of the Treasury under Presidential Executive Order No. 13662, which made it possible to impose sanctions to counteract Russian policies in Ukraine. The fine point is that the executive order imposed sanctions against Russia’s financial and energy sectors, while PL 115-44 added railways to the list, as well as the iron-and-steel and manufacturing industries. For the time being, the report is not to be expanded.

Unlike the previous two, the next report will require a longer preparatory period – until August 2018 – and is to be updated annually until 2021 (but there is nothing to prevent the timeframe from being extended). The report will concern any illicit financial transactions related to the Russian Federation or Russian nationals. It will contain data on specific violations, results of investigative actions, and outreach to the private sector to prevent these kinds of activities. Inclusion in the report involves criminal prosecution.

Importantly, it should disclose the outcome of US agencies’ cooperation with their counterparts in the EU and other countries. In other words, it internationalizes US practices. The report is also a mechanism for finding loopholes in law enforcement with regard to anti-Russia sanctions and has to include trouble-shooting proposals.

The next group is covered by the subtitle, Countering Russian Influence in Europe and Eurasia. The Act makes it incumbent on the US government to act as a protector of the sovereignty and security of all Eurasian countries that are or may become “victims” of Russian influence. The Department of State is the key agency responsible for this group. Policies in this area imply the broad use of soft power based on NGOs in the US and Eurasian countries (the Act lists some of these). The appropriations for these purposes in 2018 will add up to $250,000,000, a considerable sum given that it will be largely used for ideological and educational work rather than for infrastructure. At first glance, the money is spread across a wide spectrum of objectives and countries, such as protection of electoral infrastructure, the fight against corruption, legislative improvements, aid to NGOs and the media, and opposition to “propaganda.” However, given the low cost of these measures and their focus on countering Russia, they will become a serious source of pressure. At least this sum is much greater than Russia’s own “soft power” expenses. What’s more, Russian institutions are addressing the entire international agenda, while the West (let alone opposition to it) is not the first, nor the only target of its efforts.

PL 115-04 makes it incumbent on the State Department to report to Congress annually, including its performance, spending efficiency, and results. A separate report will cover cooperation with foreign entities and their contribution. In other words, the Americans expect that their spending should be reinforced by that of their allies in the EU and other countries. The report is due to be submitted on April 1.

The next two reports also need to be submitted annually by the US President.

The first is on the media organizations controlled and funded by the government of the Russian Federation. It is also a black list of sorts involving at least reputation effects and due to stigmatize both Russian media proper and those supported by Russia in some or other form.

The other concerns Russian Federation influence on elections in Europe and Eurasia. This is important as a tool for internationalizing the American approach to supposed Russian “electoral interference.” Unlike the United States, people in Europe and elsewhere are more or less skeptical of the US position. The annual report will make it possible to perpetuate the focus on this subject by aggregating events of any importance and prodding the related Western discourse towards the US stance.

Finally, yet another report is linked to a law on Ukrainian and other countries’ energy security interpreted as reduced reliance on Russian distribution or any ties with Russia. It is speaking about facilitation of Ukrainian energy sector reforms, the sector’s liberalization, enhanced efficiency, etc. But in the same breath it mentions counteraction to Russian energy projects (Nord Stream, etc.) and what it calls “Russian aggression.” It also says directly that the US policy should be aimed at promoting US energy exports to Europe, among other things, to create jobs in the United States. (This means that the Americans are using this political tool in market rivalry.) The Secretary of State is to report on the implementation of the Ukraine Freedom Support Act and on achievements in this area in February, with subsequent updates to be submitted every six months.

The bottom line is that PL 115-04 prescribes a specific bureaucratic procedure and narrative that will largely define US policy with regard to Russia in 2018 and thereafter. There will be at least seven reports submitted next year, each of which will most likely provide a pretext for the further alienation of Russia and the United States from each other. Russia needs a well-considered policy of clever actions that will make it possible to control confrontation, minimize damage, and retain foreign policy initiative.

First published in Valdai Discussion Club

RIAC Director of Programs, RIAC Member, Head of "Contemporary State" program at Valdai Discussion Club, RIAC member.

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Russia lacks sufficient number of migrants to fulfill its ambitious development plans

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Despite various official efforts, including regular payment of maternal capital to stimulate birth rates and regulating migration policy to boost population, Russia is reportedly experiencing decreasing population. According to the Federal State Statistics Service, Russia’s population currently stands at approximately 144 million, down from 148.3 million.

Experts at the Higher School of Economics believe that regulating the legal status of migrants, majority of them arriving from the Commonwealth of Independent States or the former Soviet republics, could be useful or resourceful for developing the economy, especially on various infrastructure projects planned for country. These huge human resources could be used in the vast agricultural fields to boost domestic agricultural production. On the contrary, the Federal Migration Service plans to deport all illegal migrants from Russia.

Within the long-term sustainable development program, Russia has multibillion dollar plans to address its infrastructure deficit especially in the provinces, and undertake megaprojects across its vast territory, and migrant labor could be useful here. The government can ensure that steady improvements are consistently made with the strategy of legalizing (regulating legal status) and redeploying the available foreign labor, majority from the former Soviet republics rather than deporting back to their countries of origin.

Moscow Mayor Sergei Sobyanin has been credited for transforming the city into a very neat and smart modern one, thanks partly to foreign labor – invaluable reliable asset – performing excellently in maintaining cleanliness and on the large-scale construction sites, and so also in various micro-regions on the edge or outskirts of Moscow.

With its accumulated experience, the Moscow City Hall has now started hosting the Smart Cities Moscow, international forum dedicated to the development of smart cities and for discussing about changes in development strategies, infrastructure challenges and adaptation of the urban environment to the realities of the new normal society.

Kremlin Spokesman Dmitry Peskov told reporters that Russia lacks sufficient number of migrants to fulfill its ambitious development plans. He further acknowledged that the number of migrants in Russia has reduced significantly, and now their numbers are not sufficient to implement ambitious projects in the country.

“I can only speak about the real state of affairs, which suggests that, in fact, we have very few migrants remaining over the past year. Actually, we have a severe dearth of these migrants to implement our ambitious plans,” the Kremlin spokesman pointed out.

In particular, it concerns projects in agricultural and construction sectors. “We need to build more than we are building now. It should be more tangible, and this requires working hands. There is certainly a shortage in migrants. Now there are few of them due to the pandemic,” Peskov said.

Early April, an official from the Russian Interior Ministry told TASS News Agency that the number of illegal migrants working in Russia decreased by 40% in 2020 if compared to the previous year. It also stated that 5.5 million foreign citizens were registered staying in Russia last year, while the average figure previously ranged between nine and eleven million.

On March 30, 2021, President Vladimir Putin chaired the tenth meeting of the Presidential Council for Interethnic Relations via videoconference, noted that tackling the tasks facing the country needs not only an effective economy but also competent management. For a huge multinational state such as Russia, it is fundamentally, and even crucially important, to ensure public solidarity and a feeling of involvement in the life, and responsibility for its present and future.

At this moment, over 80 percent of Russian citizens have a positive view on interethnic relations, and it is important in harmonizing interethnic relations in the country, Putin noted during the meeting, and added “Russia has a unique and original heritage of its peoples. It is part of our common wealth, it should be accessible to every resident of our country, every citizen, everyone who lives on this land. Of course, we will need to review the proposal to extend the terms for temporary stay of minors of foreign citizens in the Russian Federation.”

President Vladimir Putin has already approved a list of instructions aimed at reforming the migration requirements and the institution of citizenship in Russia based on the proposals drafted by the working group for implementation of the State Migration Policy Concept of the Russian Federation for 2019-2025.

“Within the framework of the working group for implementation of the State Migration Policy Concept of the Russian Federation for 2019-2025, the Presidential Executive Office of the Russian Federation shall organize work aimed at reforming the migration requirements and the institution of citizenship of the Russian Federation,” an official statement posted to Kremlin website.

In addition, the president ordered the Government, the Interior and Foreign Ministries, the Federal Security Service (FSB), and the Justice Ministry alongside the Presidential Executive Office to make amendments to the plan of action for 2019-2021, aimed at implementing the State Migration Policy Concept of the Russian Federation for 2019-2025.

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Nobody Wants a War in Donbass

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image source: euromaidanpress.com

Any escalation is unique in its own way. Right now there’s a combination of unfavorable trends on both sides, which are leading to an escalation of the conflict. This combination creates additional risks and threats that weren’t there before.

On the Ukrainian side, the problem is that the president is losing his political position and becoming a hostage of right-wing and nationalist forces. Many of the reform initiatives that he came to power with have stalled. Political sentiments are changing within his faction. They’re saying that with his recent steps, in particular the language law and the closure of television stations that Kyiv dislikes, he’s starting to stray towards the agenda of his predecessor, Poroshenko. And this means a weakening of his position. Probably, he’s already thinking about re-election and how he will look during the campaign. Here, the trend is unfavorable.

On the other hand, there’s the arrival of Biden, who will always be more attentive to Ukraine than Trump. There’s an expectation that the U.S. will be more consistent and decisive in its support for the Ukrainian side in the event of a conflict. This invigorates the forces that are looking for an escalation.

The conflict in Nagorno-Karabakh also played a role. They said there was only a political path to resolving the conflict, but in Karabakh [the Azerbaijanis] used force and made real progress. This motivates the people who think that military force can resolve a conflict. Moreover, Ukraine is carrying out defense cooperation with Turkey, so there may be hopes that the balance of forces will shift in Kyiv’s favor.

There’s also a radicalization of the political leadership of the DNR and LNR. They say that [full-scale] war is, if not inevitable, than very likely—and Russia must intervene. The idea that the DNR and LNR should join Russia is gaining popularity once again. This is facilitated by Russia’s actions. In the last two years, the mechanisms for granting Russian citizenship to residents of the LNR and DNR have changed. Hundreds of thousands of LNR and DNR residents are already citizens of the Russian Federation, and Russia has—or at the very least should have—some obligations towards its citizens. This gives hope to [the residents] of the LNR and DNR that if an escalation begins, Russia won’t remain on the sidelines and we will see large-scale intervention. Without Russia, the conflict will not develop in the favor of the republics.

As for Russia, our relations with the West continue to deteriorate. There’s Biden’s statement about Putin being a killer, and relations with the European Union. We are witnessing an accumulation of destabilizing trends.

I don’t think anyone wants a real, big war, since the costs of such a conflict will exceed the political dividends. It’s difficult to predict what such a conflict might lead to, given that the stakes are very high. But an unintended escalation could occur.

Hopefully, all of those involved have enough wisdom, determination, and tolerance to find a positive solution. So far, we are far from a serious conflict, but we’re closer than at the beginning of April 2020 or 2019. Unfortunately, we’re headed downhill, and it’s difficult to say how long it will go on.

To prevent a [full-scale] war from starting, the situation in Donbass needs to be stabilized. That’s the first task. In recent weeks, the number of ceasefire violations has been increasing, and the number of victims is growing. We need to return to the issues of the withdrawal of heavy weapons, the OSCE mission, and monitoring the ceasefire.

The second task is to discuss issues of political regulation. The main uncertainty is how flexible all the parties can be. The Minsk agreements were signed a long time ago, [but] it’s difficult to implement them in full, there needs to be a demonstrated willingness not to revise them, but to somehow bring them up to date. How ready are the parties for this? So far, we aren’t seeing much of this, but without it we will not advance any further.

The third issue is that it’s impossible to resolve the Donbass problem separately from the problem of European security as a whole. If we limit ourselves to how we fought in Donbass, Kyiv will always be afraid that Russia will build up its strength and an intervention will begin. And in Russia there will always be the fear that NATO infrastructure will be developed near Voronezh and Belgorod. We have to deal not only with this issue, but also think about how to create the entire architecture of European security. And it isn’t a question of experts lacking imagination and qualifications, but of statesmen lacking the political will to seriously deal with these issues. Because if you reduce everything to the requirements of the formal implementation of the Minsk agreements, this is what we’ve been fighting about for seven years already.

I think that Ukraine will now try to increase the political pressure on Moscow and get away from the issue of the Minsk agreements. And going forward a lot depends on what the position of the West and U.S. will be. To what extent and in what format will they provide support in the event of an escalation? This is still an open question. And, I think, even Biden doesn’t know the answer to it.

From our partner RIAC

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Updating the USSR: A Test for Freedom

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Thirty years ago, on March 17, 1991, the only all-Union referendum in the history of the USSR took place. One question was put to a vote: “Do you consider it necessary to preserve the Union of Soviet Socialist Republics as a renewed federation of equal sovereign republics, in which the rights and freedoms of a person of any nationality will be fully guaranteed?” Almost 77 percent of those who voted said “yes” to the preservation of the USSR in an updated form. The authorities of Armenia, Georgia, Latvia, Lithuania, Moldova and Estonia refused to hold the referendum on their territory. By that time, the legislative and executive bodies and institutions in these republics were already controlled by secessionist forces, which did not hide their intentions to leave the USSR.

The March 17 referendum at that time was the only convincing attempt to appeal to public opinion on the most important issue of the political life of a huge country. However, the results did not change anything — by December 8 of the same year, the leaders of Belarus, Russia and Ukraine decided to dissolve the USSR. The referendum itself became the beginning of the end of a unique state — an experiment in the vast expanses of Eurasia. By that time, the republican elites were already ready to take power and wealth into their own hands; the events of August 1991 spurred this readiness — in Turkmenistan, where almost 100 percent of the population voted to preserve the USSR, on August 22, 1991, all enterprises were placed under republican control.

All the republics of the USSR met the new year in 1992 as newly independent states. For some of them, this status was a long-awaited event, for which they had fought. Others were, according to former Prime Minister of Kyrgyzstan Apas Jumagulov, “thrown out of the union, cut off as an unnecessary part of the body.” Many economic ties broke off immediately, while others collapsed gradually; the rest survived and were even strengthened. In politics, everyone was left to their own problems. Azerbaijan, Armenia, Georgia, Moldova and Tajikistan plunged into bloody political and interethnic conflicts during their first years of independence.

The path of the countries that emerged from the ruins of the USSR over the years was the road to gaining their own subjectivity in international politics. With great difficulty and despite all odds, Armenia and Moldova are coping with this task. The majority — Russia, Azerbaijan and all the countries of Central Asia — were able to solve the problem more or less successfully. Georgia and two Slavic republics — Belarus and Ukraine, were hanging in the “limbo” between external management and full-fledged statehood. The three Baltic republics quickly transferred their sovereignty to the European Union and NATO. In their independent development, they had to make, in fact, the only decision, which, moreover, was due to historical reasons and external circumstances. This decision was made and now the fate of Latvia, Lithuania and Estonia cannot be perceived outside the context of Russia-West interaction.

For the rest, the direct link between success in creating their own statehood and the scale of interaction with the West (Europe and the United States) is quite obvious. This historical fact reveals a relationship between the ability of small and medium states to ensure their sovereignty and the interests of the great powers in their neighbourhood. Such powers were Russia and the European states, united into the European Union simultaneously with the collapse of the USSR. Also, an important role was played by the United States, which always sought to limit Russian opportunities and supported the newly independent states. At the same time, an attempt to choose in favour of closer relations with the West to the detriment of Russian interests in all cases, without exception, led to a very shaky statehood and the loss of territory.

The dramatic fate of Armenia, Georgia, Moldova and Ukraine shows that the strong collective institutions of the West are capable of exerting a stabilising effect only on those states that directly became part of them.

In all other cases, no matter how complete absorption becomes possible, an orientation towards these institutions only leads to the use of small countries in a diplomatic game with bigger partners.

Therefore, the experience of the development of such major players as Azerbaijan or Uzbekistan is indicative — they were able to confidently form their own statehood, without finding themselves in a situation of choosing between conflicting poles of power. Their main resource turned out to be a rather fair demographic situation. But not only this — the population of Ukraine has also been and remains large by European standards. Kazakhstan is a success by this indicator; equal to the average European country or small Asian states.

Therefore, the ability of most of the countries of the former USSR to build relatively independent and stable statehood played no less important role. In many ways, this ability was established during the years of the Soviet Union’s existence. Founded on December 30, 1922, it was not just a continuation of the Russian Empire, which had collapsed five years earlier. Its main distinguishing feature was its unique model of state administration, based on the full power of one political party. As long as the unique position of the Communist Party remained in the Soviet state, the experiment could exist. With the abolition of Article 6 of the Constitution of the USSR, its days were numbered regardless of the desire of the population or the real readiness of the elites to take full responsibility for what was happening.

The USSR model of state structure, new by historical standards, created the conditions for a rather unique experiment, within the framework of which union republics were created, none of which, except for Russia, Georgia and Armenia, had the experience of centralised state administration within the territorial boundaries that they acquired within the framework of the USSR. At least the peoples inhabiting them can boast of a significant experience of statehood as such. Thus, most of the countries of Central Asia trace their ancestry back to great empires or urban civilizations of past centuries.

The Baltic republics were always on the sidelines — their independent statehood arose during the collapse of the Russian Empire and existed as such for almost 20 years before being incorporated into the USSR in 1940. Russia has returned to its historical state of being a major European power or empire of the 19th century, with the development of a multinational and multi-faith society central to its development objectives. In fact, Russia has not lost anything really necessary for its survival in international politics.

The peculiar structure of the USSR formalised the situation in which the former outskirts of the Russian Empire ceased to be part of the Russian state, although Moscow served as the centre of the union. Russia among them was in the most ambiguous position — it did not have its own most important institutions of Soviet statehood — the party organisation and the republican State Security Committee. Russian nationalism was subjected to the most severe and consistent persecution by the Soviet authorities.

The vast majority of republics within the USSR, for the first time, received the experience of building their own state and their national elite.

The backbone of the ruling class was the Soviet and party nomenklatura, which all took power, with few exceptions, after 1991. Even in Tajikistan, where the first years of independence were overshadowed by the civil war, it was this part of society that was eventually able to establish control over the situation. In other Central Asian countries, elites formed on the basis of the state tradition established during the Soviet era, gradually supplemented by representatives of a new generation that grew professionally after the collapse of the USSR.

Thirty years is a sufficient period to assess the results of the independent development of the countries that emerged from the republics of the former USSR. Now the period of their growing up can be considered complete; ahead is an independent future. Russia is increasingly feeling independent and not particularly obligated to its neighbours. In any event, Moscow will continue to follow a moral imperative of responsibility for maintaining peace and strictly ensure that its neighbours correlate their actions with Russian security interests.

From our partner RIAC

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