GOP-Run Senate Backs End to Sanctions on Firms Tied to Putin Ally

(Bloomberg) -- The Senate blocked a Democratic bid to force the Treasury Department to keep sanctions on three Russian companies linked to oligarch Oleg Deripaska, as most Republicans backed the Trump administration’s plan to lift the penalties.

The 57-42 Senate vote Wednesday was three short of the 60 needed to advance the Democrats’ resolution to a final vote. As a result, the Treasury Department likely will be able to move forward with its plan announced Dec. 19 to lift sanctions against three companies Deripaska controls -- United Co. Rusal, En+ Group Plc and EuroSibEnergo JSC.

The resolution, sponsored by Senate Minority Leader Chuck Schumer, had moved forward Tuesday when in a surprise vote 11 Republicans sided with Democrats to start debate over the objections of GOP leaders. That vote required only a simple majority, and when the same 11 backed the measure Wednesday, it wasn’t enough to advance the measure.

Schumer of New York had pleaded for more Republican support Wednesday, saying Russian President Vladimir Putin is seeking to destabilize Western democracies "at every opportunity."

"In the face of this global assault on Western democracies, of course we have seen that the Trump administration has been shamefully and suspiciously weak on President Putin," Schumer said.

Democrats are questioning the administration’s motives at a time when Special Counsel Robert Mueller is continuing his investigation of Russian interference in the 2016 presidential election and possible connections to Trump’s campaign. Deripaska has close ties to Putin and was a client of former Trump campaign manager Paul Manafort.

Even after the Senate defeat, the Democratic-controlled House plans to vote on a similar resolution Thursday. Representative Jim Himes of Connecticut, the second-ranking Democrat on the Intelligence Committee, said the House should go on record as seeking a delay because, "There’s a real chance that Treasury plunges ahead here for no obvious reason."

‘Political Obstruction’

Senate Majority Leader Mitch McConnell had urged senators to reject the resolution, contending the Democratic effort ignores a careful review by the Treasury Department.

Schumer’s resolution "would overrule career civil servants at the Treasury Department and fire from the hip on one of the top foreign policy concerns of the United States," said McConnell, a Kentucky Republican.

McConnell said that "political obstruction is their top priority" because the sanctions debate is taking up floor time that otherwise could be used to consider legislation taking on the regime of Syrian President Bashar al-Assad.

Some Republicans accused the Democrats of hypocrisy in seeking to bring up the sanctions measure, S.J. Res. 2, even though they’ve blocked action on a Middle East policy package because of the partial government shutdown. Schumer said his resolution faced a Thursday deadline under a 2017 sanctions law that let him force a Senate vote disapproving of sanctions relief within 30 days after such an action.

Treasury Secretary Steven Mnuchin lobbied GOP senators at the Capitol Tuesday to defeat the measure and indicated he’s not backing down from his plan to lift sanctions against the companies.

Ownership Stake

His plan would keep intact earlier U.S. sanctions against Deripaska himself, but the Treasury Department decided to remove financial restrictions on the three companies following an agreement to significantly reduce the oligarch’s ownership stake. Aluminum producer Rusal is among the largest companies the U.S. has ever put on its sanctions designation list, and the action caused its shares to plummet.

Mnuchin has said that Deripaska, not the companies, was the intended target of U.S. sanctions imposed in April on associates of Putin over Moscow’s interference in the election. Under Deripaska’s agreement with Treasury to remove sanctions from the three companies, the oligarch would cut his ownership shares to about 45 percent of each company, the boards of En+ and Rusal would be overhauled, and they would submit to Treasury audits.

Schumer and other critics say the agreement would still let Deripaska control the companies through his close ties to other shareholders.

Mnuchin has pushed back on bipartisan claims that the Trump administration hasn’t been tough enough on Russia.

Plans to remove the sanctions are not politically motivated, but were negotiated with the assistance of longtime civil servants at Treasury, Mnuchin told reporters Tuesday after meeting with Senate Republicans. The Trump administration has sanctioned more than 220 Russian individuals and entities, including business tycoons who have seen their wealth plummet as a result of the sanctions.

In the past, there has been widespread support for stringent sanctions against Russia in both chambers. In 2017, the Senate voted 98-2 to strengthen sanctions on Russia and give Congress the power to block Trump from lifting them. The House vote on the same legislation was also lopsided, 419-3.

Lawmakers considered a package of further sanctions late last year following Trump’s July summit with Putin in Helsinki, but they shelved the effort in favor of year-end debate over spending and a farm bill.

©2019 Bloomberg L.P.