(Bloomberg) -- As U.S. President Donald Trump pursues his goal of improving relations with Russia, sanctions could be a stumbling block. Since 2014, the U.S. has imposed travel bans, asset freezes and finance and trade restrictions against hundreds of Russian individuals and companies, part of a multinational effort to punish President Vladimir Putin’s government for (allegedly) making trouble beyond its borders and online. The U.S. Congress went so far as to limit Trump’s power to ease sanctions on his own. Sanctions may be the elephant in the room when Trump and Putin meet on July 16 in Helsinki, Finland.
1. What U.S. sanctions are in place against Russia?
Almost 700 Russian people and companies are under U.S. sanctions. Individuals face limits on their travel and freezes on at least some of their assets, while some top Russian state banks and companies, including oil and gas giants, are effectively barred from getting financing through U.S. banks and markets. They include billionaires such as Oleg Deripaska and Viktor Vekselberg; close political allies of Putin including his former chief of staff, Sergei Ivanov, and Dmitry Rogozin, a deputy prime minister from 2011 to 2018; and corporate titans such as Rosneft PJSC, Gazprom PJSC, Sberbank PJSC and VTB Group.
2. Why were the sanctions imposed?
Most were imposed by executive order of Trump’s predecessor, Barack Obama, starting in 2014 after Russia annexed the Ukrainian peninsula of Crimea and supported a separatist uprising in eastern Ukraine. More were added after U.S. intelligence agencies concluded that Moscow interfered in the 2016 presidential election, won by Trump. The latest, in response to Russia’s “malign activity around the globe,” hit strongest against Deripaska’s United Co. Rusal, limiting its access to the $140 billion global aluminum industry.
3. Where does Trump stand?
As a candidate in 2016, Trump was asked if he might recognize Crimea as Russian territory and lift U.S. sanctions. He replied, “We’ll be looking at that. Yeah, we’ll be looking.” That led Congress, as part of a 2017 package of expanded sanctions, to codify them into a law specifying that it could vote to block any move by Trump (or a future president) to loosen them. Trump called the legislation “seriously flawed” but signed it into law anyway -- prompting Russian Prime Minister Dmitry Medvedev to predict the sanctions “will remain in effect for decades unless a miracle happens.” In April, the U.S. enacted sanctions that sent the ruble tumbling and roiled metals markets, leading Trump to boast, “Nobody has been tougher on Russia than I have.” But two weeks later, after U.S. Ambassador to the United Nations Nikki Haley declared that new sanctions were forthcoming in response to Russia’s support of the Syrian government, Trump stepped in to squash the idea.
4. So what’s there for Trump and Putin to discuss?
Maybe not much regarding sanctions. Russian officials say they won’t bring up the issue at the summit. But they are hoping for a breakthrough in the two countries’ strained ties that would have the potential to lead to some de-escalation of punitive measures. The two leaders may also discuss the situation in war-torn southwestern Syria, where U.S. ally Israel has expressed concern about a potential presence of Iranian or Iranian-backed troops.
5. What’s been the impact of the sanctions?
They’ve curtailed investment and Russian access to technology, hitting economic growth. Over the medium-term they could cut the size of the economy by almost a tenth, according to the International Monetary Fund. Russian markets took a hit after the latest April sanctions. While Russian stocks are now trading above levels just before then, due to the recovery in oil prices, the ruble remains about 7 percent weaker. There also is collateral damage, felt outside Russia.
6. What sort of collateral damage?
The April sanctions targeting Rusal initially disrupted the global supply chain for aluminum and sent prices soaring by 30 percent. That affected, among others, soda-can makers, the world’s biggest miners and big banks that finance the global aluminum trade. Repercussions from sanctions have also been felt in the European Union. The Trump administration has threatened to sanction German and other European companies involved in Nord Stream 2, a planned natural gas pipeline under the Baltic Sea to Germany. Congress gave the Trump administration the right to target foreign investment in new Russian energy export pipelines.
7. Who else has sanctions on Russia?
The EU slapped sanctions on Russia’s financial, energy and defense sectors in a bid -- unsuccessful so far -- to push Putin into a more conciliatory stance regarding the conflict in Ukraine. On July 5, the EU extended those sanctions for another six months. Other Western powers have adopted similar measures.
The Reference Shelf
- The U.S. State Department lists the sanctions against Russia.
- Trump still leaves the door open to recognizing Russia’s grab of Crimea.
- The New World order, according to Trump and Putin.
- Putin and Trump have nothing to talk about, Bloomberg Opinion columnist Leonid Bershidsky writes.
- QuickTake explainers on sanctions as financial warfare, Russian gas and renewed U.S.-Russia tensions.
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