Jan 10, 2019

Congress can improve sanctions policy, but Rusal is a poor target

Oleg Deripaska. Photo: Sergei Savostyanov/TASS via Getty Images

Treasury Secretary Steven Mnuchin will appear before the chairs of seven House committees in a classified briefing Thursday afternoon on the administration’s decision to lift sanctions against Russian aluminum giant Rusal. The decision along with its accompanying deal would reduce oligarch Oleg Deripaska’s ownership stake and control of the company (Deripaska has been linked to Paul Manafort).

Why it matters: If Congress demands answers to the right questions, it could improve Russia sanctions policy, but Rusal makes for a poor target. The Treasury Department has repeatedly delayed implementing the sanctions in order to avoid a catastrophic break with European allies, whose high-end manufacturers depend on Rusal for aluminum and cannot easily find new suppliers.

Background: Deripaska and his companies were designated in April 2018 for secondary sanctions that would have imposed severe penalties on non–U.S. firms doing business with them.

  • European manufacturers — and automakers in particular — would be squeezed by tight supply in the aluminum market, especially since it can take up to a year to validate a new supplier. BMW cannot sell an $80,000 car without complete confidence in its aluminum quality.
  • The administration notified Congress of its plan just before the holiday recess and government shutdown, cutting into the legislature's 30-day window to review the deal and consider a “resolution of disapproval” that would leave sanctions in place.

Between the lines: Mnuchin's briefing marks a belated introduction to congressional oversight for Trump's Cabinet. Although the administration made a mess with Rusal sanctions, Congress should not respond by forcing sanctions that would hurt allies more than adversaries.

  • It's hard to know how much the sanctions would hurt Deripaska himself: He would lose access to some assets, but that's likely a small inconvenience considering his wealth.
  • Deripaska and his fellow oligarchs are not the real targets of the sanctions, and shifting ownership structures would not put any pressure on Putin and the Kremlin. If anything, wealthy Russians might be reminded of how dependent they are on the regime.
  • Ultimately, Rusal sanctions miss their target. The U.S. does not have much leverage when the collateral damage includes important European employers.

The bottom line: With the Treasury Department losing technical staff, tactical mistakes like this become more likely. Congress should pursue further oversight of sanctions that were poorly implemented in 2018 and insist on a strategic approach to high-priority objectives, especially to discourage meddling in the elections of the U.S and its allies.

Jarrett Blanc is a senior fellow in the Geoeconomics and Strategy Program at the Carnegie Endowment for International Peace.

Go deeper

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 3 p.m. ET: 766,336 — Total deaths: 36,873 — Total recoveries: 160,001.
  2. U.S.: Leads the world in confirmed cases. Total confirmed cases as of 3 p.m. ET: 153,246 — Total deaths: 2,828 — Total recoveries: 5,545.
  3. Federal government latest: The White House will extend its social distancing guidelines until April 30 — Rep. Nydia Velázquez diagnosed with "presumed" coronavirus infection.
  4. State updates: Virginia and Maryland issued stay-at-home orders to residents, joining 28 other states — Florida megachurch pastor arrested for refusing to call off mass services.
  5. World updates: Spain's cases exceed China's — Italy reports 1,590 recoveries from the virus, its highest ever.
  6. In photos: Navy hospital ship arrives in Manhattan
  7. What should I do? Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk
  8. Other resources: CDC on how to avoid the virus, what to do if you get it.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

Cuomo: Engaging in politics during coronavirus crisis is "anti-American"

New York Gov. Andrew Cuomo said during a Monday press briefing that he won't get into a political tussle with President Trump — calling it "counterproductive" and "anti-American" — as his state deals with the most confirmed coronavirus cases in the country.

The backdrop: Trump said during an appearance on "Fox & Friends" earlier Monday that Cuomo has received high polling numbers during the outbreak because New York has received federal aid.

Maryland and Virginia issue coronavirus stay-at-home orders

Data: Axios reporting; Map: Danielle Alberti/Axios

Maryland Gov. Larry Hogan and Virginia Gov. Ralph Northam issued stay-at-home orders on Monday, with exceptions for residents engaged in essential services, including health care and government functions.

The big picture: The states are the latest to announce policies to enforce social distancing, which have affected almost 250 million Americans. More than 1.5 billion people worldwide had been asked to stay home as of last week.

Go deeperArrowUpdated 1 hour ago - Health