Avoiding Sanction

Donald Trump’s America may be run erratically, but the United States’ chief executive is still a businessman. He knows, or thinks he knows, the bottom line. Credit and capital are instruments often reached for and keenly used.

Nations and governments who offend the American president expect financial penalties. Trump does not believe in markets left alone. He does not believe in free trade; he promotes trade war. Trump does not believe in cooperation; he believes in sanction.

So even America’s allies, such as Canada, have found. Ditto even countries Trump claims to want better relations with, such as China and Russia.

Chinese imports have faced repeated American tariffs; Russia’s face sanction – notably in retaliation for what was likely an act of Russian chemical aggression in Britain’s Salisbury early this year.

As part of its paradoxical policy toward Russia, the United States issued sanctions against Russian oligarchs close to the country’s leadership in April. One of those rich men, Oleg Deripaska, has previous form with those close to the American administration.

Deripaska made use of the services of Paul Manafort, who is now in jail but once, before the 2016 election, helped shape the Trump campaign’s messaging and its policy proposals regarding Russia.

Manafort’s fall from grace may have proven a blow to Deripaska. But the oligarch has other connections, and other men willing to involve themselves in promoting his interests.

The New York Times details the efforts of some of them to allow Deripaska to duck sanctions on Russia, on his companies, and on his person. The first part of this effort involves Deripaska’s mounting legal challenges, which, the Times reports, look likely to minimise or make moribund sanctions the US Treasury has attempted to place on some of his companies.

But the second part is a more audacious undertaking, and it involves more the legal cleverness. It is a bolder task, and more personal. Deripaska wishes to reduce the sanctions placed on himself. The job for his advocates to attempt is the wholesale laundering of his reputation.

The Times notes that Deripaska is effective at using people like Lord Barker, a former British minister, as emissaries in western capitals.

John Gapper of the Financial Times wrote in May that Barker, the ‘Russophile chairman of EN+’, Deripaska’s vast holding company, which has been sanctioned by the US Treasury, ‘is staying in his job as others melt away, hoping to salvage something for the minority investors’.

Barker formulated a so-called ‘Barker Plan’, which would see Deripaska relinquishing much of his overt control of EN+ and Rusal, an aluminium company also under sanction, in exchange for the lifting or decreasing of sanctions on these entities. Accordingly, Deripaska resigned from the boards of Rusal and EN+ in May.

But more than that, he has intervened personally, parlaying with the Irish minister of business, trying to get to the US through Ireland.

In the United States, Mercury Public Affairs, featuring Bryan Lanza, late of the Trump campaign, has signed a large deal with EN+ and registered as a foreign agent to advocate on behalf of Lord Barker.

Whether this campaign will succeed entirely remains to be seen. But Deripaska’s plan of settling in for a long fight appears to be bearing fruit.

Rusal, for example, despite bearing the double burden of tariffs on levied on aluminium imports and the sanctions directly levied on the company and Deripaska, had a request for an exemption from tariffs granted in July – the twentieth such exemption it asked for, out of a total of over 100 requests.

This is only one flaw with using punitive sanctions as the primary tool of aggressive foreign policy. The canny and the rich tend to escape the net. As with all business, there is always a deal to be struck.

But even these flaws are not the system’s most glaring.

The Trump administration has expressed consistent hostility towards Iran. On November 5, new US sanctions came into force against Iranian oil production, the consequence of Trump’s suspension of the 2015 nuclear deal between the United States, Iran and five other nations.

That the moment – and its bizarre Game of Thrones-themed spin war – gave Iran’s generals space for grandstanding is regrettable. That it has prompted illegal and dangerous acts, such as Iranian ships, beginning in September, switching off their transponders and ‘going dark’ in a bid to avoid detection and sanction, likewise.

More regrettable are the ways American sanctions could prove less effective than intended. The United States has exempted several nations from its sanctions on Iranian oil. The fact that this list so far includes such vast consumers of oil as China, India, Greece, Italy, South Korea, Taiwan and Turkey suggests that Iranian crude stands a chance of doing rather better than the Islamic Republic’s leaders may have feared.

The above nations no doubt lobbied hard for their commercial advantage. Other countries, such as Iraq, whose leaders likely tried just as hard but, in this case, did so unsuccessfully, no doubt feel dispirited and will suffer economically in consequence. Once again, as with sanctioning Russian business, creeps in the possibility of partiality.

Levelling sanctions at Russia and Iran is necessary and right. But both are nations associated with more than financial impropriety and malfeasance. When sanctions can be danced around or negotiated away, and when both Iranian and Russian agents have done far worse than attempt to export aluminium and oil to the United States, a foreign policy built on financial sanction alone is insufficient.

Rather than relying on the transactional approach of the boardroom, the United States must think seriously about what behaviour in its adversaries it truly wishes to counter. If America’s concerns are purely economic, its leaders should say so directly, and accept all the partiality that style of thinking encourages.

But if it wishes to deter and punish chemical attacks in Britain and Syria, the promotion of terrorism in the Middle East, and the invasion of neighbouring states in Europe, it ought to say so, and adopt a manner of thinking and acting which looks a little further than the balance sheet.

A version of this piece was originally published at The New Arab.

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