Streetwise Professor

January 25, 2020

Riddle Me This: If All Roads Lead to Putin, Why is the Boot of US Sanctions on the Windpipes of Putin’s Pals?

Filed under: Politics,Russia — cpirrong @ 12:04 pm

If you thought the Trump-Putin narrative was put out of our misery by Robert Mueller’s drooling performance back in May, you’d be wrong. The Democrats try to resuscitate it daily: one of Nancy Pelosi’s mantras is “all roads lead to Putin.”

Adam Schiff and Gerald Nadler brought up Russia repeatedly in their drone strike of an impeachment presentation before the Senate. And by drone strike, I don’t mean something explosive, like blowing up Soleimani: I mean they droned on and on and on.

Schiff demonstrated just how little he and his ilk actually know about Russia and Putin. Schiff drew laughs when he said Trump had made a religious man out of Putin:

“‘Thank God,’ Putin said, ‘Thank God nobody is accusing us anymore of interfering in U.S. elections, now they’re accusing Ukraine,’” Schiff said.

One may question the sincerity of Putin’s public religious displays, but one cannot dispute that he has repeatedly and consistently expressed religious sentiments, utilized religious symbolism, and has attempted to increase the role of the Russian Orthodox Church in Russian life. All long before Donald Trump was even a candidate. But apparently Schiff and the idiots who laughed with him (rather than at him) have a mental image of Putin as a godless commie. But we’re supposed to take their alarums about Trump and Putin seriously.

This continuing attempt to bring the Trump-is-Putin’s-puppet narrative back to life is utterly futile. They would have better luck giving CPR to King Tut’s mummy.

It is futile because it is completely untethered from reality. Trump administration policy towards Russia has been as harsh, or harsher, than Obama administration policy (even after the farcical “Reset”). Nordstream II is one example. Perhaps the best example is the suffocating sanctions that have been imposed on some of Putin’s inner circle and closest friends.

My friend Ivan Tkachev, a journalist at RBC, has been writing about the sanctions issue. This recent piece looks at the implications of the Finnish court decision against one of Putin’s closest friends, his judo buddy Boris Rotenberg.

If you aren’t familiar with it, RBC is one of the last–if not the last–major independent news outlets in Russia. It is definitely not a Kremlin organ, or a monkey to an organ grinding Putin. Putin tolerates it, as many canny authoritarians do, because he wants information that comes from outside the echo chamber. RBC is supposedly at the top of Putin’s reading pile every morning.

As an illustration of Ivan’s independence–and courage–he put idiotic western journalists (who swallowed the Sechin/Rosneft/Putin line) to shame in his coverage of the farcical Rosneft “privatization.” (I made a modest contribution to Ivan’s reporting, but I did it from the safety of Houston–not Moscow.)

So Ivan is not one to carry the Kremlin’s water, or that of oligarchs like Rotenberg, by exaggerating or distorting the severity of the Trump Treasury Department’s sanctions. Read the article, and you see that this sanctions regime places a heavy boot on the windpipe of people like Rotenberg, Deripaska, and Viktor Vekselberg:

2. It turns out that Russian oligarchs blacklisted under the US sanctions regime are cut off from the entire Western financial system, not just the American one. There are many examples of this ‘toxic’ extraterritorial effect of US secondary sanctions. For instance, Vekselberg’s and Oleg Deripaska’s frozen bank accounts in Cyprus; frozen dividends on Bank of Cyprus shares owned by Vekselberg; forced sales of private jets by the Rotenberg brothers and Deripaska. If we take into account that Chinese banks (despite the mythologised Russian-Chinese friendship) are extremely cautious about working with blacklisted Russians (as representatives of Russia’s Central Bank admitted in late 2018), it turns out that Russian oligarchs blacklisted under US sanctions are isolated from virtually the entire global financial system.

3. Moreover, the risk of secondary sanctions does not depend on the currency in which payments to or from SDNs are made; in the context of primary sanctions US dollar payments are a decisive factor, but secondary sanctions can be imposed regardless of the currency. In the case of Rotenberg, attempts were made to transfer payments in euros but the banks refused to execute the transactions.

The gravamen of the article is that banks around the world–even Chinese ones–are petrified by the scourge of secondary sanctions. If you want to do business in the US, or in dollars with anyone, you will not deal with anyone on the sanctions list in dollars–or in dinars or bolivars or . . . in bubblegum cards or wampum.

Indeed, although the sanctions formally restrict only “significant” transactions with those under ban, what counts as “significant” is in the eye of the US Treasury. The risks to a bank are so great that it’s wiser to engage in no transaction at all–even something as trivial as processing payment of a Rotenberg’s electric or trash bills.

Just as one may question the sincerity of Putin’s religiosity, one may question whether this administration’s sanctions on prominent Russians close to Putin reflect Trump’s sincere beliefs. But one cannot question that these sanctions exist, and are extremely punishing to the Putinites that they target.

But people like Pelosi and Schiff don’t even question: they pretend that they don’t exist. And this demonstrates that there is no doubt whatsoever about their insincerity, and fundamental dishonesty.

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10 Comments »

  1. ‘If you aren’t familiar with it, RBC is one of the last–if not the last–major independent news outlets in Russia. It is definitely not a Kremlin organ, or a monkey to an organ grinding Putin. Putin tolerates it, as many canny authoritarians do, because he wants information that comes from outside the echo chamber. RBC is supposedly at the top of Putin’s reading pile every morning.’

    OK that’s interesting. I’ve been thinking about this recently, what you might call ‘rational dictatorship’: in order for a dictatorship to function for an extended period of time, the leadership must be rational, in the sense of having a clear view of reality and an ability to make decisions that acknowledges and responds to that reality. This requires the people at the pointy end of the power pyramid having information and discussions that are free of the propaganda and mind-control that these regimes impose on their subjects. But – who do these people trust to produce and report that information? Who do you allow to exist outside of your propaganda bubble, given that allowing this existence creates some danger to the regime, as it necessarily requires allowing people to think outside of, and be critical of, that propaganda bubble?

    My thoughts were mainly directed to countries other than Russia, but this helps answer the question.

    RBC’s continued existence, and its being on Putin’s reading list, indicates that he is a rational dictator who knows very well the game that he’s playing, and that he can’t fall into the trap of drinking his own bathwater. Which is consistent with his having been in power so long.

    Pelosi and Schiff, on the other hand …

    Comment by Ex-Global Super-Regulator on Lunch Break — January 25, 2020 @ 2:15 pm

  2. Good on Ivan, by the way. As well as being great at what he does, those are some seriously brassy cojones that man is carrying around.

    Comment by Ex-Global Super-Regulator on Lunch Break — January 25, 2020 @ 2:20 pm

  3. @Ex-Global Super-Regulator on Lunch Break. Completely. And he is anything but a cynical, hard-bitten man. He is a truly kind, generous, nice, and (especially) thoughtful man. Serious training as a philologist. Unlike most journalists, he is fiercely committed to the truth. I’m honored to know him.

    Comment by cpirrong — January 25, 2020 @ 2:44 pm

  4. @Ex-Global Super-Regulator on Lunch Break. Yes men and sycophants are a dictator’s worst enemies, but particularly in late-stages of any particular authoritarian’s reign they tend to have a fondness for them. At least for now, Putin seems to be aware of the risks of that. Perhaps it’s a reflection of his evaluation of the fall of the USSR.

    The thing is keeping the balance between getting a reality check, and preventing too much of the population from getting a reality check. Putin has appeared to have done a pretty effective job at that too.

    The contrast to China under Xi is instructive. Xi has gone full-bore personality cult, and has squashed any independent voices.

    I’m not too upset at that. In fact I think it’s a good thing. Because it will be a major vulnerability.

    Comment by cpirrong — January 25, 2020 @ 2:51 pm

  5. “But apparently Schiff and the idiots who laughed with him (rather than at him) have a mental image of Putin as a godless commie. ”

    Except, of course, they would be idiots to have any other mental image of him.

    And I don’t mean commie as in “believing in communism”: unlike, it seems, in the US, in Russia those were all dead by about 1918. I mean true commie, as in using communism or any other religion the particular population is susceptible to, as a tool for looting.

    “has attempted to increase the role of the Russian Orthodox Church in Russian life. ”

    So did Stalin, to the point of creating said “church” in the first place. Putin is just using Stalin’s successful experience with the shtick.

    Comment by Ivan — January 26, 2020 @ 4:57 am

  6. “But one cannot question that these sanctions exist, and are extremely punishing to the Putinites that they target.”

    Deripaska particularly comes to mind: I heard the Treasury is planning to seize about $1.7 billion of his money and invest it in Kentucky under his name. That’s gotta hurt.

    Comment by Ivan — January 26, 2020 @ 5:29 am

  7. So is this an example of asymmetric warfare? Your computer geeks screw around in the elections of another country (not much cost there). Then let it be known that you have done so. Then watch the other country tie itself in knots trying to fix blame on someone other than where it started. Three years wasted. The people’s business ignored. Worse yet, the people at each other’s throats. Moron politicians hacking and hewing away at the underpinnings of a republic, gleefully, I might add. Let’s include both parties in this melee.
    This may be a case study for war college and/or the diplomatic corp. It really does make me ill.

    Comment by Donald Wolfe — January 26, 2020 @ 3:08 pm

  8. ‘The thing is keeping the balance between getting a reality check, and preventing too much of the population from getting a reality check. Putin has appeared to have done a pretty effective job at that too.’

    Yep.

    Imagine the degree of cynicism required to marginalise and if necessary persecute the very people on whose excellence and dedication you knowingly rely for your most accurate information, and whose work is necessary for the good of the country.

    Comment by Ex-Global Super-Regulator on Lunch Break — January 26, 2020 @ 7:26 pm

  9. If the Chinese are so scared of sanctions, why are they so openly trading with North Korea?

    Comment by Michael van der Riet — January 29, 2020 @ 1:49 am

  10. Thanks for the ref to RBC, Professor. If Putin is reading it, so should I!

    Comment by I.M. Pembroke — January 31, 2020 @ 8:49 pm

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