U.S. hits Russian oligarchs, senior officials with new sanctions

The United States has imposed sanctions against Russian businessmen, companies and government officials, striking at associates of Russian President Vladimir Putin in one of Washington's most aggressive moves to punish Moscow for activities including alleged meddling in the 2016 U.S. election.

Treasury cites Kremlin's involvement in Ukraine, Syria and in Western democracies

U.S. President Donald Trump and Russian President Vladimir Putin talk at a session of the APEC summit in Vietnam in November 2017. New U.S. sanctions against Russia are a response to the Kremlin's purported 'malign activity around the globe.' (Sputnik/Mikhail Klimentyev/Kremlin)

The United States has imposed sanctions against Russian businessmen, companies and government officials, striking at associates of Russian President Vladimir Putin in one of Washington's most aggressive moves to punish Moscow for activities including alleged meddling in the 2016 U.S. election.

The action, taken Friday under pressure from the U.S. Congress, freezes the U.S. assets of "oligarchs" such as aluminum tycoon Oleg Deripaska and lawmaker Suleiman Kerimov, whose family controls Russia's largest gold producer, Polyus.

Kirill Shamalov, a minority shareholder with petrochemical company Sibur, was also sanctioned. Shamalov married Putin's youngest daughter Katerina in February 2013, multiple sources who were at the wedding told Reuters.

After the marriage, he swiftly grew his wealth through investments in Russia's biggest petrochemical company Sibur, which is not under sanctions. Unconfirmed media reports say Shamalov and Putin's daughter have since split.

Other businessmen on the sanctions list include Viktor Vekselberg, key owner of Renova holding group, ranked by Forbes magazine as Russia's ninth richest businessman with a net worth of $14.4 billion US. He is famous for bringing back a collection of Faberge eggs to Russia.

The Treasury Department sanctions on seven Russian oligarchs and 12 companies they own or control, plus 17 senior Russian government officials, are likely to complicate U.S. President Donald Trump's hopes for good relations with Putin.

"The Russian government operates for the disproportionate benefit of oligarchs and government elites," Treasury Secretary Steve Mnuchin said in a statement.

U.S. Secretary of the Treasury Steven Mnuchin speaks in the White House briefing room in Washington on April 26, 2017. Mnuchin said in a statement on Friday that Russia is 'attempting to subvert Western democracies.' (Carlos Barria/Reuters)

He said Moscow "engages in a range of malign activity around the globe, including continuing to occupy Crimea and instigate violence in Eastern Ukraine, supplying the Assad regime with material and weaponry as they bomb their own civilians, attempting to subvert Western democracies, and malicious cyber activities."

Russian lawmaker Konstantin Kosachev, chairman of the international affairs committee of Russia's upper house of 
parliament, said the sanctions were baseless and unfriendly, Interfax news agency reported.

Economic impact

The sanctions could potentially hurt the Russian economy, especially the financial and energy sectors, and are part of Washington's effort to hold Russia to account for allegedly interfering in the election, which Moscow denies.

Shares in some Russian companies targeted by the sanctions plummeted, but the broader market and ruble showed little reaction to the new round of geopolitical tensions.
 
Shares in EN+ Group, which was put on the sanctions list and manages Deripaska's aluminum and hydropower assets, were down 19.7 per cent on the London stock exchange.

Rusal, a Russian aluminum giant also included on the list, fell 10 per cent on the Moscow Exchange. Deripaska stepped down as president of Rusal in February.

Reactions defiant

Gazprom CEO Alexey Miller said Friday he is proud of the company's inclusion on the sanctions list, noting that it means the state-owned gas company is doing something right. 

Andrey Kostin, CEO of Russia's VTB Bank said he had tried to support good relations with U.S. banks, and the sanctions show a high level of misunderstanding by the U.S. administration.

Russian state companies under the U.S. sanctions will receive additional government support, Interfax cited Russia's Industry and Trade Minister Denis Manturov as saying.

U.S. intelligence agencies say Russia used hacking and propaganda in an effort eventually aimed at favouring Trump over Democrat Hillary Clinton.

Special counsel Robert Mueller is investigating whether Trump's campaign colluded with Russia in the 2016 election, something that Trump denies. Mueller has indicted 13 Russians and three organizations in his probe.

Slow action on Russia

Trump has faced fierce criticism — including from fellow Republicans — for doing too little to punish Russia for the 
election meddling, aggression in Ukraine, and support of President Bashar al-Assad in Syria's civil war.

He angered many members of Congress by failing for months to implement sanctions on Russia that lawmakers passed nearly unanimously last year.

But pressure for Washington to take action against Russia has been mounting in a series of disputes reminiscent of Cold War tensions.

Putin's government was blamed for the poisoning of a former Russian double agent living in close U.S. ally Britain last month, and the United States and several European states announced plans to expel more than 100 Russian diplomats in response. 

Sergei Skripal and his daughter Yulia are seen in a composite photo. Both remain in hospital more than a month after being poisoned. (Misha Japaridze/AP; Yulia Skripal/Facebook via AP)

In February, the White House blamed Russia for the international "NotPetya" cyberattack, which has been called the most destructive and costly in history.

On March 15, the Trump administration said it would impose sanctions on 19 people and five entities, including Russian intelligence services, for cyberattacks stretching back at least two years.

More sanctions possible

Friday's sanctions were authorized by the Countering America's Adversaries Through Sanctions Act, known as CAATSA, which Trump reluctantly signed into law in August.

Under the law, the U.S. Treasury Department released a public list of 210 people, including 96 wealthy Russian businessmen close to Putin's government and network, who could be subject to future sanctions.

The oligarchs were not immediately sanctioned then, but the existence of the list — and a more detailed classified annex — created uncertainty over international business dealings with some Russian sectors.

Chris Painter, the former top cyber diplomat at the U.S. State Department, said the latest sanctions are unlikely to deter the Kremlin unless Trump formally condemns Putin.

Painter, who left government last year, criticized Trump's rhetoric toward Putin — including a congratulatory call last month when Putin won another presidential term in a widely criticized election.

"We need the head of our country saying, 'This is not going to happen,'" Painter said. "That's a critical piece."