On March 2, President Joe Biden’s administration, together with the United Kingdom and the European Union, announced new sanctions against Russia over last summer’s poisoning of Russian dissident Alexey Navalny.
The sanctions were aimed at members of Vladimir Putin’s administration, including his deputy chief of staff and domestic advisor, Sergey Kiriyenko, as well as Alexander Bortnikov, the director of Russia’s Federal Security Service, the FSB – the feared successor agency to the Soviet-era KGB.
There were some small variations between the two lists, but the Americans’ announcement essentially brought theirs in line with the previous designations made by the EU’s sanctions announcement last October.
Conspicuously absent from either list was the name of any of Russia’s ultra-wealthy oligarchs. After Navalny returned home in January, members of his team shared a list of eight individuals closely tied to the Kremlin who they felt, if sanctioned, would actually send a strong message to Putin.
Vladimir Ashurkov, the executive director of Navalny’s Anti-Corruption Foundation, wrote on Facebook after Navalny was taken into custody, “Nothing less will make an impact on the behavior of the Russian authorities.”
Russia’s oligarchs have consistently dodged either American or European sanctions despite their significant footprint in the West. In January 2018, the Trump administration was forced under the Countering America’s Adversaries Through Sanctions Act (CAATSA), to draw up a list of Russian oligarchs to be sanctioned, but declined to take actions against any of them.
The prevailing theory for the Trump administration’s inaction is based on the belief that they worried the Europeans would not join the sanctions, particularly since EU officials have been openly reluctant to punish Russia.
Even if the Biden administration wanted to stick to members of Putin’s administration, they still may have missed the opportunity to hit harder here. Mark Galeotti, a senior associate fellow at the Royal United Services Institute in London, said the point behind the latest round of sanctions from the Biden administration was unclear.
“It’s a pretty lackluster response, and also one in which the logic isn’t that clear. Bortnikov was already under sanctions, and going after Kirienko and Yarin without also targeting their boss, Vaino, is another strange choice,” Galeotti said, referring to Anton Vaino, the Kremlin chief of staff.
Galeotti warned that the sanctions may have demonstrated to Moscow that Washington is not serious about getting into a wider struggle. Given the need for Russian cooperation on strategic arms talks or renegotiating the Iran nuclear deal, the Biden team may feel forced to avoid over-antagonizing Putin.
This can cause dismay for those who would have preferred to see a stronger message about the priority President Biden is placing on human rights both in Russia and around the world. Not long before the announced sanctions, the Biden administration disappointed activists who wanted to see a tougher line from the US against Saudi Arabia over the 2018 murder of Washington Post columnist Jamal Khashoggi.
The long-anticipated report about the grisly Khashoggi murder, which took place at the Saudi consulate in Istanbul, provided little-to-no new information and Biden ultimately did not sanction Crown Prince Mohammed bin Salman for fear of damaging US-Saudi ties, despite in-depth reports from the US’ intelligence community which pointed to bin Salman’s involvement.
Galeotti said that harshly sanctioning Russia over Navalny after failing to act more strongly against bin Salman over Khashoggi’s death will lead to “more grumblings of double standards – and quite justifiable ones”
Ilya Zaslavsky, a senior fellow at the Washington, DC-based nonprofit Free Russia Foundation, said that he was “slightly disappointed” in the sanctions levied, and he echoed Galeotti’s assessment that Biden may still need Putin’s help on certain fronts. However, he believes the move, at the very least, demonstrated a willingness by President Biden to act as his administration is still in its early days.
“They are juggling too many things with two hands, but they eventually want to get around to proper Russia sanctions,” Zaslavsky suggested.
Zaslavsky believes that it is inevitable that the Americans will have to act again, if not over Navalny’s poisoning than on any other item on the laundry list of disputes with Russia that have piled up over the years.
Most of the impetus to act comes from Congress, which yearned for stronger actions against Russia through the Trump years, but came up against significant pushback from the White House as Trump was reluctant to take a strong stance against Putin.
“In the West, Congress remains the leader. It’s not Biden; it is not Chancellor (Angela) Merkel. It is the constant pressure from the US Congress that forces any administration. That in turn must then influence Europe,” explained Zaslavsky.
After Navalny was confirmed to have been poisoned by the nerve agent Novichok, there was a rare bipartisan demand for action, only to be ignored by Trump. The Democratic Senator from New Jersey, Bob Menendez, praised the Biden administration for its decision to apply additional sanctions, but said that he would like to see more done.
“Substantial work remains in restricting the ability of corrupt Russian actors to continue accessing the U.S. financial system and I expect the administration to take additional measures to shore up our financial defenses against dirty Russian money,” said Menendez in a statement after the sanctions announcement.
A second opportunity to try something bigger may be approaching soon. Congress has been crystal clear with Europe, particularly Germany, about its opposition to Russia’s Nord Stream II pipeline. Biden has called the pipeline project “a bad deal for Europe”. American officials in both parties fear that the completion of Nord Stream II, which would bring Russian natural gas to the heart of the EU via an underwater pipe in the Baltic Sea, would result in greater European dependence on Russian gas.
In February, the State Department sanctioned a Russian company and a pipe-laying vessel involved in the Nord Stream II project, but that has failed to halt the construction of the pipeline as it inches closer to completion.
Visible anger has already emerged from Congress, particularly Republicans, who are disappointed that President Biden has not done more to block additional construction from being done on the pipeline. Only a day after the Navalny sanctions, forty Republican senators lambasted the administration for failing to issue more sanctions and for opting to apply only redundant penalties on previously sanctioned entities.
Not long after the Republican uproar, a similar letter was sent to Secretary of State Antony Blinken by Republican House members that warned against any “backdoor deal” with Germany that could result in Nord Stream II’s completion.
For some in the Biden administration, there is a perception that they are being unfairly targeted for failing to act after their predecessors refused. One anonymous official told Politico that there are hopes for patching up relations with Germany, “but Congress is not budging. We are between a rock and a hard place.”
That, in turn, leads to decisions to be made on the other side of the Atlantic. President Biden made clear that the US will act as closely together with Europe as possible, but he is running into a great deal of resistance when it comes to ending Nord Stream II. Germany‘s Merkel is insistent that they will not abandon the project and is keen to keep its construction separate from any actions related to Navalny.
Outside of the EU, Nord Stream II has become synonymous with Europe’s reluctance to meaningfully confront Russia. It has also become the quintessential symbol of the cozy relationship between the Kremlin and many former and current European officials, some of which are on Moscow’s payroll.
Most notable among those who are now paid, staunch supporters of Putin is former German Chancellor Gerhard Schroeder, who serves as chairman of the board for Nord Stream II’s consortium. Schroeder has routinely criticized all of the sanctions regimes that have been levied against Russia since Moscow’s annexation of Crimea in March 2014. Schroeder has towed the Kremlin line in lambasting the United States for keeping the sanctions in place.
Schroeder’s controversial positions have met with significant pushback both in Germany and beyond. Ukraine has previously called for the Kremlin-friendly former chancellor to be sanctioned and German politicians have similarly urged him to abandon his current position.
Germany and its former politicians are not, however, the only ones in Europe who have a vested interest in keeping Nord Stream II for completion.
The same week new sanctions were levied, eyebrows were raised when Rosneft, Russia’s state-owned oil company, announced the newest member of its board is former Austrian Foreign Minister Karin Kneissl. Notorious for inviting Putin – with whom she danced with – to her 2018 wedding, Kneissl once called sanctions against Russia ineffective and that she saw Russia as a partner for Europe.
Austria, a non-NATO member, has traditionally been within the ranks of Europe’s softest members in its relations with Russia. Austria’s state-owned oil company OMV is among the main investors in Nord Stream II. Kneissl is not alone among Austrian officials with financial ties to Russia; three former Austrian chancellors currently serve on the board of Russian companies or with pro-Russian organizations.
Asked whether her appointment or those of other former politicians by Russian state interests should raise concern, Kneissl told New Europe that she does not do interviews and directed questions to Rosneft. The oil company did not return any of New Europe’s requests for comment.
Anton Shekhovtsov, director of the Centre for Democratic Integrity (Austria), explained that Kneissl’s appointment wasn’t based on her background, but was meant to send a message to other European politicians looking to cash in after leaving office.
“With Karin Kneissl, what is curious is that she is non-influential, she is essentially a nobody,” explained Shekhovstov in a phone call with New Europe. “Moscow’s message is very important; ‘if you play by our rules you will be rewarded, even if you are not a very influential person’.”
The influence of former European officials on sanctions policy has been a concern for observers for some time. Unlike in the US, where lobbyists for foreign interests must register with the Department of Justice, there are no similar mechanism in place in the EU for individuals or firms.
Whatever the risk that is posed by Moscow’s known and unknown advocates in the European Union, there is a real risk that it is much more apparent in the current governments of the EU than most are willing to recognize.
“The problem with Nord Stream II and Germany is the actual German government,” said Shekhovstov. “They (the German government) totally understand that Nord Stream II is economically very beneficial for Germany, and also Austria.”
Merkel will not be seeking re-election this year, but her designated successor within her Christian Democratic Union (CDU) Armin Laschet already rejects any talk of ending Nord Stream II. In France, the EU’s other major power, has refused to pressure Germany to reconsider its position on the Gazprom’s pipeline after its foreign minister Jean Yves-Le Drian told Europe 1 that the decision was Berlin’s alone.
Taken altogether, the Biden administration does appear to be stuck between a diplomatic rock and a hard place. That does not mean that there is no room available for action, as there are already some hints that are emerging as to exactly what shape this will take. Secretary of State Blinken told Congress that the administration was still reviewing new options, but declined to provide further clarity.
The US has still not completed its review of the massive hack of its government systems that occurred last December, but it has already pointed the finger at Russia’s intelligence services as being responsible. Anonymous officials speaking to the New York Times described clandestine implants on Russian networks that would send a secret warning to the Kremlin, a tactic used at the end of the Obama administration after Russia’s interference in the 2016 presidential election.
Expanded sanctions against Russia’s sovereign debt is the so-called “nuclear option” that is available. Trading in Russian debt in primary markets is already hampered by US sanctions, but Bloomberg then reported these could be increased together with the UK. Upon hearing this new, the ruble tumbled, but analysts continue to rate a major move, like the aforementioned “nuclear option”, as unlikely due to its spillover potential.
Whether on Nord Stream II or Navalny, there is a sense of urgency to break the cycle of issuing reactionary responses to Moscow’s actions without meaningfully changing the Kremlin’s behavior.
“The choice is do you sanction something or someone that can really hurt Putin? Not just nominally or morally, but through the money?” said Zaslavsky. “It’s a moment of truth. It does not have to be right now, but there is a limit to the window of opportunity on how much you are taken seriously in terms of being tough on Russia.”