It’s Too Late To Be Afraid

The Russian ruling class is eagerly awaiting the publication of the U.S. Treasury Department’s so-called Kremlin Report. It includes a list of Russian government, state-owned and private institutions that the U.S. says “support the (Russian) regime” and its propaganda. New sanctions could be imposed on these institutions in accordance with the law. This would put Russia in the same category as North Korea and Iran. The deadline to publish this document is Jan. 29. A separate document will analyze the feasibility of imposing sanctions on Russian government transactions and debt securities.

U.S. Treasury Secretary Steven Mnuchin announced in the last few days that the department is working hard and the document will appear shortly. Part of the document will be classified, according to law. The classified portion will be summarized in a special letter by U.S. Deputy Treasury Secretary Sigal Mandelker, and will not go through the Office of Foreign Assets Control (or, as it’s affectionately known, the “Sanction Secret Service”), as is usual in most cases.

This could imply that the administration wants to have a free hand in negotiations, because if you simply impose all of the sanctions against everyone immediately, Moscow and Washington have nothing to discuss and there is no need for negotiation. We’re already close to such a situation, and it’s possible that by February Moscow may consider such sanctions sufficiently painful and curtail the few areas of dialogue with America that still exist. This includes monitoring of nuclear weapons. With the possibility of new sanctions, such negotiations seem rather meaningless.

Publication of the “black list of Russian elites” doesn’t mean the automatic imposition of sanctions. The final decision remains with the White House, leaving it as if there were an ax hanging over one’s head.

Even though Congress will apply pressure, the press will respond hysterically. By law, the administration is obliged to report back to legislators on the implementation of sanctions, and even more so in cases when for they have, for some reason, been “put on the back burner.” The administration will need to justify its reasons. Congress will have 30 days to evaluate the validity of the arguments.

One type of pressure that has emerged in the past few days is a report by Senate Democrat Ben Cardin called “Putin’s Asymmetrical Assault on Democracy in Russia and Europe: Implication for U.S. National Security.” This, I must say, is a fundamental work of 200 pages, with more than 1,000 references to open sources (including publications by Russian journalists). The report is the kind of presentation that is typical of the American establishment. It outlines the system of power under Vladimir Putin (the report begins with his rise to power), the motives of Russia’s foreign policy, the customs of Russia’s political system, propaganda, etc. There are no particular revelations here.

However, this previously published information is brought together with the meticulousness of a doctoral dissertation. It’s designed to create the impression that the old “horror story” of the Judeo-Masonic conspiracy of people and times long ago is nothing compared to what Russia is doing all over the world – from Georgia to Germany and Montenegro to Ukraine. In terms of domestic policy, even the “persecution of LGBT people” is not lost among the numerous examples of the trampling of democracy and the clampdown of oppositionists and the media.

It has been a long time since Congress produced such an extensive work providing a completely unequivocal assessment of Russia in which there is no light, but only gray tones. It is completely painted in black. It is not just a regime, but pure evil.

After reading this report, there is only one conclusion: “Finish them off,” and there is no need to take into account any “suffering of the civilian population” and all that nonsense which the liberal press can deal with the next time it writes about the “barbarian offensive of Assad’s troops” in Syria’s fight against Islamists.

Sen. Cardin is still a decent person, so naturally he avoids calling for blood. Among his 10 recommendations, endorsed by the Democrats but not signed by any Republican, are the creation of a special interagency body under the president, increased support for “democratic values” around the world in order to combat Russian aggression (even though this has already been allocated $250 million), freezing “dirty money associated with the Kremlin,” the creation of an international coalition to combat cyberterrorism (Russian hackers are addressed in their own separate section), counter-financing “subversive activity against democracy” on the part of Russia in the form of support to nongovernmental organizations and various institutions. These organizations and institutions are called “soft power” by the West, but if Russia does the same thing it is called propaganda and information warfare. Cardin further recommends that social networks have a duty to disclose the sources of funding for Russian political and propaganda campaigns; that Europe reduce its dependence on Russian energy supplies (in particular, that Europe should not be allowed to build the Nord Stream II pipeline), etc.

And although Republicans do not support Cardin’s report for party reasons, there are no fundamental disagreements between the two parties when it comes to how they view Russia. You know what they say, that’s just how they see us. And in the foreseeable future, the U.S. will discuss strengthening sanctions, as well as generally confronting Russia, actions which will be carried out, more or less, according to the directions indicated above.

And any courses for studying the Russian language that are funded by Rossotrudnichestvo will readily be declared spy dens conducting subversive work.*

The two-house majority in Congress will try to make the process of preparing new sanctions as transparent as possible. The report, which points out key political and business figures connected with the Kremlin, also indicates the size and sources of their income, their fortunes, information about the assets of close and distant relatives, and information about their contacts with foreign companies. It will be presented to three committees in each of the two houses of Congress. In the event that sanctions are imposed, the assets of these individuals may not only be frozen, but confiscated – for the subsequent “return of illegally obtained assets to the Russian people.”

New rumors grow as they prepare their blacklist. At times it seems irrational. Will it be 50 people? Or 100? How about 1,000! Will the largest banks in the country, including Sberbank, (although, strictly speaking, it’s already under sanctions) be spared or not?

In fact, the specific entities and individuals on the blacklist are secondary to the fact that the sanctions exist at all. First, by law, sanctions are “viral.” So-called secondary sanctions can be imposed against any Russian or foreign companies collaborating with individuals or organizations on the sanctions list. The number of systemically important or key companies in Russia on the list is around 200. These account for three-quarters of the country’s economy. The imposition of sanctions against even part of this list may directly or indirectly affect all other economic entities. Second, the threat of imposing sanctions against a particular Russian company or large entrepreneur is sufficient enough. This makes all Russian businesses toxic in the eyes of many of their potential counterparts. In some way, these underlying suspicions will spread to ordinary people.

With Russian partners, and even ordinary citizens, some will simply prefer not to conduct business of any kind, rather than delve into the list of U.S. sanctions.

Third, new sanctions will probably be significant and rather painful, judging by the attitude of the American political class concerning the “Russian question.” Therefore, delving into the blacklist is rather pointless.

There’s no need to be alarmed by the cheap leaks in the media about this issue or to be frightened by the latest lists from “reliable, but anonymous sources.” It must be assumed that all of this is part of a new reality, which we will live in not just for a year or two, but possibly for decades. Therefore, it’s time to stop being so distracted by big geopolitics, where for the foreseeable future there is nothing but confrontation between Russians and the West. It won’t improve, and it is time to focus on our own country. Wherever possible, we must attract the resources, technologies and specialists from the West in order to create the most favorable conditions possible.

It’s time to reduce the attention that geopolitics commands in our public discourse. Its role is currently inflated, and suppresses the country’s serious domestic problems, making them a secondary concern. For the sake of current and future generations, discourse on internal development should be the main focus of the upcoming presidential election campaign, instead of “spiting Uncle Sam.” But will it?

We must move on from the assumption that sanctions will be lifted (or rather, that they will go away on their own), not even if we make concessions, or suddenly “return Crimea,” which one cannot imagine any Russian leader doing, but which will happen only when we can successfully develop in spite of the U.S., and become a self-sufficient economy. We must not only advance, but, as ironic as it sounds, we must also become open to those who want to do business with us. However, progress only implies openness.

If any of the individuals who compiled Cardin’s report seriously thinks (and let’s pretend we believe it) that he will live to see the day that the confiscated “assets gained illegally by Russian oligarchs” will be “legally returned to the people of Russia” restoring their trampled democracy, he is sorely mistaken. The previous wave of sanctions, which occurred during a period of falling oil prices when Russia was less prepared for them, showed not only the high adaptability of the Russian economy and institutions to life under sanctions, but also the political stability of the Russian regime, which the U.S. wanted to weaken. There were no significant concessions by the Russian government on issues pressed by the United States. There were no conspiracies of the elite against Putin, or any palace coup, as is common in Latin America. In fact, American sanctions have shown their relative effectiveness only in Latin American countries (except for Cuba and Venezuela, until now).

In the process of confrontation with the West, Russia is becoming an increasingly conservative country, both politically and culturally. It is also becoming cautious, if not hostile, to the West. Against the backdrop of its struggle against its “decadent westernization,” many parts of society are increasingly falling under the influence of archaic ideas, if not blatantly reactionary ideas. Insularity is becoming trendy.

Vacations abroad are already associated not with curiosity, a desire to see the world, with becoming immersed in different cultures and traditions. Instead, vacations abroad are associated with being “unpatriotic.” We seem to be recalling the customs of the Russian empire from the time of Pavel the First, when nobles were forbidden to travel abroad.

Here’s an important detail: Last year’s list of countries in which the Ministry of Internal Affairs was allowed to vacation contained 30 countries. This year there are only 13. Of all the “beach destinations,” the only ones on the list are Cuba, Vietnam and Abkhazia. The remaining options are post-Soviet states, not including the Baltic countries, of course.

Influenced by the struggle against sanctions, the economy will also move toward exclusion and opacity.

Selling amnesty through OFZ bonds** and avoiding passing through Euroclear (a company that specializes in settling securities transactions), as well as the classification of contracts as state defense or “dual-use” are the first steps in this direction. Next they’ll propose keeping all offers and customers a secret to prevent the enemy from knowing about them. And of course “public agents are foreign agents” that can “blow the whistle” to the West. And who else should you tell about the facts of high-level corruption?

Introducing sanctions by themselves, especially without thinking too hard about it, driven only by the desire to “punish Putin” for Donald Trump’s victory or for Ukraine’s sudden loss of Crimea in the form of an “associated loss” resulting from the West’s embrace of the “Maiden” protest, will push Russia to a state of being a social and political regime that, when compared to the system of power under the current president, will be what he, himself, called “an example of the Munich speech.” Even to Cardin, this will seem as close to enlightenment and a “standard democracy,” as possible, but it is actually no worse than the current Ukrainian government. However, when the enemy is cornered, distant agitators don’t always assess the possible consequences. Cornered, will the enemy humbly languish for decades, or will the enemy prefer a desperate breakout to the wild? The high price of such a jolt will have to be paid for not only by the one in the corner – “the one on the wrong side of history,” as our opponents think – but also by those who so persistently drove him into that corner. Strength is enough for a last hurrah.

*Translator’s note: Rossotrudnichestvo is the Federal Agency for the Commonwealth of Independent States, Compatriots Living Abroad and International Humanitarian Cooperation, a Russian government agency primarily responsible for administering civilian foreign aid.

**Editor’s note: OFZ bonds are Federal Loan Bonds introduced by the Russian government in 1995.