Trump’s stance on Russia sanctions angers both Moscow and Washington

MOSCOW — The Trump administration managed the unusual feat this week of outraging both Russia's leaders in Moscow and Russia's biggest critics in Washington with its handling of a new sanctions law intended to punish the Kremlin for interference in the 2016 U.S. elections.

The State Department angered members of Congress by announcing Monday that it did not plan to impose new sanctions called for in a measure that President Donald Trump reluctantly signed into law last year. And the Treasury Department angered Moscow later in the day with a new name-and-shame list identifying 210 senior Russian political and business figures.

The twin announcements left a muddled impression of how Trump plans to approach the Kremlin in his second year in office even as investigators search for evidence of collaboration between his campaign and Russian agents. His domestic opponents complained that once again Trump seemed to be in thrall to Russia, while the Kremlin complained that he was a captive of what it described as the American deep state.

"This is definitely an unfriendly act," President Vladimir Putin said when asked about the Treasury Department list during a campaign event in advance of Russia's own presidential election in March. "It is complicating Russian-American relations, where the situation is already hard, and is definitely harming international relations in general."

Putin said Moscow had pondered virtually breaking ties with Washington over what is known in Russia as the "Kremlin report," but decided against it. "We were prepared to undertake retaliatory steps, and quite serious ones too, which would cut our relations to zero," he said. "But we will refrain from such steps for the time being."

On Capitol Hill, lawmakers criticized Trump for not imposing additional sanctions on Russia as envisioned in the legislation passed over his objections by veto-proof bipartisan majorities in both houses last August.

"It is a grave breach of President Trump's responsibilities to reward President Putin by inaction for his intervention in an American election — it represents nothing less than appeasement for an attack on our country's democracy," said Rep. Adam Smith, D-Wash., the ranking Democrat on the House Armed Services Committee. "It is time for us to stand up for our country. We cannot let these actions to continue to go unpunished."

Under the new law, Trump faced two deadlines Monday. The law required him to impose sanctions on large purchasers of Russian military equipment but granted exceptions. The State Department cited those exceptions in announcing that it would not take new punitive actions, arguing that the law itself was already deterring such purchases.

The law also required him to produce a list of "senior political figures and oligarchs" in Russia. No actions were to be taken against those identified on the list, but it was seen as a way of sending a signal to those close to Putin that they had much to lose if Moscow does not pull back from its intervention in Ukraine and its interference in Western elections.

Responding to criticism, the Trump administration insisted Tuesday that it was not finished taking action under the new legislation. Grilled by Democrats during a congressional hearing, Treasury Secretary Steven Mnuchin rejected suggestions that the administration was delaying action on Russia.

"I don't think in any way we're slow-walking the report that we delivered last night," he said at a Senate Banking Committee hearing on financial stability.

Mnuchin insisted that the legislation required only that his department produce a report by Monday, and that additional action would be taken. "There will be sanctions out of this report," he said.

The Treasury list, released just before midnight in Washington, included almost the entire roster of senior Russian government officials as well as 96 billionaires. The document said that inclusion on the list did not mean involvement in "malign activities." The list has a long, complicated title that included a numerical reference to the section of the law requiring its publication.

Dmitry Peskov, Putin's spokesman, called it an "enemies list" and said the report could unfairly tar those on it. "The fact that this list was made public can potentially do damage to the image and reputation of our enterprises, businessmen, politicians and officials," he told reporters, calling the roster "unprecedented."

"De facto everyone is called the enemy of the United States," Peskov said. "If you read the text and the title of this document, all this is done in accordance with the law on countering the enemies of the United States."

Government figures on the list include more than 40 of Putin's closest advisers; all 30 members of the Cabinet of Ministers, including Prime Minister Dmitry Medvedev; the heads of many important state agencies and state-run companies; and other key political figures.

Perhaps the most prominent government official not on the list was the central bank governor, Elvira Nabiullina. At least 22 people on the list had already been placed under U.S. sanctions by the administration of President Barack Obama, which said they had played key roles in fueling the Ukraine crisis.

The list was met with a combination of disbelief and derision in Russia, with mocking comments ricocheting around social media. Some joked that it had taken the Trump administration six months to photocopy the Forbes list of Russian billionaires, since they were all included, as well as the link detailing senior officials on the Kremlin website. Treasury officials confirmed that they did rely on Forbes, among other publicly available sources.
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"The list looks like the book 'Who's who in Russian politics,'" Arkady V. Dvorkovich, a deputy prime minister included on the list, was quoted as saying by the Interfax news agency. Like many, he shrugged it off as merely a list of names. "There is no need for action now."

The 96 oligarchs were Russians each worth more than $1 billion, including well-known people like Mikhail Prokhorov, owner of the Brooklyn Nets basketball team, and Eugene Kaspersky, whose anti-virus technology firm has been under fire in the West over allegations that it cooperates with Russian intelligence. One man on the list, Kirill Shamalov, who married one of Putin's daughters, might no longer be in the billionaire's club since they have recently split, Bloomberg reported.

Kaspersky Labs issued a statement objecting to its founder's inclusion, saying the company did not have political influence, and Kaspersky commented on his own Twitter account, emphasizing that the company helps protect customers "regardless of their origin."

Businessman Gavril Yushvaev, who said he had invested $500 million in Western startups, told the online news website The Bell that his overseas partners had been calling to say that they would ignore the list. "Everybody needs people who can invest, regardless of these lists," he said. "I am not upset. Whatever happens, happens."

The governor of St. Petersburg, Georgi Poltavchenko, said through a spokesman on Twitter that his inclusion was a sign that he was doing a good job.

The announcement said there were more names on a classified annex provided by the Treasury Department, including lesser officials or businessmen worth less than $1 billion.

The U.S. ambassador to Moscow, Jon M. Huntsman Jr., portrayed it as a simple step required by the law. "I would say that we should not allow emotions drive this issue," he told the Echo of Moscow radio station. "It isn't new sanctions. It is simply a report."

Sen. Chuck Schumer, D-N.Y., the Democratic minority leader, said Tuesday that Trump was effectively circumventing the law and "afraid to sanction Putin" and his associates.

"If President Trump wishes to save his presidency from the shame of having failed to address one of the gravest threats facing our country, he would announce this evening in no uncertain terms that he was sanctioning President Putin," Schumer said on the Senate floor, referring to the president's State of the Union speech Tuesday evening. "Any other president would have already made it their priority to take decisive action in their first year."

But Trump got support from an unlikely quarter, Sen. Bob Corker, R-Tenn., chairman of the Foreign Relations Committee who has broken with the president before. "On the whole, it is clear the administration is working in good faith and I am committed to applying pressure, as needed, to ensure further implementation," Corker said.

Ivan Nechepurenko and Sophia Kishkovsky contributed reporting from Moscow, and Alan Rappeport from Washington.