The Daily Beast reveals Treasury Secretary Steven Mnuchin blurted out a promise during congressional testimony last January that led to the U.S. implementing sanctions against Oleg Deripaska, one of Putin's closest allies who also is connected to Paul Manafort.
“There will be sanctions that come out of this report,” Mnuchin said—a surprise statement, because while Congress had ordered the department to create a report on Russian oligarchs, it didn’t require that any sanctions be imposed based on it.
Mnuchin’s slip-up forced Treasury officials to scramble to come up with a plan that would match the secretary’s under-oath statement, according to four congressional sources directly involved in the sanctions process. And in April, the department sanctioned Russian billionaire Oleg Deripaska and his aluminum company Rusal.
According to those sources, Treasury broke protocol and did not coordinate closely with other departments to properly scrutinize Deripaska and evaluate the impact of the sanctions—which roiled global markets and caused aluminum prices to skyrocket, mainly affecting U.S. partners in Europe.
Now, Mnuchin is backpedaling and considering lifting the sanctions, although Treasury officials deny that they didn’t understand what punishing Deripaska would cause.
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Nearly two years after the 2016 transition—when dozens of staffers involved in sanctions left the government—the inter-agency process to draft, implement and enforce sanctions is “broken” and a “complete mess,” said a congressional source who works directly with the Trump administration on the issue.
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“There’s a civil war inside the administration over Russia policy,” Sen. Chris Murphy (D-CT), a member of the Senate Foreign Relations Committee, said in an interview. “There are some really strong voices in the State Department that want us to push back more on Russia, that want the president to use the sanctions policies. But they’re fighting the president.”
The current sanctions regime has done little, if anything, to change Russian behavior, lawmakers told The Daily Beast. And the Trump administration has not developed a cohesive strategy to protect U.S. national security interests from the growing threat emanating from the Kremlin.
“Why are we letting them push us around? How are they getting away with this?” Sen. Ron Johnson (R-WI), who recently returned from a trip to Moscow with some colleagues, said in an interview. “I think we just really don’t have the kind of confident response or coordinated response.”
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With the 2018 elections rapidly approaching, lawmakers want to move quickly on legislation that would sanction Russia harder than ever before.
But their efforts are being stymied by a White House that is desperately trying to maintain the image that the U.S. is on a path to restoring relations with the Kremlin, current and former officials said ...
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“The Kremlin doesn’t really care about sanctions,” one source with first-hand knowledge of the Russian international economic strategy told The Daily Beast. “Putin makes complaints about the sanctions in the press to make headlines but really they aren’t hurting Russia in a way everyone thought they might.”
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Last summer, the House and Senate passed with overwhelming bipartisan majorities a tough Russia sanctions regime that gave the administration little discretion on implementation. Democrats and Republicans have been engaged in a heated, months-long back-and-forth with the administration over what they view as its unwillingness to fully implement the Countering America’s Adversaries Through Sanctions Act (CAATSA). And instead of fully implementing it, the White House has relied on previous executive orders, some of which were issued by Obama.
Murphy said plenty of Trump administration officials are in favor of implementing tough measures against Russia. However, there’s no telling when—or if—the White House will act on their recommendations, he said.
“There will be these breakthrough moments where the White House listens to the… hardliners. But it’s really hard to predict when those moments are going to come and whether they’re going to last,” Murphy told The Daily Beast.
Full story: How Mnuchin’s Blunder Led to Sanctions Against Putin Oligarch Oleg Deripaska (The Daily Beast)