20 years under Putin: a timeline

On January 29, the U.S. Treasury is set to submit the so-called “Kremlin Report,” a highly anticipated list of Russian individuals facing sanctions under Section 241 of the Countering America's Adversaries Through Sanctions Act (CAATSA). The report is already causing anxiety in the Russian elite. Olga Khvostunova spoke with Anders Åslund, senior fellow at the Atlantic Council, co-author of the report “How to Identify the Kremlin Ruling Elite and its Agents.”


Anders Åslund, a resident senior fellow in the Dinu Patriciu Eurasia Center at the Atlantic Council.


Olga Khvostunova: In your report published by the Atlantic Council you put forward seven criteria for selecting Russian individuals who could be put on the CAATSA list. You also suggested that the list has to be small, but at least 40 people. As Kommersant recently reported citing sources in the U.S. government, there might be 50 people or even 300 with family members. How accurate is this estimate? And how many would suffice, in your opinion?

Anders Åslund: 40-50 people is what I think would be most effective. It should be a “shame list.” One wants to say that these are the bad people. And if it’s 200, then it's sort of everybody. You are probably aware of the Putin List adopted at the Free Russia Forum in Vilnius. It’s a list of 225 people. But the criteria there are quite different. These are people who have committed a crime according to the Russian Criminal Code. But if you get 200 people, you have two risks. One is that you may get lots of “small names”—people who are not known and not really important. The other risk is that you may end up getting all the rich Russians. The fundamental question is: Do you go after people close to the Kremlin or do you go after rich Russians in general? We are very strongly in favor of only going after those close to the Kremlin—people who have made their money through the Kremlin or are cooperating commercially with the Kremlin.

OK: In terms of your criteria, could you give specific examples of who may be added to the list? For instance, one of the categories in your list is senior political figures. Does that mean figures like Minister of Foreign Affairs Sergei Lavrov? Or is it someone like Foreign Intelligence Service head Sergei Naryshkin?

AA: Naryshkin is already sanctioned. National security officials are all sanctioned. Lavrov, of course, is not sanctioned. But if you look at all the categories, you will see that we have not emphasized state officials. One group includes people who are organizing criminal activities on behalf of the Kremlin and making money on them. That is people like Konstantin Malofeyev. Another category is the “cronies”: the Rotenbergs, Timchenko, Kovalchuk. They are already sanctioned. Then you also have the sons of the cronies and other top officials who have gained billions and high positions. Apart from Igor Rotenberg, none of these “golden boys” has been sanctioned. This group should be named. There are state enterprise managers who are tapping their companies' money for the benefit of certain people close to the Kremlin. Then there is this category of people who are holding money for Putin. Some of this “Putin group” are people like Timchenko, the Rotenbergs, Kovalchuk; others are people like Petr Kolbin, who is sanctioned, Sergei Roldugin, and a few others.

OK: What about the “oligarchs,” who, as you describe them, are “profiting greatly from direct business with the Kremlin.” You say some of them appear on the Russian Forbes list, which is pretty large. Many names on that list have been associated with Putin for years. Can you be more specific as to who would fall under this category? Say, oligarchs like Alisher Usmanov, Oleg Deripaska, Mikhail Fridman, Roman Abramovich?

AA: I think certain people [from this list] would be sanctioned. But I am urging caution. There are several cases when people made their money first—and I don't want to mention their names here—but were then forced to pay massive tributes to the Kremlin. That is extortion. And we should not punish the victims. Other people were not that rich before [Putin came to power], but became far richer thanks to the Kremlin [under Putin]. One needs to distinguish. This is the most difficult [part], because from the outside it is very difficult to establish how these rich people actually make money.

OK: Which brings me my next question: Do you know how these people are being identified by the U.S. Treasury, especially in these sensitive cases? What kind of information are the Treasury officials using? Does it come from classified reports or from open sources? What are they basing their judgment on?

AA: The Treasury has an intelligence unit, and they are very good, they have good information. There is lots of information that they label as “verifiable.” Although this [list] is not sanctioning, OFAC is using the same criteria [to identify these people] as when they sanction somebody. Even if OFAC doesn't show this information, they have it. The main source that has not been fully utilized is the Panama Papers that came out last April. In fact, Russian Forbes contains lots of information. And when you look at a longer period, Vedomosti has lots of information that is publicly available. Of course, there is also intelligence from the West about which I am not informed. Russia, really, is quite an open book. It is the West that is closed in this regard, with all these offshore havens. And the worst cases are the United States and the United Kingdom.

OK: You said this list does not mean sanctioning by OFAC. What are the concrete measures that are being applied against these people? Your colleague Daniel Fried said in an interview that these measures involve financial restrictions, which is a step short of actual sanctions. So what does this mean, exactly?

AA: It’s just naming names, [to begin with]. Sanctions can be pursued next. But in practice, everybody we mention on this list will find him or herself closed out of the U.S. banking system. No U.S. bank and, probably, no Western European bank, will want to deal with a person on this list, because their compliance departments will understand that this person is likely to be sanctioned.

OK: What do you anticipate this report will achieve? How do you expect the Kremlin and people close to Putin will react to this shaming list?

AA: What this list should do is provide the right incentives—that you should not try to be close to the Kremlin, that doing bad things with the Kremlin has its risks. Putin reacted strongly to the Magnitsky list and the sanctioning of his friends in March 2014, while adopting a relatively practical attitude to the sectoral sanctions that were imposed in July 2014. He introduced Russian counter-sanctions. So Putin thinks it's good to have a more protectionist model through sanctions, to have more state control. What he dislikes is when people are exposing his friends. So go after his friends. The Magnitsky list really hit hard, and it hit much harder than we realized. The Panama Papers established that Putin himself, in all probability, [pocketed] $800,000 from the Magnitsky loot. That money was transferred to Roldugin. While ordinary sanctions and sectoral sanctions reinforce Putin's control, [personal sanctions] are targeted much more against his system. And this is the way to go. Sanction people who do bad things in Russia, not Russians.

OK: Do you think the people who end up on this shaming list will distance themselves from Putin? If they are so involved in his business, isn’t it unlikely that will happen?

AA: This is why there should be a limited number of people. It should serve as a warning to others not to get that close.

OK: Do you expect any retaliation from the Russian state? Will the Kremlin take any steps to avenge these measures?

AA: The short answer is that the Kremlin can't do very much.


This interview was originally published in Russian at mbk.media. It was slightly edited for clarity.