The Oligarch List That Wasn’t

The long-awaited “oligarch list”—a reporting requirement mandated by the Countering America’s Adversaries Through Sanctions Act (CAATSA), passed and signed into law by President Donald Trump on August 2, 2017—was published a few minutes before midnight last night, a very short time before the official deadline for releasing it was set to expire.

Part of CAATSA’s intent was to deter meddling by Russia in future elections. Section 241 of the law asks that the report list both government officials and “oligarchs” that are “close” to the regime, and to some extent corrupt. The methodology for determining who belongs on the list is vague—left up to Treasury to figure it out—but it’s clear that it was supposed to be rigorous.

The Trump Administration delivered this document. Its preamble states that “senior political figures” were chosen simply because they either worked in the Presidential Administration or the Russian Cabinet. Members of the State Duma and the Federation Council were also said to be included. How was the list compiled? It appears to have been a cut-and-paste job: someone opened up the Russian Government website and used the personnel chart for those serving under the Prime Minister. A similar process appears to have been used for Putin’s Presidential Administration. How are these people linked to Putin? They obviously work for him.

As for the most eagerly anticipated part of the list—the oligarchs—the preamble says “reliable public sources” were consulted, and that everyone on the list is said to have an estimated net worth of $1 billion or more. By mid-day today, Treasury officials had confirmed something I immediately noticed late last night: the list was lifted directly from Forbes’ annual list of the richest Russians—numbers 1 through 96, listed alphabetically.

Several obvious mistakes in the list suggest that not even the minimum due diligence was undertaken in compiling it. For example, Putin’s son-in-law Kirill Shamalov is not worth more than $1 billion any more. According to a recent Bloomberg story, Shamalov first catapulted into the ranks of billionaires when he married Vladimir Putin’s daughter Katerina Tikhonova and received shares in the Sibur oil company in 2014. Now, with rumors of him having finalized his divorce, it appears he has been forced to give up his stake, and is worth no more than $800 million, according to Bloomberg Billionaires Index. The Bloomberg report came out five days ago, which should have been more than enough time for administration officials to amend the list, given that the list is built around the single criteria of crossing the $1 billion threshold.

Similarly, the names of Arkady Rotenberg and Gennady Timchenko, who were already sanctioned by the U.S. government three years ago, also appear on the list. Here, at least, the list’s compilers show some self-awareness: they put an asterisk next to their names, indicating their inclusion is redundant.

So what does this list signal to the Russians on the receiving end?

The 210 listed people represent an impressive number that could indeed scare Russian elites if the Treasury had opted to put sanctions on some of them—even ten people chosen at random from the list would have done the trick. Of course, the preamble to the list plainly asserts that “this is not a sanctions list” and that the report “does not constitute the determination by any agency that any of those individuals or entities meet the criteria for designation under any sanctions program.” The list, they are saying, is just a list of some people who either work in the Russian government or might be worth more than $1 billion.

And thus, instead of using the list as a means of deterring further bad behavior by the Russians, the list itself was as clear a sign as you could send of there being no intention to do anything at all. That is the real policy the White House is implementing towards Russia—appeasement, not deterrence. (This was underlined by the fact that the Trump Administration willingly chose not to expand sanctions on people transacting with defense and intelligence sectors of the Russian government, as mandated by another part of CAATSA.)

The message was received loud and clear by its main addressee, Vladimir Putin. Russia’s President joked that he regretted he himself did not end up on the list, and went on to say that Russia would not take any steps in response for now. The last time Russia refrained from retaliating was in December 2016, after the Obama Administration expelled 35 Russian diplomats. It turned out later that immediately after the expulsion, General Michael Flynn reassured the Russian Ambassador Sergey Kislyak in a phone call that the Trump Administration would review Russian sanctions as soon as it took office.

Along with the unclassified, published list, there is a classified “annex” that was also prepared by Treasury. Secretary Mnuchin, grilled by Senators during a hearing earlier today about the rollout, referred to the annex and insisted that “there will be sanctions that come out of this report.” The preamble vaguely gestures at the fact that the annex “may” include people not on the main list, and that those people “may” be subordinates and have less than $1 billion to their name. How many people remaining on Forbes’ list are in danger? 25? All of them?

We will see if anything comes of Mnuchin’s pronouncement. But even if meaningful additional sanctions come out, the deterrent effect of having a list of potential targets carefully spelled out, hanging like a sword over Putin’s cronies, has been squandered. Whether this is due to incompetence or on purpose, we’ll leave to the reader to judge.

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