Republican senators protect Trump administration plan to lift Russian sanctions

US Senate Majority Leader Mitch McConnell (R-KY) speaks to Capitol Hill reporters following weekly Senate policy lunches in Washington on Jan 15.
US Senate Majority Leader Mitch McConnell (R-KY) speaks to Capitol Hill reporters following weekly Senate policy lunches in Washington on Jan 15.PHOTO: REUTERS

WASHINGTON (WASHINGTON POST) - Republican senators on Wednesday (Jan 16) successfully defended the Trump administration's plan to lift sanctions on companies controlled by a Vladimir Putin ally - despite the defection of nearly a dozen Republicans who broke ranks to vote with the Democrats.

The Democratic effort to block the relaxation of sanctions on the companies of Russian billionaire Oleg Deripaska fell just a few votes shy of the 60 needed to advance the resolution to a final vote, even after attracting the support of 11 Republican senators, including Marco Rubio of Florida, Josh Hawley of Missouri and Ben Sasse of Nebraska.

The defeat means the Treasury Department is likely to lift the sanctions in the coming days. The Treasury Department, Mr Deripaska and his companies didn't respond to requests for comment.

The United States sanctioned Mr Deripaska and his companies in 2018, among a group of Russian elites who the US said had furthered "the Kremlin's global malign activities, including its attempts to subvert Western democracy".

 
 
 

Some Democrats said they were wary about relaxing sanctions on Mr Deripaska's companies, in part because of his ties to former Trump campaign chairman Paul Manafort, who pleaded guilty last year to conspiring to defraud the US and obstruct justice in the investigation of special counsel Robert Mueller.

Mr Deripaska helped fund consulting work Manafort did for a Ukrainian political party, invested in a Manafort investment fund and lent Manafort millions of dollars, according to court records.

The Treasury Department in December proposed lifting sanctions against the companies while leaving those against Mr Deripaska intact, after protests from European countries that the company sanctions were causing havoc in aluminium markets.

Treasury notified Congress on Dec 19 that it intended to lift the sanctions because Deripaska had agreed to reduce his stake in En+ Group, the holding company that controls the aluminium giant Rusal, from about 70 per cent to 44.95 per cent, and to limit his voting shares to 35 per cent.

This would protect the companies "from the controlling influence of a Kremlin insider", which had been the goal of punishing the firms, Treasury said.

But Senate Democrats balked at the plan and tried to stop it through a resolution of disapproval. Some Republicans agreed, breaking with the Trump administration and Senate Majority Leader Mitch McConnell.

Republican Senator Susan Collins was one such defector.

"I'll vote to disapprove Treasury's easing of sanctions on Russian businesses involving oligarch & Putin ally Oleg Deripaska," Ms Collins tweeted before voting with Democrats to try to block the Treasury action. "He still would maintain significant control given his ties to Putin. Easing the sanctions sends the wrong message to Russia & to Deripaska."

Republican Senator Steve Daines said he supported the resolution to "keep pressure on the Kremlin for their aggressive actions toward Eastern Europe, the Middle East and around the world".

Mr Rubio criticised the Treasury Department's plan to shift some of Mr Deripaska's shares to a Russian state-owned bank.

Under the Treasury plan to reduce Mr Deripaska's ownership, Russia's state-owned VTB Bank or another Treasury-approved entity will take ownership of a block of his shares in En+ that had been pledged against a loan.

The Obama administration added VTB Bank to a sanctions list in 2014 as punishment for Russia's invasion of Ukraine. The Trump administration issued sanctions against VTB's chairman, Mr Andrey Kostin, last year as part of the actions against Mr Deripaska and others.

"Under this agreement, Oleg Deripaska loses shares but not influence or effective control of Rusal," Mr Rubio said on Wednesday. "Between his 35 per cent of voting shares and those held by others close to him, including 7 per cent by Putin's bank, his control over the company remains."

Treasury Secretary Steven Mnuchin disputed this criticism, saying Mr Deripaska's influence will be curbed. Mr Mnuchin said that career Treasury officials who had worked at the agency for more than 20 years negotiated the deal to reduce Mr Deripaska's ownership, and that it wasn't a political decision or a favour to Mr Putin to lift the sanctions.

"The only reasons why the companies were (sanctioned) is because they meet certain ownership and control by Deripaska", which will be reduced, Mr Mnuchin told reporters on Tuesday.

Mr Schumer and other Democrats raised concerns about Mr Deripaska's ties to Manafort.

"At the time when it's becoming public how deep Deripaska's ties are to Putin, organised crime, but also Paul Manafort, to do this would be a disgrace," Mr Schumer said on Tuesday.

The Treasury Department last year said Mr Deripaska has been "investigated for money laundering, and has been accused of threatening the lives of business rivals" and having ties to organised crime.

Mr Deripaska has denied those allegations. He and his companies did not respond to requests for comment.

Washington's sanctions on Rusal and En+ Group clobbered the oligarch financially, sinking the market value of his publicly traded companies. En+ Group lobbied the Trump administration heavily to lift the sanctions.

The British chairman of the company, Gregory Barker, hired Mercury Public Affairs and former US Senator David Vitter to try to gain the support of the State Department and other agencies.