Sanctions urged on Russian officials over abuses

Financial Times

The Obama administration is coming under pressure from Congress to support sanctions on Russian officials who are known human rights violators in return for repealing a cold war-era law that could limit bilateral trade after Russia joins the World Trade Organisation.

The White House is concerned that sanctions would harm a tentative thaw in relations with the Kremlin and is instead proposing the establishment of a foundation to promote democracy in Russia, according to people with knowledge of the discussions.

But analysts doubt such a foundation would be enough to placate Russia’s critics on Capitol Hill, especially with the expected return of Vladimir Putin – who has long been accused of leading an authoritarian state – to the presidency next year.

With Russia poised to join the WTO next year, the administration is urging Congress to repeal the 1974 Jackson-Vanik amendment. It gave Congress the right to certify the Soviet Union for most favoured nation trade status annually, based on Russian compliance in allowing Jews to emigrate.

Although Russia has been granted a waiver every year since 1992, Congress still views the amendment as a weapon for applying pressure on Russia, particularly over human rights issues.
“The concept of maintaining some linkage between Russian domestic politics and Russia’s trade relationship with the United States has very broad bipartisan support on Capitol Hill,” said Dimitri Simes, head of the Nixon Center in Washington.

But the Jackson-Vanik amendment must be repealed for the US to be able to benefit from freer trade with Russia once it joins the WTO. If it is not, US businesses will still face tariffs and be at a disadvantage to their international competitors.

Both Democrats and Republicans in Congress are suggesting that the amendment could be repealed if the White House backed the “Magnitsky Act”. It is named after lawyer Sergei Magnitsky, who died in a Russian jail in 2009 after accusing police of complicity in a $230m tax fraud. The bill, circulated by Ben Cardin, a Senate Democrat, proposes to blacklist Russian officials implicated in human rights abuses such as Mr Magnitsky’s death.

The White House is opposed to such legislation, arguing that it already has full authority to blacklist Russian officials. Indeed, many of the officials accused of putting Magnitsky behind bars are already on a visa ban list, according to the state department.

On Monday Mr Magnitsky’s former employer Hermitage Capital, a formerly Russia based fund which has been on a two-year crusade to pressure Russia to investigate the lawyer’s death, released prison documents that showed Mr Magnitsky had been beaten with a rubber truncheon on the day he died. It also released testimony by a civilian doctor who said he had found Mr Magnitsky dead on the floor of his cell, contradicting the official explanation that Mr Magnitsky had died in the hospital.

Hermitage also released a memo that had been suppressed by Russian authorities in which a police detective recommended the opening of murder investigations on November 19 2009, three days after Mr Magnitsky died.

While the White House has sought to pressure the Kremlin to make progress on investigating crimes by Russia’s notoriously corrupt police, they argue that putting sanctions into law would inflame Russian opinion. The White House has also been warning lawmakers that US businesses such as Nike will be at a disadvantage to rivals such as Adidas if Jackson-Vanik is not abolished.

“You’d have a very strange situation where the rest of the world benefits from Russia’s entry into the WTO and US companies don’t,” said Cliff Kupchan, a Russia expert at the Eurasia Group political risk consultancy. “But that sort of business train wreck is a definite possibility right now,” he said.

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