This report examines Russian aggression and election intrusion, how current and future sanctions can serve as a countermeasure, and how Europe can maintain a united front on sanctions even as the EU and the UK negotiate Brexit. The report also makes a series of recommendations for US and Europe on ensuring sanctions continue to be effective.
Policy leaders in the United States and in the European Union should take several steps to sustain the strategic utility of sanctions to their foreign policy posture as concerns with Russia’s international aggression, adventurism, and intrusions proliferate. These steps involve measures to sharpen sanctions as a policy instrument, making them more effective and targeted. The steps also involve measures to uphold and strengthen coordination on the craft and enforcement of sanctions to enhance the cogency of the measures and reduce the potential for evasion. Private sector leaders also have a role to play in ensuring that sanctions are clear, implementable, and effective. Specific recommendations for US policymakers, including the administration and Congress, as well as private sector leaders, are presented below. They are followed by recommendations for European policy leaders in Brussels, as well as member-state national leaders and private sector representatives.
Recommendations for Europe
- The European Union must significantly increase its understanding of private sector industry and financial institutions to more effectively design sanctions that achieve implementation goals.
- The UK Government, led by HM Treasury and the Foreign and Commonwealth Office, must bring forward the legal and policy architecture that ensures its post-Brexit sanctions’ influence and effectiveness.
- The UK Foreign and Commonwealth Office must dedicate itself to engaging with EU member states and Washington to ensure that the UK is not marginalised in future transatlantic sanctions dialogue and to persuade the EU of the merits of the UK’s position.
- With the private sector, the EU and UK must establish more effective partnership forums to ensure that the foreign policy goals of sanctions are effectively implemented. Specifically, government representatives can share case studies on suspected circumvention practices or corporate structure changes that are relevant to sanctions. Such forums would also help build confidence, facilitate the development of guidance, and help spread technical knowledge.
- Banking, energy, and other industry associations must play a more central role in informing members of their legal obligations to implement sanctions and informing national governments in Europe of the challenges faced by their members that undermine effective implementation, in order to inform future design.
- EU and UK national authorities for sanctions, the so-called competent authorities, must provide clearer guidance and more efficient and effective licensing to private companies in order to mitigate the unintended consequences that undermine effective implementation and the desired foreign policy outcomes.
- European enforcement agencies must significantly enhance their staffing and capabilities to ensure that guidance and licenses are provided in a timely fashion. Expanded skills, particularly in the areas of industry knowledge and languages, are also urgently needed. As related specifically to Russia, European enforcement officials should mandate that banks and nonbank financial institutions develop a better understanding of the business context, practices, and circumvention/evasion techniques.
- Both the EU and a future stand-alone UK must go beyond simply renewing existing sanctions against Russia, refining them to maintain pressure as Russian entities adapt to existing sanctions (e.g., via corporate restructuring) and reacting to the continued interference of the Russian state beyond its national borders.
Recommendations for the United States
- The US Treasury Department must enforce existing Ukraine-related sanctions on Russia, adding new companies and individuals to sanctions lists. This will add some financial pressure to existing sanctions and serve as a complement to the calls of senior administration officials for Russia to fulfill its Minsk agreement obligations.
- The US Treasury Department and law enforcement community must bring forward legal action against violators of Russia sanctions to signal to Russia, European allies, and companies that it takes a firm stance on enforcement. Wherever possible, US officials should attempt to coordinate such actions with their counterparts in the EU.
- The US Treasury Department must prepare and announce sanctions on Russian entities and instrumentalities involved in the Russian intrusion not only into the 2016 US election, but also into the elections of key US allies. This will signal to Russia, and other US adversaries, that the Trump administration will not tolerate interference into democratic processes.
- The White House should consider the establishment of new executive sanctions authorities, and other executive actions, to specifically expose and target Russian military support of the Assad regime.
- The US State Department must lead a US outreach effort to encourage EU partners to join the United States in crafting and implementing further, coordinated sanctions on Russia designed to target its intrusions into Western elections and its support for President Assad.
- The US Congress must convene further hearings on Russian aggression and threats to US interests, exploring the benefits of transatlantic coordination to counter such threats. It should summon the US administration to outline its administration strategy on engagement with Russia in such a hearing and urge the administration to vigorously implement its existing sanctions authorities to counter, in particular, Russian aggression in Ukraine.
- The US Congress should prepare new sanctions legislation to expand pressure on Russia for its cyber intrusions into US and other electoral processes and to target Russian financial and material support for President Assad. Congress should also consider measures that would progressively increase pressure on Russia under appropriate circumstances, such as by prohibiting lending to additional sectors of the Russian economy and carefully increasing sanctions on Russia’s unconventional energy projects.
- Banking-, energy-, and other industry associations, particularly those that represent multinational companies, should play a more active role in informing congressional and administration leaders of the unintended consequences of proposed and current sanctions measures, the ways in which sanctions affect various companies and jurisdictions differently, and private sector implementation challenges. This will help to inform successful, targeted, future sanction design.
The report’s authors are CNAS Adjunct Senior Fellow Peter Harrell; Director of the Centre for Financial Crime and Security Studies at RUSI Tom Keatinge; RUSI Research Fellow Sarah Lain; and CNAS Energy, Economics, and Security Program Director Elizabeth Rosenberg.
Published jointly by the Royal United Services Institute (RUSI) and the Center for a New American Security (CNAS) Energy, Economics, and Security Program
Centre for Financial Crime and Security Studies