Senate Takes on Rusal Sanctions
The Senate voted 57-42 to proceed on a resolution of disapproval of the Trump administration's plan to lift sanctions on Russian aluminum producer Rusal and related companies. Minority Leader Chuck Schumer, D-N.Y., argued before the vote that the resolution is not a political stunt, as Senate Majority Leader Mitch McConnell, R-Ky., has alleged. He accused the administration of making its announcement before the Christmas holiday "hoping no one would notice."
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Schumer said the Treasury Department's deal only reduced Russian oligarch Oleg Deripaska's stake in the companies to 45 percent, and allows his ex-wife and father-in-law to continue with their combined 7 percent stake. "Many U.S. companies are heavily influenced by an owner who controls much less than a 45 percent share," Schumer said in a speech on the Senate floor. "Why didn’t they reduce it to 10 or 15?" He said that Russian "President [Vladimir] Putin’s government, one of Russia’s largest banks, and the Russian economy have a direct interest in sanctions relief for Deripaska’s companies. Why is the Trump Administration proposing sanctions relief when President Putin has not yet made any move to curtail or constrain his malign activities around the globe?"
McConnell, who led an unsuccessful move to quash the disapproval motion, called it a "narrow case" of career civil servants at the Treasury Department implementing Congress's will on sanctions on Russian oligarchs. He also noted that European allies do not support the sanctions. Since his effort to kill the resolution failed, the Senate will proceed with further votes on the sanctions. Although the motion to proceed only needed 51 votes, there will be a later vote that will require 60 votes.
Sen. Chris Murphy, D-Conn., who supported the motion, said in a hallway interview with International Trade Today before the vote: "It's very curious why the Trump administration has bent over backwards to try to help Deripaska in this way. They have showed zero concern for international trade markets until it seemed to be very important to one certain Russian oligarch. I think it would be wise for us to implement the sanctions."
He acknowledged that implementing the sanctions would be difficult for European buyers of the company's aluminum, and there could be unintended consequences, with more demand being met by Chinese producers. "There's no way to do this without it being messy. I just don't think this is the right deal. This seems to be way too friendly to Deripaska," he said. "There's always reasons not to do sanctions. The way in which this seems to allow Deripaska to seemingly effectively continue to control his companies, sends a very backward message."
The ambassadors for Austria, France, Germany, Ireland, Italy, Sweden, the United Kingdom, and the European Union sent a letter to Schumer on Jan. 11 that said the fact that the bite of the sanctions has been delayed has been helpful for European aluminum smelters and buyers, but even so, aluminum "plants in Austria, France, Germany, Ireland, Italy, Sweden, and the United Kingdom have faced increased prices and significant challenges in maintaining their daily operations, securing new sales contracts and renewing existing contracts with longtime customers." They said delisting Rusal and related companies "will safeguard these plants and the livelihoods of 75,000 workers across the European Union (2,600 in four EU alumina refineries, 13,000 in [aluminum] smelters and 60,000 in related manufacturing facilities)."
Sen. Marco Rubio, R-Fla., who was one of 11 Republicans who voted to proceed, told ITT before a luncheon at which Mnuchin spoke to Republicans that he had not decided how to vote on the resolution. "I've been digging through it for much of the last three days. I have some concerns and some questions. One is, how do we ensure compliance, is that going to be certified to Congress on a regular basis? And the other is [about] the structure of the deal itself, I mean, I still have some questions about exactly who's going to control the entity that controls Rusal."