The Cable

Nobody Understands the Latest Russian Sanctions Tweak, But Everybody’s Riled Up

Especially in Russia, where some say the technical tweak is step one in a new alliance.

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When the Treasury Department issued a highly technical revision to sanctions on Russia Thursday morning, the reaction online was swift, merciless, and wrong.  

Lawmakers, scholars, and even former Treasury officials thought President Donald Trump had just eased penalties on Moscow, imagined payback for the election meddling. But in fact the modification announced Thursday was a long-contemplated change to deal with unexpected consequences of slapping sanctions on the Russian security service, or FSB.

In December, then-President Barack Obama hit the FSB in retaliation for the spy agency’s hacking and leaking campaign during the 2016 election. The FSB doesn’t just spy: It also regulates the import and sale of products featuring encryption technology, like Apple iPhones. Obama’s sanctions prevented American technology companies from acquiring the necessary licenses to sell their products in Russia.

So on Thursday, the Treasury Department’s Office of Foreign Assets Control issued a revision. American technology companies can now buy the necessary licenses — at a value of up to $5,000 — from the FSB in order to sell their products in Russia.

But on both sides of the Atlantic, that technical adjustment has been interpreted as an easing of sanctions. Many Americans were aghast that Trump would dial back the pressure on Moscow; some Russians viewed the fiddling as the first step in the forging of a grand alliance to fight terrorism.

“Putin’s thugs meddle with an American election, and President Trump gives them a thank you present,” House Minority Leader Rep. Nancy Pelosi (D-Calif.) said in a statement. “I have been asking the same question for awhile: What do the Russians have on President Trump?”

“Relaxing sanctions was a terrible idea when it was first floated by Trump’s campaign, and it is an even worse one now as European leaders wonder whether the Trump Administration shares its predecessors’ commitment to NATO,” said Rep. Adam Schiff (D-Calif.), the ranking Democrat on the House Intelligence Committee.

The minor move elicited strong reactions in Moscow, too — but of a different kind.

Nikolai Kovalyov, a former FSB director who now serves in the Russian Duma, said the move heralded the beginning of a rapprochement between Russia and the United States. “This shows that actual joint work on establishing an anti-terrorism coalition is about to begin,” Kovalyov told the TASS news agency. “This is the first step on the way leading to cooperation in the war on terror.”

Trump, meanwhile, appeared to have been completely blindsided by the new policy, telling reporters Thursday, “I haven’t eased anything!”

Obama first slapped the FSB with sanctions in December, in retaliation for its campaign to hack into the computer systems of the Democratic Party and leak sensitive documents. Whether Trump will preserve those sanctions represents a key question as he seeks closer relations with the Kremlin, including a possible alliance in fighting the Islamic State. There are a whole slate of other economic sanctions the U.S. maintains on Russia, fruit of the illegal annexation of Crimea in 2014, that Trump has also suggested rolling back.

Thursday’s announcement from the Treasury Department appears to have caught the White House by surprise and highlights the state of disarray within the Trump administration as it continues to staff key posts and get up to speed on government initiatives.

Though the policy change will have little substantive impact on the American sanctions regime against Russia, the confusion surrounding the tweak inevitably plays into Putin’s hands.

“Because it’s so sensitive and the issue is so heated, it’s already become a propaganda victory for Putin,” one former Treasury Department official said.

DMITRY ASTAKHOV/AFP/GettyImages

Elias Groll is a staff writer at Foreign Policy covering cyberspace, its conflicts, and controversies. @eliasgroll

Robbie Gramer is a diplomacy and national security reporter at Foreign Policy. @robbiegramer

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