Who is affected by the new US sanctions?

The United States imposed blocking sanctions against businessman Vladimir Potanin, his holding company Interros and Rosbank, half of which she owns, as well as structures VTB. This follows from the message of the department of the US Treasury responsible for enforcement in the field of sanctions – OFAC. Also on the sanctions list (SDN List) was Potanin’s wife Ekaterina, children from a previous marriage – Ivan and Anastasia, and the businessman’s yacht Nirvana.

Potanin, through Interros, owns a 36.14% stake in Norilsk Nickel, the world’s largest producer of palladium and high-grade nickel. OFAC separately explained that the sanctions do not apply to this company and, according to information available to it, as of December 15, Norilsk Nickel is not owned by more than 50% of any sanctioned person.

Nickel exports from Russia to the United States for the first nine months of 2022 amounted to $265 million, according to UN Comtrade data. This is 87% more than in 9 months of 2021, when exports were $142 million. But sales to this country account for a small share of Norilsk Nickel’s revenue – in the six months of 2022, the company earned $8.98 billion.

Potanin was included in the sanctions lists of Canada in April 2022 and the UK in June. Vedomosti sent a request to representatives of Interros and Norilsk Nickel.

The second largest shareholder of Norilsk Nickel is UC Rusalwhich owns 26.25% of the company. UC Rusal as a key shareholder, he is interested in maintaining the stability of Norilsk Nickel,” Elena Bezdenezhnykh, deputy director general of UC Rusal and member of the board of directors of Norilsk Nickel, told Vedomosti.

“We believe that the absolute priority of the current management of the MMC should be to reduce sanctions risks,” she said. – UC Rusal not under sanctions, so his presence as a shareholder of MMC will help maintain the stability of Norilsk Nickel.” UC Rusal will continue to work in this direction in the interests of Norilsk Nickel, shareholders and all employees of the company, added Beznadezhnykh.

UC Rusal – the world’s largest aluminum producer outside of China – was itself under US sanctions for several months in 2018. In April of that year, the company was placed on the US SDN sanctions list following its founder and then major shareholder, Oleg Deripaska.

As a result, international traders stopped buying raw materials and aluminum UC Rusaland transport companies to transport its products. Then aluminum prices soared to six-year highs, to $2,400 per ton. In January 2019, Washington completely lifted sanctions on the company. To do this, Deripaska had to reduce his stake in Rusal En + Group, which controlled UC, from 70% to 45%.

The current US sanctions are more significant than those previously imposed on Potanin by Canada and the UK, says independent expert Alexander Zakharov, Candidate of Law. “nornickel“is the largest supplier of palladium and pure nickel to the world market,” he recalls. This prompted the US authorities to issue an additional clarification so that no one in the market has any doubts that the sanctions do not affect the company, the lawyer explained.

“The situation that arose with Deripaska and the American sanctions against him probably should not be repeated with Potanin, since he, unlike Deripaska, is not the controlling shareholder of Norilsk Nickel,” concludes Zakharov.

Banking organizations also got into the SDN-List: “daughters” VTB and Rosbank, which is owned by Potanin’s structures. “By imposing sanctions on some more large Russian banks, we continue to deepen Russia’s isolation from global markets,” explained Brian Nelson, Deputy Secretary of the Treasury for Counterterrorism and Financial Intelligence.

A total of 17 affiliated companies were sanctioned by the US Treasury VTB companies, including VTB Development, VTB Commercial Financing, VTB Infrastructure Investments, VTB Project, VTB Leasing, VTB Real Estate, city bike rental operator Citibike and others. The state-owned bank itself came under US blocking sanctions back in February of this year.

Operations with Rosbank, according to the US Treasury Department, counterparties must be completed before March 15, 2023. Sanctions imposed by the United States on Rosbank will not have a significant impact on the work of the credit institution, a bank representative told Vedomosti. “The bank continues to work in a standard mode, to carry out all transactions in rubles both remotely and in a wide network of offices. All terms of service and tariffs for products remain the same,” he added.

Imposed on affiliates with VTB companies, the US sanctions are another proof of the desire to put pressure on business, partners and counterparties in order to obtain their own benefit, says a representative of the state bank. “This is a politicized decision, which, however, will not particularly affect our work,” he said.

Agree with representative VTB and Yury Fedyukin, Managing Partner at Enterprise Legal Solutions. “Essentially, this is a formal decision, since they were already under restrictions simply by virtue of having control from the parent company,” he explains.

The decisions of the US Treasury will not have a special impact on the work of Rosbank inside Russia, the lawyer is sure. The main problem for a credit institution is the restriction of access to foreign markets for debt capital and liquidity, Fedyukin believes. “However, taking into account the fact that similar restrictions already apply to most of the largest credit and financial institutions, and, moreover, for a long time, we can talk about having experience in working in new conditions and low risks of blocking the activities of a bank in Russia,” he concluded.

The US sanctions did not bypass the two vice-premiers – Andrei Belousov and Dmitry Chernyshenko, and 29 heads of regions. Sanctions against governors were introduced for the implementation of the mobilization order, according to the website of the US State Department. “These governors oversee and enforce the call of citizens in response to the recent Russian mobilization order,” Secretary of State Anthony Blinken said in a release statement. Why the measures taken on December 15 affected only 29 governors is not specified.

Political scientist Alexander Kynev said he sees no pattern in compiling such a list of governors. He believes that there is no common reason for including these politicians in the sanctions lists. “All governors, to one, ensure mobilization in accordance with the decree, so calling it a reason is ridiculous,” he told Vedomosti. According to him, the sanctions policy requires a constant expansion of the list, and the inclusion of governors in it was inevitable.

[Западной] the public needs to be presented with new persons on the list, Kynev noted. “Including everyone there at once is pointless, because there are no those left who will need to expand the sanctions lists further. The only principle is to stretch the process,” he said.

Regional policy expert Vitaly Ivanov suggested not looking for a “black cat in a dark room.” “They hit the squares, but they do it in the series mode. Gradually, the turn comes to everyone. There will be a sequel after some time, he suggested. “This is a kind of bureaucratic logic. They are divided into several parts in order to maintain a certain informational degree,” he agrees.

With the introduction of sanctions against the heads of Russian regions, the same logic applies as with similar measures against civil servants and politicians, this is a “continuation of the sanctions policy,” says the former head of the presidential department for domestic policy, political scientist Konstantin Kostin. “There is an internal story, there are those who say that we need to increase pressure on Russia to help Ukraine, and these people occupy quite serious positions in the American government. The Americans point out that the sanctions are aimed at reducing Russia’s ability to finance a special military operation, and also to supplement the efforts of their partners,” he told Vedomosti.

The inclusion of governors in the US sanctions list does little to change their situation, because they are already extremely limited in movement, Kynev explains. Financial instruments abroad are also prohibited to them, the expert notes.

The question is how much this will really affect the situation and correspond to the stated goal of the United States, Kostin notes – this seems doubtful. “There is a contradiction in American public rhetoric regarding the introduction of various restrictions against other countries: when sanctions are lifted, Americans say that they do not help achieve their stated goals. So it was with Iran and Cuba,” he says.