A video film, originating from Syria on April 7 and allegedly showing the after-effects of a chemical weapon attack in the Damascus suburb of Douma, triggered a series of tweets from President Trump, condemning “animal Assad” and criticising President Putin for supporting the Syrian regime. Even before the authenticity of the evidence could be established, the Syrian government, and Russia for supporting it, were held responsible. On April 11, in a joint US-French-British operation, over 100 missiles were launched at Syrian military targets near Damascus. The stated intention was to punish the Syrian government for the chemical weapons attack and to prevent its recurrence.
Perhaps because he had been directly addressed in President Trump’s tweet, President Putin took the unusual step of issuing a strong statement condemning the missile strikes, asserting that they violated the UN Charter and international law, accusing the US of pandering to terrorists, and declaring that an “already catastrophic humanitarian situation in Syria” had been made even worse. The Russians drew attention to various contradictions in the accounts of the alleged chemical weapons use, including discrepancies in the video film itself. These discrepancies were also subsequently picked up by some in the western media.
The Russians also alleged that the missile strikes were designed to prevent any finding that chemical weapons had not actually been used. When inspectors from the Organization for Prevention of Chemical Weapons (OPCW) were eventually deputed to the site, the West, in turn, accused the Russians of delaying their visit to destroy evidence of use of chemical weapons. Foreign Minister Lavrov claimed to have irrefutable evidence that British intelligence had faked the chemical weapons attack.
Such allegations and counter-allegations have become a routine feature of the face-off between Russia and the West, with each side sticking to its narrative and ignoring or rubbishing that of the other.
Reports emerged that the Russians had been given early warning of the strikes, so that equipment, personnel and civilians were moved out of the strike zones in time. The French are reported to have been the intermediaries for this. In the event, no human casualties were reported. The Russians claimed that most of the missiles (over 70) had been either brought down by Syrian air defence systems or had missed their targets. Western officials refuted this, saying all targets were hit. Some statements went further, saying a Syrian chemical weapons facility was a target. This obviously could not have been the case, since hitting such a factory could have unleased widespread chemical contamination, causing much destruction.
For the record (though it went largely unreported), the UN Secretary General issued a statement on April 13, indicating that the missile strikes violated international law, since they were conducted without reference to the UN Security Council, which “has primary responsibility for the maintenance of international peace and security”.
The missile strikes created high drama, but the real body blow to Russia was delivered earlier, on April 6, when the US Treasury Department imposed sanctions on seven Russian oligarchs, 12 companies controlled by them, 17 senior government officials and a subsidiary of the giant state-owned arms trading company, Rosoboronexport. The significant aspect of these sanctions was that, for the first time, Russian multinationals, listed on international stock exchanges and with manufacturing and trading offices across the globe, were targeted.
The worst-affected company was Rusal, the world’s second largest manufacturer of aluminium, promoted by the oligarch Oleg Deripaska, who was one of those on the sanctions list. It was stipulated that US investors should liquidate their shareholding in the company by May 7 and cancel all contracts with it by June 5. Rusal manufactures about 4 million tonnes of aluminium annually and over 80% of its sales are to markets outside Russia and states of the former Soviet Union. The sanctions therefore threatened to shut down most of the company’s manufacturing facilities, causing large-scale worker layoffs.
The impact of these sanctions was arguably more devastating than the cumulative impact of all sanctions against Russia since 2014. The Russian stock market index fell by 10% in a single day, the rouble dropped 3% against the dollar and the euro. Rusal shares plunged in the Hong Kong and other bourses. The Russian government frantically looked for measures to protect the assets of the sanctioned companies, particularly Rusal, and to mitigate the impact on Russian workers.
Then, as suddenly as the announcement of the sanctions, came a US Treasury announcement on April 24, relaxing some of the restrictions on Rusal. The deadline for terminating transactions was extended to October 23 and it was hinted that if Deripaska relinquished his control of the company by then, the sanctions against the company may be lifted altogether.
The reasons for this sudden change of heart are not hard to divine. The sanctions had caused global aluminium prices to soar, affecting all consumers, including the US, which imported about 1.5 million tonnes from Rusal in 2017. Aluminium manufacturing is a capital-intensive, power-intensive and polluting industry. The replacement of closed factories is therefore a long-drawn out process. If Rusal factories are shut down, an extended period of high aluminium prices could be expected.
Non-American Western business was also affected. Bloomberg reported that Australian-British Rio Tinto’s sale of alumina to Rusal was choked off and a Rusal plant in Ireland faced closure. It was said that France, Germany, Italy and Ireland made a coordinated pitch with the US to relax the sanctions.
At present, it appears likely that enlightened self-interest may drive both the US and Russia to take measures regarding Rusal to enable lifting of sanctions against that company. The Rusal experience has, however, shown the US a way to really hurt Russia with sanctions, but it has also revealed that in an economically inter-connected world, it could also cause unacceptable collateral pain to the imposers of sanctions.
In a strange move, the White House apparently informed the Russian Embassy in Washington, sometime after the Syria strikes, that no further sanctions against Russia were being contemplated at present. This was reported in the Russian media, confirmed by the Russian Foreign Office and also apparently by a State Department official in a background briefing. The decision was attributed to President Trump’s concern that adding to the existing sanctions would affect the prospects of the US reaching agreement with Russia on major global problems.
Meanwhile, US and Russian diplomats quietly continued discussions in Geneva on practical issues relating to the U.S.-Russia New START Treaty.
April 30, 2018