Home News US Widens Russia Sanctions Amid Calls They Don't Go Far Enough

US Widens Russia Sanctions Amid Calls They Don't Go Far Enough

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“The Treasury Department is disrupting Russian efforts to circumvent our sanctions,” Treasury Secretary Steven Mnuchin said Tuesday.


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WASHINGTON—The Trump administration imposed new sanctions against Russia, escalating U.S. diplomatic pressure on Moscow as the White House tries to fend off a push by lawmakers to deploy even-more-potent tools to cripple the Russian economy.

In two separate actions on Tuesday, the U.S. Treasury Department blacklisted several firms and individuals it accused of violating bans on energy trade with North Korea and breaking U.S. laws against cooperation with Russia’s intelligence arm, the Federal Security Service.

Combined, the sanctions underscore a recent escalation in U.S. economic pressure against Moscow as U.S. agencies try to force Russia to stop its election-tampering, cyberattacks and other activities, and show a commitment to challenging the Kremlin.

The Trump administration is calling out Russia and China for easing economic sanctions on North Korea. The WSJ's Gerald F. Seib explains how that action and others could impact nuclear negotiations. Photo: Getty

But many lawmakers, wary that the administration is pulling its punches with Russia, are advocating legislation that could force the White House to levy even-tougher economic penalties.

Fueling those concerns are a federal investigation of the election interference, President Trump’s overtures to Russian leader Vladimir Putin, and repeated presidential questioning of U.S. intelligence assessments about the election hacking.

Administration officials contend that they are confronting Moscow, imposing sanctions on more than 200 Russian companies, banks, individuals, government officials and institutions, including some of Mr. Putin’s closest allies and the country’s richest oligarchs. Administration officials say they must also balance confrontation with the need for Russian cooperation issues such as Iran, Syria or North Korea.

The International Atomic Energy Agency this week said North Korea is continuing to develop its nuclear program, despite an agreement between Washington and Pyongyang to denuclearize the Korean Peninsula.

The tensions surrounding Mr. Trump’s approach to Mr. Putin, the U.S. sanctions and congressional concerns were on display in a pair of Senate hearings on Tuesday.

Sigal Mandelker, a Treasury official who is Mr. Trump’s sanctions chief, told the Senate Banking Committee that more actions are coming and current authorities are sufficient.

“Though Russia’s malign activities continue, we believe its adventurism undoubtedly has been checked by the knowledge that we can bring much more economic pain to bear,” said Ms. Mandelker, Treasury undersecretary of terrorism and financial intelligence. “We will not hesitate to do so if its conduct does not demonstrably and significantly change.”

At a separate hearing before the Senate Foreign Relations Committee, A. Wess Mitchell, assistant secretary of state in the bureau of European and Eurasian affairs, said the administration Russia policy is designed to “continue raising the cost until Russian aggression ceases, while keeping the door open to dialogue.”

Foreign direct investment into Russia has tumbled over the past several years and the ruble has often plummeted amid new rounds of sanctions. Action in early April targeting some of Mr. Putin’s closest allies hit one of the largest aluminum producers in the world, sent Russian stocks into a temporary nose-dive and cut the market value of Russia’s elite by tens of billions of dollars.

Still, many in Congress question whether the White House is using all its sanction powers and dispute the effectiveness of the current sanctions program.

“They have not changed their behavior,” said Sen. Joe Donnelly, (D., Ind.). “The fact is that Russia is still in Syria.…They’re still in Ukraine, they’re still using cyberattacks, they’re still meddling in elections, they are preparing to meddle in the upcoming elections.” he said.

According to new research from


, Russian hackers linked to the 2016 election cyberattacks on the Democratic Party are widening their targeting for the U.S. midterm elections.

“Our efforts have just not been effective enough,” said Sen. Tim Scott, a South Carolina Republican.

Many lawmakers are backing new legislation that would mandate more stringent action by the White House, including a proposal that would target Russian government debt. By prohibiting investors, banks and others from buying Russian sovereign bonds, such debt measures could jeopardize Moscow’s ability to fund its operations and pay its obligations.

“Congress is going to act,” said Sen. Bob Menendez (D., N.J.), a primary sponsor of the new Russia sanctions legislation and ranking member of the Foreign Relations Committee.

Mr. Mitchell said administration officials plan to meet with lawmakers within the next week to provide its views on the legislation. He emphasized the need for executive branch discretion in administering sanctions.

Treasury Secretary Steven Mnuchin has pushed back against the effort to hit sovereign debt, citing the potential damage it could cause to broader markets, including allies. Sanctions experts say such a move would be a major intensification of sanctions policy that could cripple the Russian economy.

That, say some lawmakers, is exactly the warning they want to send.

“The economy hasn’t been brought to its knees,” said Sen. John Kennedy, (R., La.), complaining about the impact of the sanctions program.

Among powers lawmakers say still could be brought to bear are sanctions targeting Russian arms sales, such as the sale of a missile system to U.S. NATO ally Turkey. Another is sanctioning the intelligence officers named in a recent indictment by the federal prosecutor investigating Russia’s election interference.

In the double-barreled action announced on Tuesday, the U.S. Treasury Department said two Russian firms operating out of the Eastern port of Vladivostok—Primorye Maritime Logistics Co. and Gudzon Shipping Co.—helped Pyongyang evade United Nations bans on its oil trade. Providing oil to North Korea and allowing the country to export its labor force undermines Washington’s denuclearization negotiations, U.S. officials maintain.

In the second action, Treasury said two Russian individuals, working through Vela-Marine Ltd. and Lacno SRO, helped a sanctioned Russian firm, Divetechnoservices, procure goods and services for Russia’s Federal Security Service in violation of a U.S. law against abetting Russia’s intelligence services. The FSB had been previously blacklisted by the U.S. for its central role in hacking U.S. infrastructure, including airports and the energy grid.

The Russian Embassy in Washington didn’t respond to requests for comment. The companies weren’t available to comment.

Other sanctions are under consideration. The administration may be willing to risk provoking its trans-Atlantic allies with sanctions against new Russian natural gas pipeline projects that would represent a primary European energy source and major revenue stream for Russia.

Moscow also faces penalties for its alleged involvement in the poisonings of a former Russian spy, his daughter and a U.K. citizen with a banned nerve agent earlier this year. Russia has denied involvement.

This month, the administration announced a new round of sanctions triggered by Washington’s official determination that Moscow was behind that attack. Additional sanctions under a 1991 law guiding those sanctions are possible.

Write to Ian Talley at ian.talley@wsj.com

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