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European Lobbying Could Save Russian Industrial Giant

Complaints from European governments and multinationals apparently persuaded White House to take a second look at sanctions against Oleg Deripaska’s Rusal. 17 May 2018

The U.S. is considering lifting the sanctions it imposed on Russian oligarch Oleg Deripaska (pictured) and his aluminum company Rusal, primarily as a result of the lobbying efforts of European governments and several multinationals, Reuters reported yesterday.

 

On 6 April the U.S. targeted seven Russian oligarchs and 12 of their companies in the biggest escalation of Western sanctions against Russia since the annexation of Crimea in 2014.

 

The White House said the measurements were a response to “destabilizing and malicious behavior by Russia,” but Russian Prime Minister Dimitry Medvedev called the move a manifestation of a protectionist policy “with a veil of sanctions drawn over it.”

 

The sanctions against Deripaska’s Rusal caused a worldwide surge in aluminum prices and cut production at several of Europe’s biggest aluminum producers, which could no longer take deliveries from Rusal. Many jobs in the industry were at stake, Reuters says.

 

France, Germany and several other European governments, joined by multinational aluminum producers, immediately started lobbying Washington to reconsider the sanctions.

 

“We got in touch with the Americans as soon as it became clear there was an impact on some companies operating in France,” a French Finance Ministry official told Reuters.

 

It seems that the lobbying was successful. Initially, U.S. authorities gave entities doing business with Rusal one month to complete ongoing transactions without facing a penalty. On 23 April the grace period was extended to six months, New York Magazine reported.

 

The United States could even lift the sanctions on Rusal altogether, on the condition that Deripaska, a long-time ally of Russian President Vladimir Putin, disentangles himself from the company.

 

Deripaska, who controls Rusal through the holding En+ Group, agreed “in principle ” to reduce his stake in En+ from 66 percent to just under 50 percent and withdraw from the board of directors, Kommersant reported in April.

 

It remains to be seen if that will do the trick. Washington has not been clear whether Deripaska has to withdraw completely from Rusal in order for the sanctions to be lifted. And even if the oligarch were to sell off all his shares, that might still not be enough. Deripaska’s wife and father-in-law, who also fall under the sanctions regime, also have a stake in Rusal, Kommersant says in a separate article.

 

 

  • Russian lawmakers approved in its first reading Tuesday a draft law making it a crime to observe U.S. sanctions. Individuals or businesses in Russia who cite the sanctions as a reason for refusing to do business with a Russian citizen could be sentenced to four years in prison if the bill becomes law, Reuters reports.

 

  • Deripaska is currently entangled in a court battle with fellow Russian oligarchs Roman Abramovich and Vladimir Potanin. The case at the London High Court revolves around Deripaska’s objection to Abramovich selling shares in Nornickel (Norilsk Nickel), one of the world’s largest nickel producers, to Potanin, The Moscow Times says.

Compiled by Wasse Jonkhans

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