Experts assessed the prospects for sanctions if Trump wins

Republican presidential candidate Donald Trump recently said that he does not like sanctions because they “pull everyone away.” Soon after, the campaign took a turn as President  Joe Biden withdrew his candidacy, calling on Democrats to support Kamala Harris, who serves as vice president. Trump said even before Biden left the race that it would be easier to defeat Harris than the incumbent president.

If Trump wins, one should not expect a quick easing of sanctions against Russia, since this is impossible without resolving the Russian-Ukrainian conflict, according to experts interviewed by RBC. They also cautiously assess President Trump's possible policy regarding Russian assets frozen in the United States.

In an interview with BLOOMBERG, Trump said that he had a good relationship with Russian President Vladimir Putin and because of this, Ukraine was “never threatened by war.” Previously, he had repeatedly said that he could help end the military confrontation between the two countries, and argued that if he won the elections, he would resolve the conflict even before the inauguration.

Trump’s words about his dislike of sanctions and the possibility of stopping the Russian-Ukrainian crisis in one day  are still comments within the framework of election rhetoric that do not have any meaningful content, notes Deputy DIRECTOR of the Institute of International Economics and International Relations (IMEMO) RAS, Corresponding Member of the RAS Sergey Afontsev. He is convinced that the sanctions that have already been introduced and are in effect cannot be lifted without significant damage to the political image of the United States.

“Any easing of the sanctions regime is only possible if it comes as part of a package that includes resolving the crisis. How it will be resolved and whether Trump will be willing to resolve it on terms acceptable to Russia is a big question. In his numerous statements, Trump did not say exactly how he sees this settlement,” Afontsev emphasizes. However, if this process is nevertheless launched, the issue of easing sanctions will inevitably be included on the agenda, he predicts.

George Voloshin, an expert in the fight against financial crimes, does not expect any significant changes in the US sanctions policy towards Russia in the foreseeable future. In his opinion, Trump “amuses himself with unrealistic hopes” that he will be able to seat the presidents of Russia and Ukraine at the same table , work out conditions for ending the conflict that would satisfy both sides, thus obtain the consent of Ukraine and the Western public to ease anti-Russian sanctions and present everything it’s like your “big foreign policy victory.”

In the current conditions, a compromise between Russia and Ukraine, at least on the territorial part of the conflict, is “impossible in principle,” not to mention other fundamental issues, for example, Ukraine’s membership in NATO, Voloshin is sure. He suggests that easing the sanctions pressure would be realistic only if Russia renounces new territories (at the same time, the settlement of the status of Crimea could very likely be postponed as part of the initial peace initiatives). But such a scenario is unacceptable from the Kremlin’s point of view. Thus, Trump's approach "has almost no basis for success," at least as long as the situation on the battlefield remains in its current state, Voloshin says.

If a relaxation of the sanctions regime is not expected in the near future, then the introduction of new sanctions under the Trump administration will indeed be less likely, Afontsev believes. “Strictly speaking, Trump voters are not interested in this topic, and the escalation of the sanctions regime may be suspended,” he says.

Some transformation of the sanctions regime if Trump is elected is possible, believes Sergei Glandin, partner at BGP Litigation. In fact, Trump did not personally introduce anti-Russian sanctions during his presidential term in 2017–2021: Crimea-related restrictions were introduced under Barack Obama, he recalls. However, under Trump , the Countering America's Adversaries Through Sanctions Act (CAATSA) was passed in 2017  , imposing sanctions on Iran, North Korea and Russia, argues Elvira Khasanova, a senior lawyer at the law firm Kucher, Kuleshov, Maksimenko and Partners. With regard to Russia, this document expanded a number of sanctions previously imposed by presidential executive orders and turned them into law. In addition, in 2019, sanctions were introduced against the Nord Stream gas pipeline.

According to Glandin, Trump “definitely will not impose sanctions under Executive Order No. 14024,” which he “does not like.” This April 15, 2021 order from Biden was the key basis for the imposition of sanctions under the Russian sanctions program. Trump, if elected, could cancel it by first announcing this to Congress, Glandin admits. If “decree No. 14024” is not canceled, it may go into the category of “sleeping”, the lawyer suggests.

Sanctions measures that were adopted by the US President through executive orders can traditionally be canceled with the stroke of a pen, Voloshin points out. In 2021, Biden rescinded Trump's executive order imposing restrictions on Chinese services TIKTOK and WeChat. However, under Section 216 of the CAATSA law, there are restrictions on the easing or lifting of sanctions against Russia that were in effect as of 2017, Voloshin points out. If both houses of Congress oppose it with a joint resolution, and if a presidential veto is imposed on it, they overcome the latter, the sanctions cannot be lifted or mitigated, the expert explains. This limitation does not apply to sanctions adopted in subsequent years, “namely, to the entire array of sanctions initiated by the Biden administration starting in 2021, for example, as part of Executive Order No. 14024,” he emphasizes.

“With a change in the US President, one can reasonably expect a change in the direction of regulation of US sanctions,” says Khasanova. In her opinion, this may be expressed both in the adoption of new acts and in a change in the decision-making policy in the Office of Foreign Assets Control of the US Department of the Treasury (OFAC) as the main body administering sanctions. “As a rule, with a change of administration, the approach to the main issues of the work of ministries and departments changes. This may affect, for example, issues of issuing licenses to Russian persons, exclusion from sanctions lists and the addition of new persons to the lists, and joint work with sanctions authorities of other countries,” Khasanova notes.

Trump has repeatedly stated his intention to fight de-dollarization, predicting that the American economy will get out of control if the DOLLAR ceases to be the standard in international payments. Trump's economic advisers are considering ways to actively counter other countries' refusal to use the dollar if he wins, Bloomberg wrote in April.

Voloshin is skeptical about Trump's promises to punish third countries for abandoning the dollar. The dedollarization processes launched in other countries, including US allies like Saudi Arabia, have different reasons, including, for example, the growth of mutual trade with third countries, in particular the supply of Saudi oil and petroleum products to CHINA , he explains. “These processes have high inertia; they cannot be canceled or stopped overnight,” says Voloshin. The hypothetical normalization of relations with Russia will also not be an effective tool for countering de-dollarization in conditions where sanctions cannot be significantly mitigated or lifted, he states.

If Trump wins, his administration will not be able to ignore Russia’s successes in the context of its pivot to the East: many contracts and external payments have been transferred to rubles and yuan, according to a comment received by RBC from partners of the international consulting company Fidem Research Group. In their opinion, the real prospects for the dollar to lose part of Asia and the Middle East are obvious and the Trump administration “is unlikely to be interested in developing this track and will push Russia and Asia towards further rapprochement.” Last year, the share of the ruble in Russia’s foreign trade settlements reached its highest level in the last five years, the Bank of Russia reported. In payments for exports it amounted to 39%, for imports  - 30%.

Republican lawmakers were concerned about the role of the dollar in the global financial system due to the adoption of an initiative on the possible use of Russian assets blocked in the United States to help Ukraine, Bloomberg reported. After the start of the special operation in Ukraine, the EU and G7 countries froze about $282 billion of assets of the Russian Central Bank in the form of cash and securities, the US Treasury reported . Over two thirds of them are in the European Union.

There is no consensus on the use of Russian assets yet and the scenario of their confiscation cannot be ruled out, says Voloshin. “In the case of Trump’s potential re-election, a lot will depend on the balance of power in Congress, the personalities at the HEAD of the Treasury, the National Security Council and the National Economic Council, the strategic position on the battlefields, the position of US allies and many other factors. “I cannot talk about a definite increase or decrease in the risks of confiscation of Russian assets under the new Trump administration,” he emphasizes.

According to Afontsev, Trump will avoid sanctions steps that affect the international position of the dollar, as a result of which the threat to Russian assets frozen in the United States “may be somewhat reduced.” At the same time, with regard to the European part of the assets, he sees two ways.

“On the one hand, Trump may be interested in reducing instability in the use of key reserve currencies and influencing European satellites so that they are not too keen on the idea of ​​confiscating assets or income from them. But it is also likely that Trump will tell the Europeans: “Get money to finance the Ukrainian crisis from wherever you want.” This will encourage European countries to treat Russian property more vulgarly,” the expert says.

The Trump campaign could not help but notice Riyadh's recent unofficial statement regarding the confiscation of Russian assets, partners of Fidem Research Group note. “The Saudis did not directly touch the United States, but promised to respond by selling European bonds if the G7 countries transferred Russian assets to Ukraine. The United States, as a member of the G7, is unlikely to want to catalyze such precedents and initiate the transfer of Russian assets on its part,” they point out.