Breaking the Cycle of Mutual Imprecations

The Magnitsky Act and Dima Yakovlev Law.

The anti-Russia sentiment that manifest itself in the U.S. Congress passing the Magnitsky Act sparked a retaliatory wave of anti-Americanism in Russia, epitomized by the passing of the Dima Yakovlev Law. This represents a very dangerous turn of events, and one that will be very difficult to bring back under control.

The Magnitsky Act and Dima Yakovlev Law

The anti-Russia sentiment that manifest itself in the U.S. Congress passing the Magnitsky Act [1] sparked a retaliatory wave of anti-Americanism in Russia, epitomized by the passing of the Dima Yakovlev Law [2]. This represents a very dangerous turn of events, and one that will be very difficult to bring back under control.

I

President Obama and many American business leaders, in fact, opposed the Magnitsky Act. Opponents to the Magnitsky Act believed it would do significant harm to U.S.-Russian political and economic relations, and that it would most likely result in Russian retaliation. The dilemma, however, was that President Obama, the U.S. Chamber of Commerce, and those multinational corporations that had been lobbying for years to repeal the 1974 Jackson-Vanik amendment, found themselves forced into a domestic political trade off [3]. American businesses generally wanted to see Russia accede to the World Trade Organization (WTO), and gain Permanent Normal Trade Relations (PNTR) status, in an effort to open up U.S. trade and investment opportunities in Russia, but there were a number domestic political obstacles to overcome.

Photo: storystar.ru
The Jackson-Vanik amendment that has been
in effect since 1974

The political dilemma was that Congress would not repeal the Jackson-Vanik amendment unless there was some other form of sanction placed on Russian activities that would somehow seek to punish those responsible for Magnitsky’s death, and thus help deter similar criminal actions in the future.

In effect, in order to assure the passage of legislation that would finally provide Russia with PTNR status, just after Russia had acceded to the WTO in December 2011, President Obama reluctantly had to engage in a domestic political trade off, and accept the passage of the Magnitsky Act into law. Obama’s reluctant decision was due to the fact that the Magnitsky Act was very popular in Congress and among international financial circles [4]. The Act passed the House by 365 votes to 43; it passed the Senate by a vote of 92 to 4. The political dilemma was that Congress would not repeal the Jackson-Vanik amendment unless there was some other form of sanction placed on Russian activities that would somehow seek to punish those responsible for Magnitsky’s death, and thus help deter similar criminal actions in the future.

The Magnitsky Act thus reflects fears raised by transnational corporate and financial interests that are eager to engage in mutually beneficial economic activities with Russian enterprises, but which often face problems related to bribery or other forms of corruption. At an extreme, these concerns can involve money laundering, major tax fraud, if not the outright theft of investment, by criminal groups. But one of the most significant issues raised by the Magnitsky case is the accusation that corrupt Russian state officials might be involved. Magnitsky’s death in prison has further raised fears of how individuals might be treated if they seek to challenge Russian authority. In short, Magnitsky’s death is far from being the only concern that led to the passage of the Magnitsky Act; rather the Act reflects the concerns of Americans who have tried to do business in Russia [5].

II.

According to its proponents, the Magnitsky Act differs from previous American sanction policies, in that this kind of act does not target whole societies, as was the case with the Cold War era Jackson-Vanik Amendment. Rather, it aims to target the ostensibly corrupt elites in those societies, to ensure the sanctions do not harm the broader population [6]. It was therefore hoped that this particular Act would indirectly press the Russian government to clamp down on corruption and criminal activities and thus reassure American investors and businessmen that they can expect to be treated fairly when doing business in Russia in the future. But due to its ‘holier than thou’ approach, the Act will actually make it more difficult for Americans to do business in Russia, and may significantly harm US-Russian relations in general. The impact on Moscow of this measure could also be amplified by the UK, Canada or other European countries enacting similar legislation, and it sets a precedent for similar sanctions to be placed by the US or other countries on other Russians in the future [7].

Photo: pasmi.ru
The initial U.S. Senate version of the Magnitsky
Act had envisioned a more universal application
of the Act, not only requiring the United States to
deny visas and freeze the assets of Russians
linked to Magnitsky's death, but also applying
such legislation to all individuals accused of
human rights violations in Russia or any state
seeking to trade with the United States.

In effect, the Magnitsky Act seeks to implement a new, more refined version of what have been called “smart sanctions”— re-conceptualizing the measure particularly important given the dismal failure of U.S.-imposed general sanctions to weaken the Iraqi regime of Saddam Hussein. U.S. sanctions on Iraq in the 1990s resulted in severe deprivation for the general public in the country, and are said to have indirectly caused the deaths of hundreds of thousands of Iraqis, while in no way harming Saddam Hussein or other members of Iraq’s ruling elite [8]. The failure of U.S. sanctions to obtain the results Washington desired in Iraq, Cuba, the Soviet Union (under Jackson Vanik), among other countries, led to the development of this new, more refined category of “targeted sanctions.”

These measures aim to limit the behavior or actions of particular individuals or groups, in the hope that this will indirectly work to convince government officials to act differently, particularly where their current actions conflict with what are understood as being “universal” values. Whether or not this approach delivers behavioral change, whether or not those goals meet mutual interests, and whether or not the values really are accepted as “universal” are all separate issues. Yet one of the major concerns this article seeks to raise is that this particular Act, in its desire to “name and shame” alleged human rights abusers, is, in fact, a travesty of justice. In contrast to its stated goals, the list of individuals to be targeted has not been vetted or subjected to legal due process, thus making this a powerful tool capable of destroying reputations and opening the door for lawsuits [9].

Not only does the Magnitsky Act accuse specific individuals of human rights abuses without following due process of law, but the Magnitsky Act’s proponents also believe that targeted sanctions will somehow link “economic interests to universal values.” [10] Yet this argument reveals the Magnitsky Act’s selective bias, and shows that the Act is not at all “universal.” In singling out Moscow, the Magnitsky Act makes no mention alleged human rights violations or acts of corruption taking place in other countries with PNTR status (including states with close relations with the U.S. such as China, Ukraine, Israel and Saudi Arabia). The Act simultaneously displays a ‘holier than thou’ aspect of America’s stance. It ignores a whole host of human rights violations by the U.S. itself, from the treatment of prisoners in Abu Ghraib and Guantanamo Bay to the treatment of U.S. Army Private Bradley Manning, who was arrested for allegedly passing classified information to Wikileaks, and imprisoned in “inhumane” conditions [11].

In fact, the initial U.S. Senate version of the Magnitsky Act had envisioned a more universal application of the Act, not only requiring the United States to deny visas and freeze the assets of Russians linked to Magnitsky's death, but also applying such legislation to all individuals accused of human rights violations in Russia or any state seeking to trade with the United States. But it was the House version that pointed the finger at Russia alone: and that (hypocritically) passed both Houses [12].

One of the main reasons that the Senate version of the Act, which sought to place sanctions on individuals from any country for human rights abuses, did not make it into law was the fact that it was predicted to be more costly to implement compared to the House version, which singled out Russia. Title III of Senate Bill No. 3406 (the Magnitsky act) “requires the Departments of State and Treasury to compile, publish, and annually report on a list of persons responsible for the death of Sergei Magnitsky or human rights violations in foreign countries. Listed persons would be ineligible for entry into the United States, have any existing visas revoked, and have their assets frozen” (my emphasis): at a total cost of $7 million over the 2013-2017 period. But because the provisions of the House version H.R. 4405 of the Magnitsky Act would apply only to human rights violations in the Russian Federation, the Congressional Budget Office estimates of costs incurred under the House bill were much lower [13].

The Magnitsky Act’s lack of universality is further indicated by the fact that the U.S. Congress had previously threatened to apply sanctions on China, due to its alleged human rights abuses. The U.S. Congress finally granted Beijing PTNR status in 2001, and yet no such sanctions relating “economic interests to universal values” were enacted against China. This is doubly ironic, and reveals American double standards.

First, China, unlike Russia, was not singled out for sanctions, despite alleged human rights abuses and the significant extent of official corruption in the country. Second, while Russia’s Gulag Archipelago was officially disbanded, China’s version, the lao gai detention camps, remain intact. At the same time, none of these countries have much to boast about regarding prisoners’ human rights. Prison conditions in all three countries are in dire need of far reaching reform, and the United States has the largest prison population, per capita, than any other country in the world, raising real questions as to whether the U.S. lives up to its own stated standards and values [14].

Photo: Prison population

In addition to the need to engage in prison reform, there is also a need to tackle issues related to corruption and, most importantly, to the pernicious influence of criminal organizations within almost all states and societies [15]. Organized Crime impacts the economy and national security of both the United States and Russia. President Obama’s Strategy to Combat Transnational Organized Crime recognizes that the United States needs to put its own house in order, and deal effectively with international criminal networks, particularly regarding high domestic demand for drugs in America and illicit weapons sales [16]. At the same time, the struggle against criminal organizations requires effective multilateral action given the transnational outreach of such organizations. The U.S. and Russia need to cooperate fully on this crucial issue: rather than just pointing fingers.

III.

This article raises the concern that neither the Magnitsky Act nor the Dima Yakovlev Law, represent the optimum approach to handling numerous valid, interrelated concerns, ranging from prison conditions or how wards of the state are treated, to the pernicious influence of organized crime. On the one hand, it is not up to the U.S. government to point fingers at other countries, particularly in areas where the U.S. itself is far from perfect. Yet, on the other hand, it is also not in the general Russian interest to permit rampant corruption, something both Vladimir Putin [17] and Dmitry Medvedev [18] have repeatedly recognized in speeches, even if reforms have been extremely slow in coming.

But here, rather than engage in retaliatory measures, the U.S. and Russia should form joint independent commissions to investigate specific measures that could be implemented in the struggle against organized crime, to limit corruption where possible, to improve prison conditions and reduce prison populations, and also to protect the rights of adopted children and improve conditions in state care facilities, in both societies. In other words, the Magnitsky Act and Dima Yakovlev Law (which might be contested in the Russian courts [19]) should be repealed by the U.S. Congress and Russian Duma respectively, and both governments should pledge to form joint independent commissions to address these pressing domestic and human rights concerns. Repealing both Acts would put the U.S. and Russia in a better position to tackle the issues that currently prevent the two countries from moving forward on closer bilateral and multilateral cooperation.

Due to the wide range of mutual imprecations involving a large number of divergent, yet legitimate domestic and international concerns, and that have resulted in tit for tat retaliatory actions, it is absolutely crucial to find ways for the U.S. and Russia to compromise over these important issues, in order to ease social and political tensions that risk boiling over into a new arms race, or worse.

1. The actual name of the Act is the “Russia and Moldova Jackson-Vanik Repeal and Sergei Magnitsky Rule of Law Accountability Act of 2012.” In October 2008, Segrey Magnitsky, a lawyer for the Hermitage Fund who was investigating grey market activities of Russian businesses using the Hermitage Fund capital, was arrested and imprisoned in Russia, where he died the following year. In an interview with Bloomberg Businessweek (November 5, 2008) Magnitsky made accusations against certain individuals he claimed were involved in significant money-laundering operations involving hundreds of millions of dollars. The Russian government then counter-accused Magnitsky and William Browder, head of the London-based Hermitage hedge fund, of tax evasion. For details, see on-going discussion on the World Association of International Studies (WAIS) website: http://www.waisworld.org/go.jsp?id=02a3&objectType=post&o=74005&objectTypeId=65902&topicId=51

2. The Dima Yakovlev Act was named for an adopted Russian child who died in the US in 2008 after being locked in a car by his father; other Russian adoptees have also been maltreated. All four major party groupings in the Russian Duma (United Russia; Communist Party; Just Russia and the LDPR) joined together to co-write the Dima Yakovlev Law. Only seven Duma members voted against, and one abstained. The law was passed despite criticism from Russians that it would reduce opportunities for children in state care to find new homes: U.S. families have given homes to roughly 55,000 Russian children over the past 20 years. At the same time, American legal complications make it increasingly difficult for Americans to adopt children and for foreign governments to oversee those children once adopted.

3. http://www.cnas.org/files/documents/publications/CNAS_GlobalSwingStates_KlimanFontaine.pdf

4. Democrats evidently did not support President Obama on this issue. Obama argued that Washington had already denied visas for some people tied to Mr. Magnitsky’s death. Democratic U.S. Senator Benjamin Cardin was one of the prime proponents of the Magnitsky Act. Head of the Senate Finance Committee, Democratic Senator Max Baucus added the Magnitsky measure to legislation on trade relations in summer 2012. Democratic Senator John Kerry, appointed Secretary of State, also voted for the Act. Democratic Senator Carl Levin was one of only four Senators who opposed the Act.

5. In addition to the Magnitsky affair, America’s elites have been concerned with the legality and handling of cases involving Khodorkovsky, Lebedev, Berezovsky and Gusinsky, among others. Then there is the Sakhalin II oil and gas development affair, which pit environmentalists against Shell Oil, but which was seen by business elites as a way to force Shell and other Sakhalin II shareholders to sell out to Moscow. Nor can one overlook the unresolved murders of journalists, such as Anna Politkovskaya, which sparked protests from human rights activists throughout the world.

6. The Magnitsky Act “signifies an entirely different format of Western influence. It does not intend to influence societies living under authoritarian regimes (in most cases, these societies no longer need lectures on building democracy); it is aimed instead at the elites who use Western countries to secure their interests and their authoritarian regimes.” See David J. Kramer and Lilia Shevtsova, “What the Magnitsky Act Means” The American Interest (December 18, 2012) See also Eliot Cohen, a proponent of the Magnitsky Act

7. See The Moscow Times. Here, strong Congressional support for the Magnitsky Act in the U.S. Congress, the unanimous backing for similar legislation in the European and Dutch Parliaments in 2012, and a resolution in the German Bundestag in support of civil society and human rights in Russia, all suggest that the U.S. and Europe have begun to single out Russia for human rights abuses.

8. For a discussion of sanctions on Iraq and the rise of so-called “smart sanctions” (which are further refined in the Magnitsky Act), see Global Issues.

9. Edward Lozansky, Vladimir Sobell and Stephen F. Cohen “Is Congress's Magnitsky Bill a New Blacklist?” The Nation (December 14, 2012) These three critics question the motivations of the main lobbyist for the Magnitsky bill, William Browder, head of the London-based Hermitage hedge fund.

10. Here is it claimed that “by linking economic interests to universal values, Congress turned a new page in the foreign policy textbook—albeit a page turned against the wishes of the Executive Branch. This indeed marks a new approach, both for the United States and the West as a whole.” See David J. Kramer and Lilia Shevtsova, “What the Magnitsky Act Means » The American Interest (December 18, 2012) Likewise, Senator Benjamin L. Cardin (D-Md.), one of the prime movers of the Magnitsky bill, stated that “(Jackson-Vanik had) served its purpose. Today, we open a new chapter in U.S. leadership for human rights.”

11. See Amnesty International, “Open Letter to The Honorable Robert M. Gates, Secretary of Defense” (19 Janury 2011)

12. Reuters (June 26, 2012) Democratic Senator Carl Levin was one of 4 senators not to vote for the Magnitsky act, because it was not universal: "Why would we deny visas only to Russian human rights violators? ... Why diminish the universality of the values the Magnitsky bill seeks to uphold?". Republican Representative (and libertarian) Ron Paul also voted against the Magnitsky Act.

13. Congressional Budget Office S. 3406 Cost Estimate (July 19, 2012) “Russia and Moldova Jackson-Vanik Repeal and Magnitsky Rule of Law Accountability Act of 2012”

14. If government statistics can be trusted, in terms of the total numbers of prisoners, the U.S. has the most prisoners of any country in the world, with a total of 2,239,751; China comes second with 1,640,000, unless the some 650,000 prisoners held in Lao Gai detention centers in China are included, putting China’s total prison population in 2012 at over 2,300,000, making it the world’s largest. Russia comes third, with a prison population of 706,200. Yet, considering prisoner population per 100,000 people, then the U.S. holds 716 per 100,000, the most of any country in the world, while Russia has 493, placing it seventh. China has 121 per 100,000, based on sentenced prisoners in Ministry of Justice prisons only. But a total prison population of 2,300,000 (including those in Lao Gai detention camps) would raise the prison population rate to 170 per 100,000 of the population. In percentage terms, this is still less than the U.S. or Russia. Of course, these figures do not show the social and legal reasons why so many people are serving sentences. This is what needs comparative research.

15. The World Bank estimates about $1 trillion is spent each year on bribing public officials, causing a range of economic distortions and damage to legitimate economic activity. See Strategy to Combat Transnational Organized Crime (Washington, DC: GPO, July 2011)

16. See Strategy to Combat Transnational Organized Crime (Washington, DC: GPO, July 2011) op. cit.

17. Guest article by Vladimir Putin, “Russia needs more technology and less corruption” Financial Times (January 30, 2012)

18. The Magnitsky Act itself observes that Dmitry Medvedev has addressed corruption in many public speeches… In his 2009 address to Russia’s Federal Assembly, he said, ‘[Z]ero tolerance of corruption should become part of our national culture. . . . In Russia we often say that there are few cases in which corrupt officials are prosecuted. . . . [S]imply incarcerating a few will not resolve the problem. But incarcerated they must be.’ President Medvedev went on to say, ‘We shall overcome underdevelopment and corruption because we are a strong and free people, and deserve a normal life in a modern, prosperous democratic society….”

19. The newspaper Novaya Gazeta collected at least 100,000 signatures against the adoption ban, which has drawn criticism from both officials and civic groups. Putin signed the Dima Yakovlev bill into law even though it included an amendment cancelling an agreement reached with the U.S. State Department permitting Russian consular officials to officially investigate cases of reported abuse. Putin explained at length how this agreement had proven ineffective because only local state laws applied in adoption cases and the federal agreement was not recognized by state authorities, meaning that the consular officials were still, de facto, frozen out. See also Gilbert Doctorow. In another tit for tat measure, an American-based petition urged the U.S. government to impose sanctions on Russian lawmakers who supported the Dima Yakovlev bill. (1, 2)