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Sanctions on Russia's Rusal could be lifted, Mnuchin says

The Trump administration is looking into lifting sanctions against a major Russian aluminum company founded by one of Vladimir Putin's closest allies.

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Donna Borak
Marshall Cohen

The Trump administration is looking into lifting sanctions against a major Russian aluminum company founded by one of Vladimir Putin's closest allies.

The Treasury Department is considering relieving Rusal of penalties even though its former owner, oligarch Oleg Deripaska, was sanctioned this year by the US in an attempt to punish the Kremlin for interfering in the 2016 US presidential election.

The possible relief for Rusal comes as President Donald Trump continues to deal with the fallout from his Helsinki summit with the Russian president. Democrats and Republicans urged Trump to ramp up sanctions -- not dial them back -- and strike at even more sectors of the Russian economy.

The US imposed sanctions on Rusal in April because of its ties to Deripaska. But the Treasury Department said a few weeks later that it was considering removing sanctions against the massive aluminum company after a surge in aluminum prices.

In an interview with CNN, Treasury Secretary Steven Mnuchin said the US government knew the impact sanctions would have on Rusal. The company's founder, Deripaska, has since stepped down from his role as a non-executive director on its board.

"It wasn't a surprise that Rusal was going to get picked up if we sanctioned Deripaska," Mnuchin said on the sidelines of the G-20 meeting of finance ministers in Buenos Aires on Saturday. "We evaluated the impact. We made a decision."

Representatives from Rusal could not be reached for comment.

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By targeting Deripaska and six other prominent Russian oligarchs the Treasury specifically hit members of Putin's inner circle.

The Treasury said Deripaska had been accused of bribery, extortion, racketeering, ordering the murder of a rival businessman and having links to organized crime. Deripaska has denied "the alleged basis" of US sanctions, according to statements he provided to London's High Court, the Telegraph reported in May.

At the time, Mnuchin said the sanctions were intended to punish Russia for aggressive behavior around the world, which also included Russia's annexation of Crimea and its military campaign in Syria. But the move wound up roiling global aluminum markets.

Mnuchin said the priority of the Trump administration was to enforce sanctions against Russia, including Rusal, as required under a law passed by Congress last summer to punish Russia for interfering in the US election.

"We were going to enforce the Russia sanctions," said Mnuchin not put Rusal out of business. "The objective was to impact the oligarchs, not to impact the hardworking people of Rusal as a result of the sanctions."

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The law passed by Congress last year gives Treasury new powers to go after Russian oligarchs. Trump reluctantly signed the bill, which was passed with a veto-proof majority, despite criticizing the legislation and previously questioning the effectiveness of US sanctions against Russia.

While seeking sanctions relief, Rusal has taken steps to water down Deripaska's involvement in the company. Deripaska has previously agreed to reduce his stake to below 50% and resign from the firm's board in order to give Rusal a shot at getting off the sanctions list. Seven other members of the board, nominated by a Deripaska-owned company, also resigned in May.

Deripaska also has financial ties to Paul Manafort, who was Trump's campaign chairman in 2016 and is now awaiting trial on a slew of financial crimes related to his work for the Russia-friendly government of Ukraine. Manafort was charged by special counsel Robert Mueller, who is tasked with investigating Russia's interference in the 2016 election and related matters.

None of the recent sanctions against Deripaska are related to his ties to Manafort.

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