A report by Special Counsel Robert S. Mueller III was finally delivered to the US Attorney General William P. Barr on 22 March and he, in turn, presented a summary of the findings to Congress on 24 March stating that the investigation led by Mueller did not find conclusive evidence that US President Donald J. Trump, or any of his aides, conspired with the Russian government to help him win the 2016 election.

Mueller’s report, however, states that “while this report does not conclude that the president committed a crime, it also does not exonerate him” on the issue of obstruction of justice.

“The key takeaways from a Russian perceptive are that A) Mueller did not find any evidence that Trump colluded with Moscow and B) that Russia did try to influence the outcome of the 2016 presidential election,” Chris Weafer, co-founder of Macro-Advisory in Moscow, wrote in an emailed note on 25 March.

“It means that while President Trump is loudly declaring, ‘I told you so’, Russia remains in the frame for more sanctions. In fact, the more that Trump pursues those he accuses of harassing him over the past two years, i.e. the Democrats in Congress, the more likely those same Democrats will try to apply more sanctions against Moscow,” Weafer wrote, adding that it has already become clear that the Democrats do not accept that there was no collusion and have asked for the full report to be made public.

“Russia remains the foreign adversary of choice for just about all political forces in Washington and at the same time the stick with which Trump’s opponents seek to batter him. The absence of ‘collusion’ will persuade none of Trump’s enemies that he is not in Russia’s pocket. More sanctions are coming, if only because that is what the Congress can do against Russia and what Democrats in the House can deploy as a challenge to the administration and to their Republican counterparts,” Weafer wrote.

“Evidence — whether real or not — of Russian interference in the Ukrainian election, especially between the first round of voting, on 31 March, and the expected second round on 21 April, would provide a catalyst. A Russian court is scheduled to review the charges against 24 Ukrainian sailors on 24 April,” added Weafer in reference to the two dozen Ukrainian naval personnel who were captured and taken prisoner while trying to pass through international waters in the Kerch Straight.

Sanctions and Nord Stream-2

Weafer noted, however, that US sanctions against the controversial Nord Stream-2 pipeline from Russia to Germany might not materialise as they could threaten investment. “A key question remains to what extent Republicans, and even some Democrats, may feel that excessive use of secondary sanctions is damaging US interests with allies like Germany and Japan. That may cool support for sanctions aimed at blocking co-investment in Nord Stream-2,” Weafer wrote.

He reminded that the delivery of the Mueller report comes against the backdrop of the revised Defending American Security from Kremlin Aggression Act, or DASKA – a tough economic sanctions bill which has recently been presented by a group of bipartisan Congress members. “Right now, they are trying to get support to have it passed by both houses, although revisions are still possible,” Weafer wrote.

The main expected impact of DASKA is that more of Russia’s Kremlin-connected oligarchs are expected to be added to the Specially Designated Nationals And Blocked Persons List (SDN) by the US Treasury and it will be a lot more difficult for US and EU companies because of the threat of secondary sanctions. Investors will not be able to increase investment in the Russian oil sector and, possibly, in new sovereign debt issues, Weafer said.

The other outstanding sanctions threat is related to the Chemical and Biological Weapons Control and Warfare Elimination Act (the CBW Act), Weafer said, explaining that Trump may add three out of six published options on new sanctions at any time.

“Bearing in mind that President Trump announced the first phase of CBW sanctions to appease Congress after fierce criticism following his Helsinki Summit with President Vladimir Putin, the reaction to the Mueller Report may again persuade him that it is time for another distraction,” Weafer wrote.

The timing of new sanctions i.e. names added to the SDN list, is unclear, Weafer noted, adding that more likely they will come in the second quarter.

The Mueller Report is just one of the known possible catalysts. However, the fact that Russian aluminum tycoon Oleg Deripaska sued the Trump administration on 15 March over sanctions it imposed on him and his companies last year, may lead to a delay in adding more names to the SDN List as Congress may wish to see how the case proceeds, Weafer argued.

GAZ Group

There was positive news with regards to the Russian automaker GAZ Group as the US Treasury Department Office of Foreign Assets Control (OFAC) extended the expiration date of two general licenses with respect to Ukraine-related sanctions.

“OFAC extended the deadline again, this time to 6 July, in a clear signal that it would prefer the ownership issue to be resolved and GAZ removed from the threat. It is reported in the Russian media that Volkswagen, which has an existing stake in GAZ, is in talks with the government about adding to this,” Weafer explained.

“Moscow maintains the position that it does not wish to talk about retaliatory sanctions because it needs to remain open for as much foreign investment as it can attract,” said Weafer, adding that Russian officials have also made clear that Moscow may be forced into retaliation if new sanctions are damaging enough.