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The idea of the president of any normal country also owning one of its largest assets and using his office to protect it seems outrageous. Putin used his position to gain wealth for himself and a small group of cronies, and is trying to prevent sanctions from reducing the value of that wealth.

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Who Benefits If Russian Oil Sanctions End?

The idea of the president of any normal country also owning one of its largest assets and using his office to protect it seems outrageous. Putin used his position to gain wealth for himself and a small group of cronies, and is trying to prevent sanctions from reducing the value of that wealth.

The US put sanctions on Russian oil in 2014 to discourage Putin from invading any more of his neighbors after he annexed Crimea.

Russian oil sanctionsImage Credit:

These sanctions are focused on Russia’s oil sector, because most of Russia’s state wealth is actually privately owned by about 30 Russian oligarchs. All of the state-owned petro-state assets were essentially stolen by the Russian mob after the end of communist rule. Russia is a petro-state with little economic diversity.

Sanctions also impact foreign investors in Russian oil. Bloomberg:

“Sanctions to punish Russia for supporting separatists in eastern Ukraine and for the annexation of Crimea prohibit companies based in the U.S. and EU from probing Russia’s deep-sea, shale and Arctic fields.”

The Russian Dossier and Trump and Sanctions

In the infamous Russian Dossier exposed by Buzzfeed, the respected British ex-spy Christopher Steele revealed that Trump’s top campaign advisor Carter Page/Trump’s associates had been offered up to a 19% stake in the giant Russian oil company Rosneft if the new Trump administration would lift these sanctions.

Russian Dossier offer up to a 19% share of Russian oil firm RosneftImage Credit: Russian Dossier

Although denying contacts now, early last year, Page boasted of his Russian connections. Bloomberg: March 2016: Trump’s New Russia Adviser Has Deep Ties to Kremlin’s Gazprom:

“When Donald Trump named him last week as one of his foreign-policy advisers, Page says his e-mail inbox filled up with positive notes from Russian contacts. ‘So many people who I know and have worked with have been so adversely affected by the sanctions policy,’ Page said in a two-hour interview last week. ‘There’s a lot of excitement in terms of the possibilities for creating a better situation.’”

After Trump was successfully elected, Carter Page visited Russia in December. That week, the Kremlin announced the sale of a 19.5% stake in Rosneft, supposedly to Glencore and Qatar, but also to an unnamed entity through a series of Cayman Island shell companies, which can legally conceal the identity of owners, so it is impossible to ascertain its real buyer. The sale price is variously cited as either $11.3 billion or $17.5 billion.

Reuters was unable to account for nearly a quarter of the funding for this 19.5% stake in Rosneft:

“But important facts about the deal either have not been disclosed, cannot be determined solely from public records, or appear to contradict the straightforward official account of the stake being split 50/50 by Glencore and the Qataris.

For one: Glencore contributed only 300 million euros of equity to the deal, less than 3 percent of the purchase price, which it said in a statement on Dec. 10 had bought it an “indirect equity interest” limited to just 0.54 percent of Rosneft.

In addition, public records show the ownership structure of the stake ultimately includes a Cayman Islands company whose beneficial owners cannot be traced.

And while Italian bank Intesa SanPaolo lent the Singapore vehicle 5.2 billion euros to fund the deal, and Qatar put in 2.5 billion, the sources of funding for nearly a quarter of the purchase price have not been disclosed by any of the parties.

“The main question in relation to this transaction, as ever, still sounds like this: Who is the real buyer of a 19.5 percent stake in Rosneft?” Sergey Aleksashenko, a former deputy head of Russia’s central bank, wrote in a blog last week.

Rosneft declined to respond to questions posed by Reuters, including a request for comment on how ownership of the 19.5 percent stake was divided, information about the identity of the Cayman Islands buyer, or details of the source of any undisclosed sources of funds.

Carter Page Benefits from Lifted Sanctions on Russian Oil

Carter Page, a US oil investor and energy expert, had a long history of oil and gas energy investment in Russia. Sanctions on Russia directly impact him as well, because his own investments are among those impacted by the sanctions.

In December, Page warned/threatened Senator McCain that military response would follow if the US refused to lift sanctions, according to Sputnik News.

December 2016 Sputnik News Carter Page threat to Senator John McCain

Sputnik News is described by Foreign Policy in 2014 as a “compliant outlet to trumpet the Kremlin line.”

Page is among the Trump associates under investigation for Russian connections (New York Times):

“Carter Page was one of at least three individuals in the Trump campaign who were under investigation by the FBI, National Security Agency, and Central Intelligence Agency for possible links to high-ranking Russian officials.”

Curiously, since his December threat from Moscow, Page’s current whereabouts are unknown.

Exxon Benefits from Lifted Russian Oil Sanctions

Exxon’s interest is also aligned. In 2014, through joint-venture agreements with state-controlled Rosneft, Exxon acquired drilling rights to 63 million acres of Russian oil  (Bloomberg). This is much larger than Exxon’s previously largest-ever deal, a 14 million acre lease in the US.

The purchase would make no sense if sanctions remained, as Exxon would not be able to sell most of that oil. All but 3 million of the 63 million acres are covered by the sanctions. However, even with the sanctions, exploration itself was still legal. The sanctions do not bar oil-related activities like seismic surveying or acquiring drilling rights. So it was legal for Exxon to get the drilling exploration rights.

However, in order to sell the vast amount of oil expected to lie under the remaining 60 million acres, sanctions would need to be lifted. It is now also in Exxon’s interest that the US look the other way when Putin invades neighbors.

In other words, by partnering with Putin’s firm Rosneft in the 63 million acre lease, Exxon was betting on the sanctions being lifted. Former Exxon CEO Rex Tillerson is the Trump administration Secretary of State.

Flynn Tried to Lift Russian Oil Sanctions – on Orders From…

In February, Trump National Security Advisor Michael Flynn “resigned” after publicity over US intelligence intercepted calls in which he appears to have promised Russia sanctions relief while he was still a private citizen — in violation of the Logan Act — and then lied about it to VP Pence.

According to the New York Times this week, before resigning, Flynn had been hand-delivered a sanctions-removal proposal by three Trump associates.

One of the three was Felix Sater, a Russian-born Mafia-linked figure whose racketeering sentence was reduced for cooperating with American intelligence officials on “undisclosed matters related to national security” in providing “significant intelligence with respect to nuclear weapons in a major country openly hostile to the United States.” Trump claimed no connection to Sater, but Sater has admitted to multiple Trump connections under oath in pursuing numerous Russian and other business ventures, and operates two floors down from Trump in Trump Tower.

Felix Sater business cardImage Credit: Forbes

The second was Trump’s lawyer Michel Cohen, who was named in the Dossier as having clandestine meetings in Prague in August with Kremlin figures, which he denies. (The Dossier claims are progressively being verified by US intelligence agencies.)
Trump Lawyer Michel Cohen meeting in Prague per Steele Russian DossierImage Credit: Russian Dossier

The third person is Trump-connected through former Trump campaign chairman Paul Manafort. Manafort now directs the Putin-backed Trump-style populist strongman candidacy of the new would-be Ukrainian leader, Andrii Artemenko. Before working on Trump’s campaign, Manafort worked on electing Putin’s initial Ukraine puppet pick, former president Viktor Yanukovych, now exiled in Russia.

So, the sanctions ultimately impact Putin’s wealth, through the fortunes of Rosneft, the world’s largest listed oil company. Putin himself is reputed to be worth $200 billion, according to Red Notice author, Bill Browder.

The idea of the president of any normal country also owning one of its largest assets and using his office to protect it seems outrageous. Putin used his position to gain wealth for himself and a small group of cronies, and is trying to prevent sanctions from reducing the value of that wealth.

So, various US interests are aligned with a foreign power threatening the sovereignty of Eastern European NATO members.

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