Steven Mnuchin Saves Thousands Of Manufacturing Jobs . . . In Russia

Mnooks is really getting the hang of this gig.
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When Donald Trump campaigned on his plan to save manufacturing jobs in the Heartland, little did we know he was referring to the blue-collar strongholds of Guangdong Province in China and Sayanogorsk, Russia’s aluminum-smelting capital.

MadMnuchin

But after Treasury Secretary Steve Mnuchin told Reuters over the weekend that his department was actively working to protect Russian aluminum giant Rusal from the worst of the effects of sanctions that were imposed on it in April, one can argue that the administration has taken at least as much direct action to prevent the destruction of jobs in rival countries that it has to protect American workers from the effects of its trade policies.

In April, the Trump Administration finally followed through on a veto-proof mandate from Congress that it implement sanctions on Russia in response to its illegal interference in the 2016 presidential elections, by leveling economic sanctions aimed at financially impairing dozens of powerful oligarchs close to Russian President Vladimir Putin. One of those oligarchs, Oleg Deripaska, is the largest shareholder in Rusal, though the company has claimed that Deripaska has reduced his interest in the firm to less than 50%, after stepping down as president of its parent company EN+ Group.

But according to Russia experts like Anders Aslund of the Atlantic Council, the idea that one can punish Vladimir Putin and his coterie of oligarchs without seriously damaging leading Russian multinational firms like Rusal is mistaken. He told the Washington Post last month that there can only be two possible owners of Rusal: Deripaska or the Russian government, given how important the firm is to the Russian economy. “It appears to me that both parties play the game now: Deripaska reduces his public exposure and the Treasury (Department) pretends that it is satisfied, gradually easing the sanctions,” Aslund told the Post.

It is tempting to attribute the Administration’s coddling of Rusal to President Trump’s general tendency to give in to Vladimir Putin whenever he can get away with it. And it is worth noting that Rusal’s erstwhile honcho Deripaska was the very Russian oligarch to whom former Trump campaign Chair Paul Manafort owes more than $10 million. But even if the Trump Administration is bailing out Deripaska and the Russian economy for the sake of stabilizing global aluminum markets, and not for more nefarious reasons, the about-face underscores the incoherence of Trump foreign and economic policy.

The Rusal drama closely resembles the recent drama surrounding Chinese telecommunications firm ZTE, when President Trump personally countermanded a sales ban that was imposed on it by the Commerce Department, after the U.S. government determined that it had violated a probation agreement put in place after the firm was punished for flouted sanctions against Iran. For all his tough talk against Iran for its nuclear ambitions and China for its unfair trade practices, when President Trump had the chance to send a message on both fronts by allowing ZTE to go under, he declined to do so. On top of that, he spent significant political capital convincing Congressional Republicans not to go ahead to put the sales ban into law.

There are several conclusions to draw from the contradictory mess that has been U.S. foreign policy for the past two years. The most obvious conclusion is that President Trump has an affinity for Russia that lies somewhere on the spectrum between pathological and criminal. But that conclusion must also be paired with the recognition that economic sanctions, whether they are implemented by Trump, Obama, or any other U.S. president are pretty useless at changing an adversaries behavior. The Russian economy has suffered from sanctions placed on it by the U.S. and Europe following its invasion of Crimea and its murder of the innocents aboard Malaysia Airlines Flight 17, but these effects have done nothing to limit Vladimir Putin’s grip on power.

Finally, the ZTE and Rusal episodes should convince President Trump’s interlocutors on the global stage that the current administration lacks any strategic objectives whatsoever, other than creating theater meant to convince his fanbase in America that the President is gallantly fighting enemies at home and abroad who would otherwise be screwing them with impunity. And so far it’s working, as Trump has successfully turned the Republican Party into his personal, political machine even as his trade wars have done nothing to shrink the U.S. trade deficit and plenty to hurt certain pockets of the American economy.

Christopher Matthews is a writer who splits his time between New York City and Accra, Ghana, with an interest in the intersection of markets, the economy, and public policy. He previously held staff positions at Axios, Fortune Magazine, and Time Magazine, and has been published in Forbes and Debtwire.

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