“Russia will not change its course because of sanctions”.
It was nearly two years ago, and I agreed to go on a Russian political talk show. Little did I know that this situation would become very personal for me.
At that time, Russia and the United States seemed to be caught in a game of who could do the most petty trick against the other. Shutting down diplomatic presence, for example, really means nothing to anyone except for those who are simply trying to live their lives, and happen to have a connection between the two countries.
To put it simply on how sanctions don’t work: Regardless of your political views, I think it’s clear: Russia has ZERO intention of giving up Crimea, or apologizing for any alleged interference in any election process, even if it did buy some Facebook ads.
If you’re American and reading this, you also know that the US government has ZERO intention of changing its opinion of Russia anytime in the near future. And to give you an idea of how ineffective sanctions are, some of you are only right now learning that Russia has also created sanctions against the US.
With the background of flooding in Houston, I suggested a constructive approach on the talk show but was fairly quickly shouted down. The man I argue with in this short clip is Greg Weiner. He moved from Russia to the States, lived there for some time, and now represents the USA on Russian political talk shows.:
I didn’t last long as a political talk show personality. It seems I didn’t have a strong enough position for or against America or Russia. My stance of judging each situation separately, not taking sides, and offering constructive solutions apparently didn’t make for very good television.
If you want more in-depth political analysis on how sanctions don’t work, you can check out this Forbes article that I just stumbled upon. Because this is now about how this became personal for me, an American in Russia.
Again, at the time of my talk show adventures, I didn’t take the sanctions very seriously. I saw that the sanctions were pointed at a small group of people and businesses, none of which I have any relation to, and to repeat myself: why take anything seriously if it produces zero result?
As regular readers know, I don’t just blog: I run a Moscow real estate agency, wrote a book in Russian, run a Russian language YouTube channel, and help Russian businesses grow their business in the West.
But my view on sanctions changed this year when I decided to also start a small trucking company in Russia. Together with a Russian business partner, we created a business plan, and I quickly saw the clear upside. I then showed it to my brother Tim back in Ohio, and he also saw the potential. Tim’s LLC, that he had used for various side hustles in the past, became a partner in the Russian trucking company, and made a no-interest loan to the Russian company. The amount wasn’t small or big, but we saw that leveraging the amount through Russian bank financing, we could start our small business off with three 18-wheel tractor-trailer trucks. That’s when the problems began.
We were put under some fairly heavy scrutiny in Russia. Although it was stressful at the time, in retrospect, the Russian tax authorities’ concerns were not baseless, and actually had our American partner’s interests in mind. It seemed they were mainly concerned that we were really going to do business with the money that came in from the no loan contract and not planning some fraud like bankrupting the company and running away with cash.
After we had worked through all of this on the Russian side, problems began for Tim. The bank that he used in Ohio, and asked him to close his accounts. He asked why, and they refused to give an answer.
We realized that something strange was afoot, but weren’t sure how to proceed. Tim then went to 3 or 4 more banks in Ohio, and they all refused to open an account for him. Again, they refused to give an explanation. This was maddening for me. If nothing else, this is not the America that I know. If a business is refusing to serve its customers, it should be able, or even required, to give a reason.
We found out about an organization called OFAC. This is the Office of Foreign Assets Control. Tim called OFAC. In short, after that phone call we were relieved to understand that we were not somehow unwittingly involved in anything illegal, but concerned to hear that because of regulations, banks simply do not want to have anything to do with servicing any business account with any connection to Russia.
My conclusion: Neither government has changed its views one iota because of the sanctions. There are issues for businesses, but big business is mostly unfazed. But here we are, small business, working to develop a life for ourselves and our families, and to create jobs, and we are the ones suffering the most because of the sanctions.
I do not even blame OFAC for this. They are simply following the procedures created by legislators.
What I am suggesting is dialog. And I strongly recommend and even beg US legislators to re-consider how your legislation is hurting small business ventures between our nations. This serves no purpose for business, and I dare say serves no purpose even for your supposed agenda of spreading “American democratic values”. You have failed, and you need to set it right.
Because when you have no qualms with buying Russian gas and oil, but Americans in both in the USA and in Russia become the main victims of your half-baked policy, your hypocritical absurdity becomes clear to all. You are involved in a series of “petty tricks” that serve no purpose except to save face in front of your constituents, and in the end hurt small business and those folks who genuinely want to develop constructive ties between our nations.
P.S. This situation has forced me to pay more attention to politics than I really care to. But while the lawmakers do what they do, we have a business to run and obligations to fulfill, so this text is also a request for help. If you have experienced a similar situation with US banks and know how to navigate the way out, I would really appreciate any tips or insight. Thanks!