Why the Magnitsky Act Makes Sense

Congress has the chance to press for trade reforms that serve U.S. interests and promote global human rights. Why is it postponing?

Senator John Kerry recently postponed—once again—the Senate Foreign Relations Committee’s consideration of the Sergey Magnitsky Act. This is wrong. Individual- and property-rights violations in Russia are undermining government legitimacy, destabilizing the country and preventing investment and business development—and the proposed Magnitsky Act can provide the tools to combat this sad state of affairs.

A weak rule of law and pervasive corruption—including the failing court and law-enforcement systems—are at the heart of these persistent rights violations, which reflect both the Soviet legacy and the older Russian tradition of the patrimonial state. Bad cops and courts are challenging everyday Russians, as well as Western and domestic investors. Top Russian leaders, including presidents Vladimir Putin and Dmitri Medvedev, have complained bitterly about the state of affairs but done little to improve things.

Now, Congress has a chance to press for trade reforms that are in the best interests of the United States while supporting the cause of human rights for all. The bipartisan bill was drafted in response to the death of Sergei Magnitsky. He died in detention following his whistle-blowing on massive fraud allegedly committed by Russian officials. It provides a practical and balanced way forward—something that can serve as a prerequisite for the lifting of the obsolete Jackson-Vanik Amendment, a 1974 restriction on trade with authoritarian regimes. The new Magnitsky Act would accommodate Russian membership in the World Trade Organization (WTO) while signaling long-term American commitment to the rule of law beyond Jackson-Vanik.

Despite the Obama administration’s opposition to the bill, congressional staffers believe that without the Magnitsky Act passing first, the Jackson-Vanik Amendment will not be lifted. Things are not helped by the heavy-handed opposition by the Russian ambassador Sergey Kislyak, who threatened “a significant reaction” which may “undermine” the U.S.-Russian cooperation. Many in Congress rejected Kislyak’s threats, believing that foreign ambassadors should not dictate to American legislators how to pass laws.

Instead, Russia should pin a medal on U.S. lawmakers trying to pass the Magnitsky Act. After all, its own government failed to control corruption and fraud, leading to mass demonstrations in Moscow last winter.

Human Rights and the Sergei Magnitsky Case

Sergei Magnitsky was a thirty-seven-year-old attorney who uncovered a giant corruption scheme that involved embezzlements of $230 million from the Russian Treasury by law-enforcement and tax officials. After making accusations, he was arrested on fabricated tax-evasion and tax-fraud charges.

Magnitsky died in isolation at a Russian prison where he was denied medical care and beaten mercilessly by guards; an investigation by the Russian Presidential Council on Human Rights has confirmed as much. This has not resulted in the punishment of those involved. Those that were in power remain in power, and some have even been decorated or promoted.

Earlier this month, Russian state prosecutors dropped charges against the chief doctor at the prison where Magnitsky died after the statute of limitations expired. The physician had been accused of negligence resulting in Magnitsky’s death. Other officials implicated in the affair have been promoted instead of being punished.

The legislation could also be applied to the case of Mikhail Khodorkovsky. Khodorkovsky, chairman and CEO of the Yukos oil company, was once Russia’s wealthiest man. In 2003, he was arrested on charges of tax fraud, and in 2005 he was sentenced to nine years in prison. At a second show trial in December 2010, he was sentenced to fourteen years in prison. In 2006, Yukos was auctioned off at a rock-bottom price to Rosneft, Russia’s state-run oil company. Yukos shareholders, including many American small investors and mutual funds, were effectively expropriated by the Russian government without compensation.

In reality, Khodorkovsky ran afoul of the Putin administration due to his calls to curb corruption and because some of Putin’s associates coveted parts of Yukos. The show trial was used to intimidate and control other oligarchs that might have disobeyed the Kremlin. Amnesty International recognized Khodorkovsky as a political prisoner. Today, Russia is the only G-8 country with political prisoners.

U.S. Response to the Outrage

For the Obama administration, the fear is that the increased pressure on Russia to get its economic act together will fracture its hallowed “reset” policy. This is why the administration applied pressure on Sen. Kerry to postpone the vote on the Magnitsky Act.