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.

But the time for softball is over. The Magnitsky bill has prominent supporters: David J. Kramer, president of Freedom House and former assistant secretary of state for human rights in the George W. Bush administration, has stated that the Magnitsky bill has “done more for the cause of human rights [in Russia] than anything done” by the two previous administrations.

Yet in late July 2011, the State Department placed some sixty-four Russian officials involved in Magnitsky’s murder on a visa blacklist. This brought about some protests on the Russian side, but it was most likely a preemptive attempt by the Obama administration to stonewall the Magnitsky Act.

The bill is aimed at human-rights abusers not only in the Magnitsky case—and not only in Russia—but around the globe. Individuals guilty of massive human-rights violations would be refused visas, and their assets within the preview of the U.S. government would be frozen. Russia has threatened to retaliate “asymmetrically” if the legislation is passed. It has already banned U.S. officials prosecuting Viktor Bout, an arms trader known as the “Lord of War,” from entering Russia.

As the United States supported Russian membership in the WTO, targeted legislation like the Magnitsky Act would be a more effective way to encourage Russia to respect the rights of its citizens. As seven leaders of Russia’s prodemocracy movement declared, “Jackson-Vanik is not helpful in any way—neither for promotion of human right and democracy in Russia, nor for the economic interests of its people. . . . Much more effective are targeted sanctions against specific officials involved in human rights abuse.”

Under Magnitsky, the United States could comply with its WTO obligation to offer permanent normal trade relations (PNTR) to America’s trading partners, thereby allowing U.S. firms the best chance to compete for business in Russia. Extending PNTR to Russia would also promote transparency, property rights and the rule of law.

As the world shrinks, the United States and its Western allies can and should target blatant and systematic abusers of human rights, who often spend time or keep financial resources in the West. Washington should also coordinate with allies in Europe and elsewhere who are promoting pieces of legislation similar to the Magnitsky Act. International cooperation will go a long way in deterring gross violations of individual rights, including property rights. This is the way for the United States and its allies to project their values—and make the world safer for investment and economic growth.

Ariel Cohen, PhD, is senior research fellow in Russian and Eurasian Studies and International Energy Policy in the Douglas and Sarah Allison Center at The Heritage Foundation.

Image: www.kremlin.ru