/ Magnitsky Act a Barrier to the Belt and Road Initiative?

In 2012 the United States passed the Magnitsky Rule of Law Act in a bipartisan effort to reprimand Russian officials which the U.S. deemed responsible for the death of Sergei Magnitsky, a Russian accountant who died in police custody in Moscow after helping to expose a tax fraud scheme involving government officials. Since 2012, the Magnitsky Act has expanded and targets the assets of human rights violators and those complicit in acts of corruption, while also disallowing individuals targeted by the Act to enter the United States. The Magnitsky Act has been utilized globally by the U.S. to target those complicit in the undermining of human rights corruption and as of December 9, 2019, the act was expanded once again, this time adding its first Latvian national to the list of sanctioned individuals.

Aivars Lembergs, who the Magnitsky Act has recently targeted for alleged graft and corruption, served as the mayor of Ventspils, which is widely known as a port city that handles numerous cargo shipments in the Baltic Sea and across Europe and Asia. The addition of Lembergs to this list was expected to cause significant issues for the shipping operations of Ventspils due to four entities, including the Ventspils Freeport Administration, initially being subjected to the new sanctions. However, on December 18 Saeima reported the passage of a new bill that established Ventspils Port as a state-owned joint-stock company, which allowed for its removal from the sanctions list. Although the port was quickly removed from the sanctions list, the situation presents the potential repercussions that can occur internationally for programs such as China’s Belt and Road Initiative (BRI), with which Latvia has signed a number of cooperation agreements. One such agreement includes a promise of deepening cooperation in maritime shipping measures with major ports such as Ventspils.

Latvian and Chinese corporations have worked to improve logistics capabilities that expand existing infrastructure for railways, ports, and aviation. Many of these new capabilities hinge on Latvian cooperation to better connect Asian and European markets. This being noted, the latest expansion of the Magnitsky Act by the U.S. and the looming possibility of Europe passing its own version the legislation could spell trouble for the BRI should these acts continue to involve major players in Latvian politics and industry, effectively denying access to essential financial assets necessary to fund the initiative. Although it appears that major negative economic impacts will not be felt from the Ventspils’s brief appearance on the U.S. sanctions list, the situation has indeed brought to light the complex ripple effects that may come as a result of future additions to the sanctions list and the difficulties it can create for initiatives such as the BRI.

Chance Kennicutt