The US reportedly watered down sanctions against a key Russian oligarch out of fear that disrupting his business empire could hurt the global economy

• The US Treasury issued a special license exempting Alisher Usmanov's businesses from sanctions.
• The move makes it legal for the oligarch's entities to continue doing business with US companies.

The US Treasury made exemptions to sanctions on Alisher Usmanov, the Russian businessperson described by the European Union as one of President Vladimir Putin's "favorite oligarchs" whose net worth is estimated to be about $19.6 billion.

US officials feared that blocking the hundreds of businesses believed to be connected to Usmanov could wreak havoc on the global economy and supply chain, current and former Treasury Department employees told The Wall Street Journal.

To mitigate repercussions, the US focused sanctions on assets personally linked to Usmanov — such as his superyacht and private jet — instead of his business entities. The Journal reported the move was an example of sanctions put in place following Russia's invasion of Ukraine that were limited to avoid outsize influence on the US economy.

On March 3, the Treasury issued a special license "authorizing all transactions and unblocking all property of any entity owned 50 percent or more, directly or indirectly, by Usmanov." Typically, businesses with a majority stake owned by sanctioned oligarchs have been blocked from doing business with US companies unless granted an exemption.

In an email exchange dated March 1 reviewed by The Journal with the subject line "Usmanov mitigation," Lisa Palluconi, a Treasury official, detailed the plan for watering down sanctions against Usmanov, saying that "messaging will be that we continue to look into his entities … or something like that."

Insider's email seeking comment sent to an address believed to belong to Palluconi was not immediately returned. Palluconi did not respond to The Journal's request for comment.

The Journal, citing current and former Treasury officials, also reported that the decision to limit the sanctions on Usmanov was partly influenced by a desire to avoid lawsuits from the oligarch, which could eat into the department's limited resources.

"Financial sanctions on Russian elites immediately cut them off from their wealth, their ability to make or receive payments, their travel, and their ability to extract revenue from their companies," a Treasury spokesperson told Insider. "The United States will continue to freeze and seize assets of these elites and their proxies as they support President Putin's unprovoked invasion of Ukraine."

Usmanov's business holdings are substantial. He controls 49% of OOO USM Holding Co., an investment group that owns the iron-ore supplier Metalloinvest and Udokan Copper — which claims to have Russia's largest undeveloped copper deposits. The Russian telecommunications company MegaFon is also a USM subsidiary. And Usmanov purchased the Russian business newspaper Kommersant in 2006 and owns Khimki Group, a real-estate developer, according to PitchBook.

A USM spokesperson told The Journal that the oligarch had previously called the sanctions levied against him by the US, the UK, and the EU "unfounded and unfair." He said his businesses received zero support from the Russian government.

You can read more on the decision-making behind the Usmanov sanctions over at The Wall Street Journal.