A Russian flag flies next to the U.S. embassy in Moscow on July 31, 2017.Mladen Antonov / AFP / Getty

For months, Moscow waited for this report, churning with a mix of fear and preemptive righteous anger. The political and business elite knew that, on January 29, in order to comply with a sanctions bill Congress passed almost unanimously last July, the Trump administration would have to deliver to Congress a list of Russia’s “most significant senior foreign political figures and oligarchs … as determined by their closeness to the Russian regime and their net worth.” Also required was an “assessment of the relationship between individuals” and “President Vladimir Putin or other members of the Russian ruling elite,” and some measurement of their corruption. Together, these materials became known as the Kremlin Report, and they were intended to provide the basis for a possible new set of sanctions to punish Russia for election meddling and continued interference in Ukraine.

“Our embassy in Moscow says they’re consumed with this and that we should expect blowback,” said one administration source last week. Andrei Kostin, the head of the massive state-controlled Russian bank VTB, said that any new American sanctions on Russia would be “a declaration of war.” Stories in the Russian business press speculated about which people could possibly be on the list of oligarchs and political figures, and how many of them. One member of the Russian parliament even circulated his own list of Russians, hoping to preempt Washington’s.

Anticipating new sanctions, Putin responded to oligarchs’ December appeal to simplify the process of bringing money back to Russia. Banks began splitting off their defense-related branches into new entities in order to spare the mothership from sanctions. When reports revealed that Putin’s daughter Ekaterina separated from her husband, many speculated that it was a way of splitting up their assets to avoid sanctions. (Divorce is a popular way to hide money in Russia.) Some oligarchs were approaching Daniel Fried, who used to handle Russia sanctions at the State Department, to offer him money to help them avoid sanctions. (He declined.) Meanwhile, the Kremlin considered how to retaliate. According to a source close to the Russian Foreign Ministry, officials discussed bringing Iran under Russia’s military umbrella and increasing military aid to North Korea.

The Trump administration recruited Fried and Anders Aslund, an expert on the Russian economy, for advice on compiling the Kremlin Report’s list of powerful Russians. The point, Fried told me shortly after the new year, was to go after “the bag men, the cutouts, the people who were part of the informal system of power. … You don’t need a big list to show people in Moscow that their interests would be better served by not being part of this inner circle and not messing with the United States.” Fried and Aslund, now both at the Atlantic Council, noticed how nervous “the Russian ruling elite” were. “Look at this level of anxiety in Moscow!” Fried said at the time. “Their anxiety suggests our opportunity.” According to Fried and three other sources familiar with the development of the Kremlin Report, the Fried and Aslund recommendations were expected to produce a serious and targeted list of names.

And then, on Tuesday morning, it turned out that the administration’s list was instead an indiscriminate compilation of every Russian billionaire and every senior Kremlin official and minister except Putin himself. It included Moscow’s mayor and the governor of St. Petersburg. It included Russia’s prime minister and its foreign minister. It included Russia’s ombudsman for human rights and its presidential commissioner for children’s rights. It included the founder of Yandex, the Russian Google, a liberal billionaire who has spent the last decade avoiding the Kremlin’s attempts to control him. It included everyone, it seemed, except Vladimir Putin. A Treasury official admitted to BuzzFeed’s John Hudson that the department had simply copied the Forbes list of Russian billionaires for the oligarch portion of the list. The list was so broad as to be meaningless, rendered even more so by the fact that no one on it would be targeted for punishment: The State Department made clear Monday night that it was planning no new sanctions anyway.

It was hard to imagine a more anticlimactic outcome. Or a more confusing and counterproductive one.

“At the last minute,” Aslund seethed in a piece for the Atlantic Council’s website, “somebody high up—no one knows who at this point—threw out the experts’ work and instead wrote down the names of the top officials in the Russian presidential administration and government plus the 96 Russian billionaires on the Forbes list. In doing so, this senior official ridiculed the government experts who had prepared another report, rendering [the Russian sanctions law] ineffective and mocking US sanctions on Russia overall.”

The Russians seemed to agree. The head of the committee for foreign affairs in the upper house of parliament was puzzled at the fact that the set of government names “simply copied the Kremlin’s phonebook.” Putin’s friend and former finance minister, the liberal Alexey Kudrin, pointed out that “both the law and the list and any potential new sanctions are illogical.” Arkady Dvorkovich, a deputy prime minister, said, “It’s just a list of people who are clearly leaders in Russian politics ... and ... leaders in Russian business. So far, there are no grounds for any actions here. The list looks like a book of ‘who’s who in Russian politics.’” Mikhail Fedotov, the generally well-regarded human rights ombudsman, also wasn’t sure what it meant. “As I understand it, the only thing that might happen now is that American diplomats might not say hello or shake hands, when meeting me at diplomatic receptions,” he said. “But these are polite people and I don’t expect they’ll do that.” One of the billionaires told The Bell, an independent Russian news site, “This list means nothing, whether it exists or not.” (Fried, for his part, was indignant. “The list is a virtual xerox of Forbes Russia Rich Guy List,” he told me. “It misses the vectors of closeness to Putin  and corruption, which was the point.” There is a more-targeted, classified version, he said, and it “may be serious. But the published list is not.”)

Others in Russia were far less charitable. Some called it an attempt to interfere in Russia’s upcoming presidential election; others suggested drawing up a similar list of Americans. Putin weighed in to say that the list was “an unfriendly act that complicates relations between Russia and the U.S. and damages international relations in general.” Businessmen speaking anonymously to The Bell said that they expected not a splintering effect inside the Russian elite—which would have been the point of new sanctions—but a rallying around Putin.

In general, though, the indignation was tempered. “People in government are all expressing relief,” says the source close to the Russian Foreign Ministry. “There’s a real appreciation that Trump took a stance against the Washington establishment. … They see it as constructive for the relationship.” A Moscow investment banker pointed out that the ruble rallied on Tuesday. “People are relieved,” he said. “I think the Kremlin understands that it could’ve been worse and that there’s no need to panic,” says Andrei Kortunov, who runs a foreign policy think tank in Moscow.

There was an acknowledgement that, as Kortunov said, “this is the beginning, not the end,” but the list was met with exactly what you don’t want when you’re talking about possible sanctions: relief, mockery, and disdain. “We should tend to our own affairs, and then the realization will come that there’s no sense in drawing up lists and threatening and frightening,” Putin said. “Russia should be guided by the old rule: ‘The dog barks, but the caravan rolls on.’” (Or, as Andranik Migranyan, an old friend of the Russian foreign minister, put it, “They screw us but we get stronger.”)

The administration had all the tools and expertise at its disposal, and seemed to be on track to a sensible policy to which Congress had bound it: using a scalpel to go after the specific people who make Putin’s antagonism to the United States possible. Instead, it opted for a blow-up toy sledgehammer that is as blunt as it is comical. Congress had tasked the Trump administration with devising the framework for Russia sanctions, and on Tuesday, by seemingly copying Forbes and the Kremlin phonebook, the Trump administration essentially plagiarized its homework. In the process, the administration made a mess for itself at home. Democrats and Republicans in Congress were furious, and the list again raised another round of questions about why the Trump administration was being so lenient on a regime that stands accused of helping Trump get elected. The Russians, in the meantime, were both angry, mocking, and relieved, yet, according to two sources close to the Russian Foreign Ministry, left the option of retaliating through Iran and North Korea on the table.

It’s hard to imagine a worse reaction.

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