Trade groups mount quiet campaign to weaken Senate sanctions bill on Russia

Trade groups representing some of the nation’s biggest financial services and energy firms are using the recess to urge lawmakers and their staff to soften Russian sanctions legislation.

The groups, including the U.S.-Russia Business Council and the National Foreign Trade Council, are meeting with lawmakers and staff in an effort to prevent the bill from moving forward.

{mosads}The bill would impose sanctions on the Russian arms exporter Rosoboronexport as well as Gazprom and other energy firms. It would also authorize restrictions on Russian banks from doing business with the U.S. banking system while codifying the administration’s current sanctions.

The business groups argue the bill would be bad for the economy and would limit the administration’s flexibility in dealing with Russia.

Worse, the sanctions would be difficult to eliminate if passed into law by Congress. Existing U.S. sanctions on Russia imposed by the Obama administration have been done through executive authority and would be easier to lift.

The bill authored by Senate Foreign Relations Committee Chairman Robert Menendez (D-N.J.) and ranking member Bob Corker (R-Tenn.) also authorizes lethal military aid for Ukraine to defend itself from Russian-backed rebels.

The administration has not taken a position on the bill and has so far has declined calling for lethal military aide to arm Ukraine.

But business groups think it could be tough for lawmakers to vote against it if it hits the floor, so they’re focusing their efforts on preventing it from getting that far.

“If this bill gets to the floor, it’s like passing a bill in favor of motherhood,” said one business source working to remove the sanctions language.

It’s unclear whether Senate Majority Leader Harry Reid (D-Nev.) will take up the bill during the lame-duck session, and there are no plans in the House to move similar legislation. Reid’s office didn’t respond to a request for comment for the story.

“The administration continues to consult closely with Congress on a full spectrum of bilateral and multilateral assistance and support for Ukraine,” said Mark Stroh, spokesman for the National Security Council, in a statement when asked about the bill.

Supporters say the bill would show Congress backs the administration in its handling of Russia President Vladimir Putin.

“Combined with political and military support for Ukraine, sanctions are being used as a tool to influence President Putin’s strategic calculus and hopefully to end his ongoing aggression in Ukraine,” said Menendez committee spokesman Adam Sharon.

The chief concern from business groups is that sanctions legislation, rather than executive action, will lock in tighter rules that will last in perpetuity.

Daniel Russell, president of the U.S.-Russia Business Council, said that businesses are “afraid that if you get to a legislative solution to this, you’ll in effect make it very hard for the administration … to use these as a foreign policy tool rather than a punitive measure that will be there for all time.”

Robert Kahn, a senior economics fellow at the Council on Foreign Relations in Washington, said business groups understand there is “always a political risk in investing in the region — it’s Russia.”

“[But] the administration chose very consciously not to seek congressional authorization for this and to do it as an administrative measure so it gives them flexibility to adjust,” Kahn added. “One of the powers of sanctions is the threat of more sanctions.”

Some experts said the White House has already signaled it’s willing to make exceptions for certain U.S. sectors impacted by the sanctions.

Last week, Bloomberg reported that the administration granted an extension to ExxonMobil giving it more time to halt its drilling in the Russia Arctic, where it is working on a $700 million project with Russian state oil company Rosneft.

Without the exception, Exxon would be subject to U.S. sanctions.

“What we’re seeing is some flexibility on the part of the government to work with Exxon so as not to penalize the company,” said Elizabeth Rosenberg, a former Obama Treasury official.

Rosenberg said a legislative measure could make it more difficult for the administration to provide such flexibility.

“Businesses are in a tight spot balancing the foreign policy considerations with the negative commercial consequences these sanctions may have on their own companies,” said Rosenberg, who now works as a senior fellow at the Center for a New American Security in Washington. 

Tags Bob Corker Harry Reid Robert Menendez

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