Russia Sanctions Bill Could Deliver Punishing Blow - Global Trade Magazine
  January 31st, 2017 | Written by

Russia Sanctions Bill Could Deliver Punishing Blow

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  • Countering Russian Aggression Act of 2017 would do tremendous damage to the Russian economy.
  • If Russia sanctions bill becomes law Trump would not be able to undo Obama Executive Orders.
  • Part of the intent of international sanctions is to influence behavior without having to impose penalties.

On January 10, a bipartisan group of United States Senators introduced new legislation that would impose sanctions against Russia in response to its cyber activities during the 2016 U.S. elections, as well as other offenses, including its meddling in Ukraine and its role in the Syria conflict.

“This legislation, if it were to become law and be implemented vigorously, would do tremendous damage to the Russian economy,” concluded a report from Columbia University’s Center on Global Energy Policy. “Depending on how Russia would react, it could also create significant ripples in the global economy, political stability and energy markets in particular.”

The question now becomes whether the bill, known as the Countering Russian Aggression Act of 2017, ever becomes law. The best-case scenario in that eventuality is that it would have a positive impact on Russian behavior so that the punishing sanctions would never need to be implemented.

The bill (also known as S.94) codifies in legislation existing Executive Orders issued by President Obama with regard to Russia’s intervention in the U.S. political process in 2016 and in Ukraine starting in 2013. That means that if the bill were eventually to go on the books, President Trump would not be able to terminate those Executive Orders with his own counter order.

The sanctions in the bill are directed at the the petroleum, natural gas, and pipeline sectors in Russia, and at civil nuclear projects by Russia anywhere around the world). It also aims to shut down trade in Russian sovereign debt and investment in the privatization of state-owned assets by Russia.

The legislation also sets out a menu of penalties for the president to choose from should he find that sanctionable conduct took place. These include prohibition on EXIM bank assistance for exports to sanctioned persons; prohibition on export licenses for sanctioned persons; prohibition on loans in excess of $10 million in 12 months from U.S. financial institutions; prohibitions on U.S. government procurement, foreign exchange, and banking and property transactions; exclusion of corporate officers from the United States; and various other international financial prohibition.

Once the law was triggered, the president would be required to impose five or more of these penalties against the offending party and would remain in place until the president determines that the offending behavior has ended. Failure on the part of the president to enforce the law is considered a violation of the law but the president retains a certain amount of executive leeway.

“It is therefore not entirely clear,” the report noted, “that, even if the legislation were to pass through Congress and be signed into law by the President, specific penalties would ever be enforced. However, as with all international sanctions, part of the intent is to influence behavior without having to impose penalties.”

Russia would still be permitted to sell oil and gas under the legislation but its international partners would be cut off from US trade and banking, making it likely they would decide that continuing to do business with Russia was not worth the price. The restrictions on Russian foreign debt would curtail Russia’s ability to raise hard currency, all of which would be “not without consequence for the Russian population.”

The current legislation may be seen as grandstanding by its sponsoring senators, although, the report noted, “it seems plausible that some new form of Russia sanctions will pass Congress.”

This legislation, however, will raise concerns from foreign policy experts, business interests, and from governments in Europe and Asia. The president himself has trumpeted his desire to improve relations with Russia and could, of course, veto the measure. Even congressional Republicans, who might otherwise be inclined to support such a measure, may find it more politically expedient to line up behind President Trump.

“But,” as the report concluded, “if further details emerge about the nature of Russian government involvement in the 2016 election or if the situations in Ukraine and Syria worsen, the political winds could change in Congress and make passage of sanctions legislation more likely (and more severe).”


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