A Republican-led sanctions bill could hurt a wide array of American companies if lawmakers don’t add crucial amendments to the final measure, energy analysts and diplomats warn.
Energy analysts and former American cabinet officials believe that a bill punishing Russia for meddling in the U.S. presidential election could cause ripple effects throughout the U.S. economy. They argue that the legislation could effectively sanction U.S. companies for not doing business with Russia.
Any hint of a Russian investment in a project will automatically trigger sanctions, Thomas Pickering, a foreign expert with the Brookings Institute, told The Daily Caller News Foundation. He served as the Under Secretary for Political Affairs during the Clinton administration.
“[R]ussian companies in oil and gas, even if signed up for less than one percent of a deal can taint the deal by attracting sanctions and the firms do not have to be Russian,” said Pickering, who served as the U.S. Ambassador to the United Nations during the George H.W. Bush administration.
There are few places U.S. companies can go for reprieve if they are tied into a deal indirectly connected to a Russian investor, he added, because obtaining a presidential waiver requirement is “so difficult that there will nearly never be a situation in which they can be applied.”
The U.S. Senate passed the so-called Russia Sanctions Review Act of 2017 in June with a vote of 98-2, leaving the final version up to the House of Representatives to change the language. Trade experts have issued their own warnings.
“Were this legislation to pass with the Directive 4 provision included, it could block U.S. oil and gas firms from participating in some international oil exploration and production projects,” Richard Sawaya, vice president of National Foreign Trade Council, wrote in an editorial earlier this month. He gave a handful of examples regarding why the sanctions could clobber the energy industry.
If a sanctioned Russian company is awarded an exploration block on an oil field, then U.S. companies would be denied the means to explore anywhere on the field, according to Sawaya, who also heads USA Engage, an advocacy group for the agricultural industry.
Other analysts warn that companies such as GE, Boeing, Proctor & Gamble, John Deere and a subsidiary of Caterpillar could get slapped for doing business in Eastern European countries. Popular hotel chains like Marriott, Hilton and Hyatt have important properties in Azerbaijan, where there are significant Russian investments.
“These businesses sell their products and services to customers from many countries that live and work in Azerbaijan, including Russians,” Richard Kauzlarich, a former U.S. Ambassador to Azerbaijan, noted in an editorial Thursday. “If this sanctions legislation applied, US businesses would lose Russian customers, hurting manufacturing and service jobs we need here at home.”
Republican Sen. Lindsey Graham of South Carolina spearheaded the Senate’s version, which could cost companies that play key roles in energy development and production billions of dollars.
Graham has fashioned himself into one of President Donald Trump’s biggest critics. He has joined many of his Democratic colleagues in calling for a special investigator to lead a probe determining what, if any, role the Trump administration played in helping Russia wiggle into the country’s electoral system.
Other countries could use the sanctions to punish the U.S as well, Sawaya noted.
China could gain a foothold, for instance, because Chinese officials haven’t sanctioned Russia, allowing it to freely engage in commerce. Even if Russian President Vladimir Putin and other oligarchs don’t crowd out U.S. companies, other Chinese companies could work to freeze the country out of the oil fields.
The Senate bill also permits Congress to prevent Trump from easing or suspending sanctions on the Kremlin, making it nearly impossible for the president to engage in diplomatic talks with Russia. Senators combined the provision on Russia sanctions with a separate Iran sanctions package, which would make vetoing the bill a much more difficult choice for Trump.
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