Republican and Democratic Congressional leaders have reached an agreement on The Countering Iran's Destabilizing Activities Act – the broad sanctions legislation that allows for new sanctions against Russia, Iran and North Korea. The package «punishes» Russia for alleged meddling in the U.S. presidential elections and for its policy on Ukraine and actions in Syria. It institutes new sanctions on certain Russian industries, such as mining, metals, shipping and railways, and paves the way for possible new sanctions on individuals.
An initial Senate bill was passed in June. It was held up in the House of Representatives after Republicans proposed including North Korea sanctions. Congress plans to have the bill approved and sent to the president’s desk before the August recess. The House version of the bill is set for a vote on July 25. The legislation will move under special, expedited procedures for noncontroversial bills expected to pass with a two-thirds majority — enough support to overcome a presidential veto.
Republicans are undercutting their own president on a particularly important subject as the legislation would limit any potential effort by the chief executive to improve the relations with Russia. Under the terms of the bill, the U.S. president must submit to Congress a report on proposed actions that would «significantly alter» U.S. foreign policy in connection with Moscow, including the return of diplomatic properties in Maryland and New York. After that, Congress would have at least 30 days to hold hearings and then vote to uphold or reject the proposed changes.
Should the bill pass the House and Senate, the lawmakers will get a veto power to block any easing of the sanctions imposed on Russia. The White House had objected to this section of the bill, making Donald Trump or any other president elected after him handcuffed and unable to take decisions on key issues, significantly curtailing presidential foreign policy prerogatives. Despite the objections, the administration has not issued a formal veto threat.
One thing about the legislation catches the eye. Despite the much talked about desire to «punish» Russia, the bill stipulates an exclusion from the rule. It says US anti-Russian sanctions should not affect the work of National Aeronautics and Space Administration (NASA) and damage bilateral cooperation in space!
Indeed, the Russian RD-180, RD-181 rocket engines exported to the US are crucial for America’s space research programs. They have been exported to the United States despite the sanctions. Senator John McCain called it «the height of hypocrisy!» He rightly noticed that the US administration tells European countries and governments that they need to hold the line on maintaining sanctions on Russia, which is far harder for them to do, while the US is gutting its own policy in this way.
Over a dozen of US corporations want changes to the bill and lobbyists and trade associations have been visiting Capitol Hill in recent days meeting members of Congress. According to Investors Business Daily, American businesses in energy, construction, technology, logistics and financial sectors would be punished for doing business with European consortiums that include even small percentages of Russian involvement. As a result, the United States — the intended punisher — would become the punished by a bill that would give Russian firms a competitive advantage. American logistics and supply chain companies will lose opportunities in Russia. American companies like Boeing, Johnson & Johnson, International Paper, Amsted Rail, and several in the pharmaceutical and shipping industries could all be negatively impacted by this bill.
CNN reports that companies from the oil, energy, banking, aerospace, auto and heavy manufacturing industries have all raised concerns with the details of the sanctions measure. They have argued that the legislation has unintended consequences that will ultimately harm their businesses, rather than Russia. The companies that have expressed concerns include oil and energy giants like BP, Exxon and General Electric, aerospace leader Boeing and banking conglomerates Citigroup, MasterCard and Visa. Manufacturers including Ford, Dow Chemical, Procter & Gamble, International Paper, Caterpillar and Cummins have also raised issues with how the measure could impact their businesses. Caterpillar could lose orders for heavy equipment needed to build pipelines and other construction projects.
In Brussels, the European Union sounded an alarm about the U.S. moves to step up sanctions on Russia, urging Washington to coordinate with its Group of 7 partners. The European Commission warned of possibly «wide and indiscriminate» «unintended consequences», notably on the EU's efforts to diversify energy sources away from Russia. Germany has already warned of possible retaliation if the United States moves to sanction German firms involved with building a new Baltic pipeline for Russian gas.
According to Reuters, EU diplomats are concerned that a German-US row over the Nord Stream 2 pipeline being built by Russia’s state-owned Gazprom could complicate efforts in Brussels to forge an EU consensus on negotiating with Russia over the project. «We are concerned the measures discussed in the US Congress could have unintended consequences, not only when it comes to Transatlantic/G7 unity, but also on EU economic and energy security interests. This impact could be potentially wide and indiscriminate, including when it comes to energy sources diversification efforts», the Commission said in its statement. «We understand that the Russia/Iran sanctions bill is driven primarily by domestic considerations», it says, referring to the bill.
As declared in a joint statement made last month by German Foreign Minister Sigmar Gabriel and Austrian Chancellor Christian Kern: «Europe's energy supply is a matter for Europe, and not the United States of America!» The foreign ministers emphasized that the very fact that the U.S. bill threatens European firms taking part in pipeline construction is «a completely new and very negative dimension into European-American relations». The officials wrote that, «In noticeable frankness, the draft US legislation describes what it's really about: the sale of American liquefied petroleum gas and the squeezing out of Russian natural gas from the European market». German Economy Minister Brigitte Zypries joined in the criticism and warned of possible retaliation if Washington ended up fining German companies.
Signing the bill into a law, would not benefit the United States in any way. It would hurt American businesses and spoil the relations with the European allies. The provision that NASA is excluded from the bill emasculates the whole idea.
Russia is adamant in its desire to resist pressure and it will respond. The sanctions have been in force since 2014 without producing any effect. According to the World Bank, Russian economy is expected to grow from 2017 onwards. The unprecedented development would damage the Russia-US relationship for many years to come. It would be an obstacle on the way of reaching much needed accords in the field of arms control and non-proliferation. It would hinder coordination of efforts in the Middle East.
With so many cons, there are actually no pros. The US will gain nothing while losing a lot. There are solid arguments in favor of making certain changes, like giving the president flexibility in foreign policy decision making, in compliance with the American constitution. There is still time to amend the bill and avoid the damage it will do becoming a law.