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US businesses lobby against Russia sanctions legislation

US businesses lobby against Russia sanctions legislationThe Senate's Russia sanctions legislation has generated objections from a wide array of US business industries, which have undertaken a lobbying campaign on Capitol Hill to try to make changes to the bill, CNN reports.

Companies from the oil, energy, banking, aerospace, auto and heavy manufacturing industries have raised concerns with the details of the sanctions measure. While the corporations insist they're not against new sanctions on Russia and not seeking to eliminate the bill, they have argued that the legislation has unintended consequences that will ultimately harm their businesses, rather than Russia.

The Russia sanctions measure, which was a deal struck by the Senate banking and foreign relations committee leaders last month that passed the Senate 98-2, establishes new sanctions on several Russian sectors, including energy and defense. But the bill has been stalled in the House over a series of procedural disputes. While Democrats have accused Republicans of working with the White House to scuttle the bill, the behind-the-scenes push from the business community provides another explanation for why the legislation has yet to move in the House. More than a dozen companies want changes and their lobbyists and the trade associations representing them have been on Capitol Hill in recent days meeting with congressional staff to try to push for changes to the legislation. Negotiators in both parties are nearing final approval of a sweeping sanctions deal that does not include changes the White House sought to make it easier for President Donald Trump to ease penalties against 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, according to congressional aides, lobbyists and industry officials.

Manufacturers including Ford, Dow Chemical, Procter & Gamble, International Paper, Caterpillar and Cummins have also raised issues with how the measure could impact their businesses, the sources say. European countries have also objected to the bill, saying it will disadvantage their energy companies. The strongest outcry comes from those companies that are involved in highly controversial Nord Stream 2 natural gas project in the Baltics directly mentioned in the bill.

The biggest dispute with the bill between the Senate and the White House is over the provision that gives Congress veto power if the Trump administration tries to ease sanctions on Russia. House and Senate leaders are currently working through potential changes to the legislation being proposed, and they say they're open to some of the changes being proposed by industry -- so long as they don't weaken the bill. Senate foreign relations committee Chairman Bob Corker said Tuesday there were about 10 issues that had been raised, and all but one of them had been worked out. "We're not opposed to some of the technical changes and some of the improvements," Maryland Sen Ben Cardin, the top Democrat on the Senate committee, told CNN. "What we're resisting is anything that would weaken the bill."

New York Rep. Eliot Engel, the top Democrat on the House foreign affairs committee, said it was "obvious" that several outside companies were weighing in, adding he was concerned the extended stalling would allow more and more changes to be made. "That is part of the problem. Once you open up the bill then every company just wants one change, or every group wants one change and before you know it, you don't really have a bill," Engel said. "That's my big fear."

The bill passed the Senate over a month ago, but a series of procedural disputes in the House have given companies time to outline their concerns. Some of the companies have been lobbying Congress themselves, while others are working through trade associations. Nearly all of the companies raising issues are members of the US-Russia Business Council, a US-based trade association involved in the lobbying campaign. "The competitiveness of US companies in diverse sectors from manufacturing to services would be negatively impacted by the legislation as currently written," Dan Russell, head of the council, said last week. "The legislation would disadvantage US companies operating in the Russian market relative to their Asian and European competitors."

The objections from oil and energy companies have been the most publicized since the bill passed the Senate last month, particularly over pipelines. BP, for instance, is concerned that its pipeline project in Azerbaijan to Italy -- which it argues would help countries depend on Russian energy less -- could get caught up in the new sanctions because of a partnership with a Russian company, according to industry and congressional officials. The sanctions bill would prohibit US companies from partnering with Russian energy firms on projects "in support of exploration or production for deep water, Arctic offshore or shale projects."

One congressional aide said there's been a suggested fix to that section's legislation by quantifying the percentage of a partnership that would trigger sanctions. But the issues go well beyond oil and gas.

There are concerns from heavy equipment and aerospace companies over a provision on dealing with state-owned companies and the railway, shipping or metals and mining sectors.

Boeing is worried about the legislation affecting access to Russian titanium used to build its jets, according to industry and congressional officials. Banking companies like Visa, Citi and MasterCard have their own issues with a provision in the bill that shorten the timeline for financing certain Russian customers to 14 days and 30 days, which the officials say could be as considered routine payments for commercial contracts. Cardin said the Senate knows the bill isn't perfect and can be improved, but that doesn't mean they will agree to all of the changes industry is proposing. "I'm sure there's some suggestions that industry wants, but I haven't really been exposed to that. If it weakens the bill I'm opposed to that," he said.

One of the stickiest issues may be over congressional review of easing Russia sanctions. The legislation includes language that states congressional review covers licenses to do business with Russia otherwise prohibited that have traditionally been issued by the Treasury Department's Office of Foreign Assets Control.

The White House has called for a national security waiver to be part of the sanctions bill, and industry officials point to the licensing section as the key area that needs such a waiver raising concerns that Congress, rather than the Treasury office, would be in charge of signing off on licenses to do business with Russia. But that appears to be one area where the Senate does not want to budge and add a waiver. "We're not wavering on a national security waiver," Corker said.

The lobbying campaign takes place in times when the U.S. Treasury Department fined oil giant Exxon Mobil $2 million for alleged violations of Russian sanctions. President Trump's secretary of State was serving as the company's CEO at that time. Although financially insignificant for a global company, the fine reflects another thorny development for the Trump administration as it seeks to downplay its political entanglement with Russia, which is accused of using a hacking campaign to help Trump get elected.

Secretary of State Rex Tillerson was CEO of Exxon when the company "demonstrated a reckless disregard for U.S. sanctions" on Russia's involvement in Ukraine, Treasury's Office of Foreign Assets Control (OFAC) said in a civil penalty document. The company signed eight documents in May 2014 for energy deals with Russian oil giant Rosneft's president, Igor Sechin, who was subject to sanctions at the time, according to the enforcement action.

Exxon said it "followed the clear guidance" from the Obama administration that it was allowed to sign deals with sanctioned executives as long as the counterparties were signing on behalf of their companies and not for themselves. The company filed a lawsuit against the Treasury Department in the U.S. District Court for the Northern District of Texas seeking to reverse the action. "OFAC is trying to retroactively enforce a new interpretation of an executive order that is inconsistent with the explicit and unambiguous guidance from the White House and Treasury issued before the relevant conduct and still publicly available today," Exxon said in a statement.

Sergiy Korsunskyi
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