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Tillerson cautions against new Russia sanctions

14 Jun 2017 20:04 (+01:00 GMT)
Tillerson cautions against new Russia sanctions

Washington, 14 June (Argus) — US secretary of state Rex Tillerson urged the Senate to adjust the provisions of a bill adding new sanctions on the Russian oil sector, to preserve room for potential compromise with Moscow on Ukraine.

But the measure is sailing through the Senate with overwhelming, bipartisan support. The bill codifies existing US sanctions on Russia and mandates additional measures making it even harder for Russian energy companies to raise money in capital markets abroad.

"I certainly agree with the sentiment expressed by members of both parties that Russia must be held accountable for its meddling in the US elections," Tillerson said today. But he asked that the legislation preserve the administration's ability to adjust sanctions up or down in response to Russia's actions.

Senate majority leader Mitch McConnell (R-Kentucky) advanced the measure today, through an amendment to an Iran sanctions bill that likewise enjoys bipartisan support. The amendment was approved by 97-2, while the Iran sanctions bill is expected to be approved shortly. Senators Mike Lee (R-Utah) and Rand Paul (R-Kentucky) voted against the amendment.

The bipartisan work on new sanctions targeting Iran and Russia "is a good example of the Senate at its best," McConnell said yesterday. "The lack of trust in [Russian president Vladimir] Putin on both sides of the aisle is paramount," Senate minority leader Chuck Schumer (D-New York) said. "I hope the House will pass the bill without change and send it to the president's desk."

The bill would require President Donald Trump to inform Congress in advance before lifting existing sanctions that prohibit provision of shale, deepwater and arctic drilling equipment and technology to Russian oil companies.

Former president Barack Obama imposed the sanctions on the Russian oil sector in 2014, over the conflict in eastern Ukraine. The previous administration said it would only lift the sanctions if Moscow fully abides by the Minsk cease fire agreement and respects Ukraine's sovereignty.

Trump's administration initially refused to tie sanctions relief to the Minsk agreement, but eventually endorsed the same conditions, which match the EU conditions for sanctions imposed on Russia.

But Tillerson today suggested sanctions relief was possible under different circumstances. "It is possible that Ukraine and Russia come to an understanding other than Minsk, if the parties decide to settle this through a different agreement," he said.

The mention would ally the administration with Putin's preference for direct negotiations with Ukraine, eliminating France and Germany as mediators.

Regardless of the administration's preferences, the Senate bill would allow Congress to pass resolutions of disapproval that would overrule the administration's decision to grant sanctions relief.

The scope of sanctions would increase to prohibit transfer of drilling technology to any project undertaken by a Russian energy company, including outside of Russia. The bill further restricts the access of Russia's financial and energy sectors to US financial markets by limiting the maturity of debt Russian companies may raise.

Another provision would require the administration to penalize foreign companies looking to make a "significant investment in a special Russian crude oil project" or participating in the privatization of Russian government assets. The bill prods the administration to expand the sanctions from the energy sector to include mining, metals, shipping and railways — all major generators of Russian government revenue.

The legislation preserves the president's right to waive all the requirements for national security reasons, but any action with regard to Russia is becoming politically difficult for the administration. Justice department special counsel Robert Mueller is leading an investigation into whether members of Trump's presidential campaign cooperated with alleged Russian efforts to interfere with the US election.