US companies urge Biden and Congress to be cautious on Russia sanctions

U.S. President Joe Biden holds a meeting with his national security team on the Russia-Ukraine crisis, at Camp David, Maryland, U.S. January 22, 2022. The White House/Handout via REUTERS

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WASHINGTON, Jan 26 (Reuters) – U.S. President Joe Biden has threatened to impose devastating sanctions on Russia if leader Vladimir Putin invades Ukraine, but some big companies and business groups are pushing the White House and lawmakers to caution.

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A trade group representing Chevron, General Electric and other major U.S. companies doing business in Russia is asking the White House to consider allowing companies to meet commitments and weigh exempt products when developing penalties. At the same time, the big energy companies are pushing Congress to limit their scope and timeline.

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The Biden administration and Congress must “work out the details in case they have to follow through on the threat of sanctions,” Jake Colvin, chairman of the National Trade Council, told Reuters on Monday.

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“These details should include consideration of safe harbors or slow periods to allow companies to fulfill existing contracts and obligations, as well as exclusions for life-saving drugs and other humanitarian considerations consistent with U.S. policy of long time,” Colvin said.

Energy companies have also approached U.S. lawmakers directly to push for a “cooling off” or “winding down” period so their assets won’t be seized if they’re unable to meet trade deals in Russia, it said. a congressional aide told Reuters.

The American Petroleum Institute, the largest US lobbying organization for oil and gas drillers, has discussed sanctions against Russia with congressional offices. “Sanctions should be as targeted as possible to limit potential damage to the competitiveness of American businesses,” an API spokesperson said.

Export sanctions are usually phased in, giving companies time to shut down existing operations or secure deliveries, said William Reinsch, a former top US Commerce Department official.

But in this case, the sanctions are likely to be applied suddenly, in the middle of a crisis, making a “slowdown” period harder to secure, he said.

In the past, the U.S. Treasury has provided some financial sanctions mitigation measures, such as issuing licenses protecting senders of humanitarian aid and personal remittances to Afghanistan despite sanctions against the ruling Taliban. .

A US Treasury official declined to comment on such moves regarding possible sanctions against Russia, but added: “We are prepared to impose significant costs on the Russian economy while minimizing undesirable fallout.”

THE LEGACY OF SANCTIONS IN CRIMEA

Oil companies felt the impact of US sanctions on some of Russia’s costliest drilling operations for years after Putin’s 2014 invasion of Crimea.

The measures forced Exxon Mobil (XOM.N) out of the Russian Arctic and ended the company’s collaboration with Russian state oil company Rosneft (ROSN.MM), with which it signed a 3 .2 billion dollars in 2011 to develop the region.

Exxon has argued that the sanctions, which have slowed work on a major find in the Kara Sea above the Arctic Circle, have unfairly penalized US companies while allowing foreign companies to operate in the country, l one of the largest oil producers in the world.

The 2014 sanctions hit the softest targets in Russia’s high-tech oil and gas exploration projects in the Arctic, Siberian shale and deep waters.

New sanctions could be broader, but also difficult to enforce without hurting Western businesses.

A possible “safe harbor” measure could protect companies from legal liability for sanctions violations if certain conditions were met, Reinsch said, such as showing that a shipment went to the sanctioned country without permission, perhaps from a third country.

Exxon did not immediately respond to a request for comment on any lobbying it is doing on potential sanctions from Russia.

A spokesperson for the US Chamber of Commerce, the largest lobby group for US business, declined to comment on the matter.

U.S. trade in goods and services with Russia totaled about $34.9 billion in 2019, according to the Office of the U.S. Trade Representative.

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Reporting by Andrea Shalal, Tim Gardner, David Lawder; Editing by Heather Timmons, Robert Birsel

Our standards: The Thomson Reuters Trust Principles.

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