By Jay Solomon and William Mauldin
WASHINGTON -- Leading U.S. senators proposed new sanctions
against Russia that would markedly increase Moscow's economic
isolation and could limit President-elect Donald Trump's ability to
improve relations with the Kremlin.
Tuesday's proposed legislation would set in stone many of the
Obama administration sanctions levied against Russia after
revelations of election-related cyberhacking, and significantly
broaden the restrictions against companies seeking to invest in
Russia's energy sector and the state-run corporations that dominate
its economy.
The sanctions, which U.S. officials acknowledge could lead to
retaliation by the Kremlin, also would directly target U.S. and
foreign banks that help Russia sell sovereign debt, a restriction
the Obama administration had previously preferred to assert more
informally, through conversations with Wall Street executives.
"We have been attacked by Russia. That's no longer up to any
debate," said Sen. Ben Cardin (D., Md.), one of the sponsors of the
bill. "It cannot be business as usual."
The measure, called the "Countering Russian Hostilities Act of
2017," has also been spearheaded by Sens. Lindsey Graham of South
Carolina and John McCain of Arizona, two Republicans who have
differed sharply with Mr. Trump's skepticism over U.S. intelligence
agencies' finding that the Kremlin was behind last year's
cyberhacking of the Democratic National Committee and Hillary
Clinton's presidential campaign. Democrats also are backing the
measure.
Other Republican co-sponsors include Sens. Marco Rubio of
Florida, Rob Portman of Ohio and Ben Sasse of Nebraska. The
legislation so far has bipartisan support among 10 U.S. senators,
according to the senators backing it.
While any bill introduced by the senators could be scaled back
in committee or in the broader Senate or House, Congress in recent
years has been willing to take the lead in punishing Russia, even
when the Obama administration has urged a softer approach.
The measure would provide the White House with the ability to
waive the sanctions. But it would have to certify that Russia's
international behavior has improved. "The waiver is not to be used
unless progress is made," Mr. Cardin said.
Responding to the election-year hacking, the proposed
legislation would impose visa bans and asset freezes on foreigners
linked to cybersecurity breaches, ban transactions with key Russian
intelligence agencies and codify in law President Barack Obama's
recent executive order on cybersecurity.
The bill also would codify Mr. Obama's earlier sanctions on
Russia, imposed following Moscow's interference in Ukraine and its
move to annex Crimea. It could thus potentially hamstring Russian
President Vladimir Putin's efforts to lobby the Trump
administration and European leaders for those sanctions' removal, a
step Mr. Trump hasn't ruled out.
Kremlin spokesman Dmitry Peskov responded to a request for
comment by saying the proposed measures "have not been passed
yet."
Sanctions brought by the U.S. executive branch can be more
easily removed as Washington's relations with other countries
improve. But it can take years or decades to roll back punitive
laws passed by Congress, such as those that still apply to Cuba and
Iran.
It wasn't clear Tuesday whether the bill is likely to win
congressional approval in time for Mr. Obama to sign it, or wait
for the start of the Trump administration. Either way, it stands to
exert pressure on Mr. Trump's position on relations with Mr.
Putin.
"None of us know the position of the president-elect, but we do
know and should know the position of the Congress," Mr. McCain
said.
Mr. Graham said he was confident the bill would get
"overwhelming" support, though allies of Mr. Trump could seek to
block it.
A decision to sign or veto the measure could place Mr. Trump in
an awkward position, but having fresh sanctions in place also would
strain ties with Russia.
Mr. Putin refrained from retaliating after Mr. Obama in December
imposed the new round of cybersecurity-related sanctions and
expelled dozens of alleged Russian intelligence operatives from the
U.S. Mr. Putin's restraint won plaudits from Mr. Trump.
Despite Mr. Putin's reaction last month, the strict new
measures, if enacted, could lead to harsh retaliation from Moscow.
After U.S. enactment of the 2012 Magnitsky Act, Moscow banned U.S.
adoptions of Russian children and took other measures that soured
relations and helped end Mr. Obama's efforts to "reset" relations
with Moscow.
"To criticize and try to isolate Russia is a crazy idea," said
Andranik Migranyan, an top Russian academic at Moscow State
University. "Russia has the luxury at the moment to see what Trump
will try to do."
The legislation would take the Ukraine-related sanctions even
further by ordering sanctions on investments of $20 million or more
that help Russia develop its oil and natural-gas reserves. Most
significantly, it would impose mandatory sanctions on U.S. and
other companies that help Russia privatize state-owned assets.
Stung by the earlier sanctions, Russia has recently reached out
to major international firms to offer stakes in state-run companies
in exchange for increasingly precious foreign currency to pay debt.
The recent gain in energy prices has alleviated some of Moscow's
near-term financial problems, but the cumulative effect of
sanctions continues to take a toll on the economy and the
investment climate.
The proposed legislation would establish a unit at the U.S.
Treasury Department to track allegedly illicit financial flows
emanating from Russia and support programs to counteract Russia's
state-led media, which U.S. intelligence services say was used in
the 2016 election in the U.S. and in other countries.
The sanctions legislation could face significant opposition from
U.S. energy companies that do business in Russia, including Exxon
Mobil Corp., whose former chief executive is Mr. Trump's pick for
secretary of state.
The bill could put immediate pressure on the incoming Trump
administration to take a tougher stance on Russia, since broad
skepticism of Moscow on Capitol Hill means lawmakers would have a
shot at overriding a presidential veto.
Write to Jay Solomon at jay.solomon@wsj.com and William Mauldin
at william.mauldin@wsj.com
(END) Dow Jones Newswires
January 10, 2017 16:48 ET (21:48 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.