New Russia Penalties Face ‘Sanctions Fatigue’ in U.S. Congress

(Bloomberg) -- Tough talk about the need to punish Russia for meddling in the 2016 U.S. election is running into the reality that Congress’s enthusiasm for additional sanctions is waning.

“We face a little bit of sanctions fatigue around here these days,” said Republican Senator Marco Rubio of Florida, the sponsor of one of the bills aimed at Russia. “Hopefully we’ll get more people on board.”

Two main proposals are circulating aimed at increasing pressure on Russian individuals and companies by restricting their access to U.S. markets and capital. Both Senate bills received significant attention in 2018 after President Donald Trump failed to condemn Russia for its election meddling, but they lost steam after November’s midterm elections and aren’t moving any faster in this year’s Congress.

Many lawmakers still want Russia to face stronger consequences for its actions in the U.S. and elsewhere, but there’s no clear consensus on how to send the right message to the Kremlin. Two other factors add to the hesitation: concern about unintended economic consequences, and the difficulty of passing legislation in a divided Congress when the measures don’t have the president’s support.

“Sanctions can often be a double-edged sword,” said Republican Senator Ron Johnson of Wisconsin, chairman of the Homeland Security Committee. “So we really should take a little bit of a step back and assess where we are and what we can really do.”

Sovereign Debt

Markets are closely watching the next U.S. moves on sanctions, since any action may affect Russia’s sovereign debt. The ruble has depreciated against the dollar since 2014, when the U.S. imposed sanctions on during the Obama administration.

Read more: All About the U.S. Sanctions Aimed at Putin’s Russia

Senators Lindsey Graham, Republican of South Carolina, Bob Menendez, Democrat of New Jersey, in February reintroduced their DASKA Act, which would impose sanctions on Russian individuals, cyber operations and liquid natural gas export facilities. The legislation calls for the president to “prescribe regulations” for sanctions on sovereign debt issued 90 days after the law is enacted. The bill would also reinforce support for NATO, and would create a new office in the State Department to respond to cyber threats.

The other Senate bill, the DETER Act, was reintroduced last week by Rubio and Democratic Senator Chris Van Hollen of Maryland. It would require the Director of National Intelligence to tell Congress on any foreign interference within 60 days of a federal election. If a Russian violation is found, sanctions would target that country’s political figures and its energy and defense sectors. Sanctions could also extend to government and state-owned company bonds issued after the bill is signed into law.

Van Hollen said the current version of his bill includes an option for the president to waive sanctions in the interest of “national security.” Senators considered adding this provision in 2018 as an escape valve that would improve its chances of getting a floor vote, after the Treasury Department warned of potential economic spillover.

Previous versions of both bills failed to advance at the end of 2018 as Congress turned its focus to government spending measures, judicial nominations and a farm bill.

Van Hollen said the new version would deter Russian misbehavior because it would punish future action.

“We’re not talking about adding new sanctions now, we’re sending a clear signal that if you screw around in our elections again, there’s going to be swift and severe punishment,” he said. “It makes much more sense to tie a sanction to future conduct to deter the conduct.”

The U.S. has sanctioned roughly 700 Russian entities since 2014 when Russia annexed Crimea and fostered unrest in eastern Ukraine. Other sanctions were imposed following the 2016 U.S. presidential election and the poisoning of a former Russian agent and his daughter in the U.K. in March 2018.

Lawmakers last year stepped up the push for legislation compelling new sanctions after Trump sparked bipartisan outcry when he stood beside Russian President Vladimir Putin following a one-on-one summit in Helsinki and said he believed Putin’s denial of Russia interference in U.S. elections.

Mueller Momentum

While senior lawmakers now express mixed feelings about what to do next, the upcoming release of portions of Special Counsel Robert Mueller’s investigation of the 2016 election and the Trump campaign could bring renewed attention to the sanctions bills.

“You’ll see more interest in this from other members who may not have been as involved when they can see the full Mueller report,” said Senator Mark Warner, a Democrat from Virginia and vice chairman of the Intelligence Committee.

Some key lawmakers are taking their time, though, as they try to decide the best next steps. Senate Foreign Relations Committee Chair Jim Risch, an Idaho Republican, said he isn’t backing any particular proposal at this time.

‘It’s Getting Worse’

“The purpose is to persuade people to adjust their conduct, and it’s not happening,” Risch said. “In fact, if anything it’s getting worse. That’s what is causing the discussion.”

Risch said he couldn’t “really judge what the appetite is” in the Senate for more sanctions, but he’d like to see a strong stance from the U.S. “I’m interested in seeing Russia change their conduct,” he said. “And the Russian administration, they’re not nice people. They do bad things.”

Senator Jeanne Shaheen of New Hampshire, a Democrat on Risch’s committee, said Congress’s willingness to further punish Russia will also hinge on that country’s participation in other conflicts around the world.

“We’re seeing their activities in Venezuela,” Shaheen said of Russia’s support for the faltering Nicolas Maduro regime that the U.S. has sought to transition out of power. “If we see those kinds of activities continue, that there will be a growing appetite for additional sanctions.”

Senator Chris Murphy, a Connecticut Democrat also on the Foreign Relations Committee, said Congress should be thinking “a little more creatively about how to make Russia pay a price.” Murphy said the focus should be on how to address underlying geopolitical problems, rather than focusing on isolated punitive measures.

“We could spend our time talking about actual long-term strategies to try to combat Russia’s influence, or we could spend all our time slapping sanctions on Russian individuals and banks,” Murphy said. “The former is probably more important than the latter.”

--With assistance from Laura Litvan.

To contact the reporters on this story: Daniel Flatley in Washington at dflatley1@bloomberg.net;Steven T. Dennis in Washington at sdennis17@bloomberg.net

To contact the editors responsible for this story: Joe Sobczyk at jsobczyk@bloomberg.net, Anna Edgerton, Ros Krasny

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