Senators Publish New Russia Sanctions Bill Targeting Debt

(Bloomberg) -- A bipartisan group of senators introduced legislation to punish Russia for interfering in U.S. elections, and for exerting “malign influence” in Syria and aggression in Ukraine, setting up a potential clash with President Donald Trump.

The bill includes sanctions on Russian banks, new sovereign debt, liquefied natural gas investments, political figures and oligarchs, and its sponsors include Lindsey Graham, a South Carolina Republican who’s usually a Trump ally. Similar legislation last year, in response to alleged provocations by Russia, never received a vote.

Under the measure proposed Wednesday, Trump would be blocked from pulling out of the North Atlantic Treaty Organization without clearance from the Senate. It also calls for a report on Russian President Vladimir Putin’s net worth and assets.

Russia’s currency slumped in August and the central bank was forced to raise interest rates when similar measures looked like they were gaining traction in Washington. The ruble extended its slide on Thursday to the weakest in a month, and yields on local-currency bonds jumped the most since September.

Senators Publish New Russia Sanctions Bill Targeting Debt

The sanctions proposals “aren’t pleasant, but Russia has taken measures to respond to them,” Finance Minister Anton Siluanov told reporters in Moscow on Thursday. Liquidity and state support will be provided to state banks if they are hit by restrictions so that depositors aren’t affected, he said.

Here are the restrictions outlined in the senators’ statement:

Reason for SanctionsTarget of Sanctions
Kremlin interference in democratic institutions abroad
  • Russian banks that support efforts to undermine democratic institutions abroad. Unlike in the previous version of the bill, no specific lenders are named
  • New sovereign debt 
  • Investment in Russian LNG projects outside of the country
  • Cyber sector
  • Political figures, oligarchs, and family members who aid Putin
Kremlin aggression in Ukraine
  • 24 FSB agents deemed complicit in the Kerch Strait attack on Ukraine ships
  • Shipbuilding sector if Russia violates freedom of navigation
  • With respect to support for the development of crude oil resources 
  • Russian state-owned energy projects outside the country

A legislative vote to crack down on Russia would test Republican lawmakers’ desire to confront Trump as Special Counsel Robert Mueller continues to investigate links between Trump’s 2016 campaign and Moscow. Trump has said his administration already is taking a tough approach with Russia, though lawmakers from both parties have said more needs to be done.

“President Trump’s willful paralysis in the face of Kremlin aggression has reached a boiling point in Congress,” Senator Bob Menendez, the top Democrat on the Foreign Relations Committee, and a sponsor of the legislation, said in a statement.

Non-Tolerance

Menendez of New Jersey added: “Putin’s actions cannot be tolerated, and the consequences of inaction are quickly compounding -- further humanitarian disaster in Syria, regional instability, kidnapping of Ukrainian sailors and seizure of ships, and the steady erosion of international norms.”

The legislation faces an uphill battle in the Senate, where Majority Leader Mitch McConnell has shown a reluctance to bring forward legislation that doesn’t have the president’s support. The Senate blocked a Democratic bid in January to force the Treasury Department to keep sanctions on three Russian companies linked to oligarch Oleg Deripaska. Yet McConnell has been willing to buck the president on his policy in Syria and Afghanistan.

Other sponsors of the Russia legislation include Democrats Ben Cardin of Maryland and Jeanne Shaheen of New Hampshire and Republican Cory Gardner of Colorado.

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