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"Draconian" anti-Russian sanctions of Washington meet resistance

American corporations, ranging from technical giants to Texas oil companies, are unhappy with the latest updates made by the Senate in the draft law on sanctions against Russia. The same indignation they caused from the Germans and the Austrians, who threatened the bill with severe punitive measures in punishment for financing the laying of a new Russian gas pipeline to Germany. This bill was so overly stringent that the House of Representatives returned it for revision, and the Senate has once again revised this document. However, it is quite possible that they will need to do this more than once.

Supporters of the Democratic Party believe that Trump was elected by the Russians, and that this was the result of a conspiracy conceived by Vladimir Putin

The amendment to the number 232 was adopted by the US Senate on June 18, 14, with a vote ratio of 97 vs 2. The bill provides for a review of the existing law on sanctions against Russia, which established punitive measures against individual citizens, as well as banks and energy companies. US businesses are prohibited from financing Russian banks, including by buying bonds. In addition, they have no right to cooperate with Russian companies engaged in exploration and drilling operations in oil and gas fields in the Arctic. The bill also prohibits the sale of technologies and equipment for the production of coastal shale gas. Training of Russian oil industry tracking technology entails a monetary penalty.

The process of passing the Senate bill was stalled last week, when the Republican Party leaders declared that it was contrary to the constitutional provision that income legislation should come exclusively from the House of Representatives. In other words, it is a violation of the "blue slip" rule, which establishes two separate legislative procedures in the US Congress. This is basically a technical point, but politics is politics, and the Democrats immediately began to call their supporters to activity in social networks and the publication of positive materials in the newspapers.

Democrats quite predictably accused the Republicans of trying to "kill" the Senate bill to please Donald Trump, in their view, the best friend of Vladimir Putin in Washington. The delay meant that voting in the House of Representatives could take place only after the conclusion of the G20 summit in Hamburg. "This will in fact be a referendum for the republican leadership, which will show whether they intend to agree with the president's flirtation with Putin and the Russians," a representative of the Democrats in the Foreign Affairs Committee of the House of Representatives Eliot Engel said in his predictable caustic manner.

The United States and Russia are hardly today major trading partners. According to the Office of Foreign Trade Bureau of the United States Census, in 2016, US companies exported goods worth 5,7 billion US dollars, which is the lowest indicator after the recession of 2009. Since the sanctions were imposed in 2014, American exports to Russia have been halved.

Drilling and oilfield equipment is the second largest item of US exports to Russia. The first place is traditionally reserved for deliveries of civil aircraft, dominated by Boeing. In 2016, the United States sold Russia equipment for drilling oil and gas wells for a total of 391,7 million dollars, and this figure has increased significantly compared to 2015 year when it was 291 million. Ten-year maximum at the level of 458,6 million dollars was recorded in 2008 year, when the price of oil exceeded 150 dollars per barrel. The sale of equipment is prohibited if it is intended for horizontal drilling, deep-sea arctic drilling or the production of shale oil and gas.

This prohibition is open to various interpretations. However, the threat of sanctions has caused fears among Texian oil companies that a new tougher bill, which will now operate not only in Russia but worldwide, will sharply reduce their sales.

Section 223 of this amendment calls on the Office of Foreign Assets Control of the Ministry of Finance to prohibit "direct or indirect provision, export or re-export by residents of the United States of America or persons in the United States of goods, services (excluding financial services) or technologies facilitating exploration or production oil and gas in the framework of deep-sea, shelf or slate projects in which Russian energy companies participate, or any persons that are identified as objects of action of the directive, their property or share in the ownership of the said persons ".

According to CNN, some of the Texas Republicans believe that the energy companies in their state are already feeling heavy pressure due to sanctions. Recent export statistics show that the sales of oil and gas equipment have never been so low for the past seven years. And, it's not just about exporting to Russia. The American export of oil and gas equipment to Britain, which is one of the largest gas producers in Europe, is at the lowest level in a decade. Last year, its volume was only 160 million dollars. Brazil is "in the same boat", as equipment sales to this country have fallen over the past ten years to a record low of 183 million dollars. China also showed the lowest demand in the last decade: the volume of US exports to this country was only 179 million dollars. In other words, the collapse of those markets that are not subject to the negative impact of sanctions, cause additional damage to American companies that are already suffering from the stagnation of their business in Russia because of the sanctions regime.

The new draft law on sanctions is also directed against the construction of the Nord Stream-2 pipeline, which must pass through the bottom of the Baltic Sea. The financing of this Gazprom pipeline was undertaken by the German company Wintershall and the Austrian OMV. However, the US Senate wants to punish them for it. When the Germans and the Austrians learned about this, they became infuriated. Their governments issued a joint statement to the press immediately after the Senate began to boast loudly and congratulate itself for having succeeded in annoying Putin and, at the same time, indirectly, Donald Trump.

"We can not recognize as legitimate the threat of sanctions against European companies that want to contribute to the expansion of energy supplies to Europe," the statement reads. "Europe's energy supply is a matter for Europe itself, not for the United States of America."

It is interesting, by the way, that the draft law on sanctions against Russia is included in a larger bill that provides for sanctions against Iran. "I think that the Senate wants to equalize sanctions programs against Russia and Iran," believes partner Dorsey & Whitney, a law firm in Seattle, Lawrence Ward.

They, most likely, really hope for it, but it is unlikely that they will achieve the desired. The Obama administration has been cautious in drafting anti-Russian sanctions in order not to punish American business too much. The interests of many American companies are deeply intertwined with the Russian economy.

Europeans are very militant against this bill. Another country that has been calm so far will also enter into a dispute, and possibly in the very near future. Emmanuel Macron clearly does not belong to Trump's fans. This is a typical conflict between an alpha male and a beta male, and Macron's opposition views him as a puppet of German Chancellor Angela Merkel, just as Trump's opposition is sure that he is dancing to the tune of Putin. Macron previously called for a reset of relations with Russia.

In April, the lower chamber of the French Parliament considered a resolution against the extension of sanctions against Russia. The resolution was supported by 577 deputies, while only 50 parliamentarians voted to extend the sanctions. Their will was completely ignored by Brussels, and this is not surprising. If France was an independent state, where the will of the majority in the legislature is a decisive factor, the French would already cancel the sanctions this year.

Although the government may not have much influence, the French oil company Total SA may prove to be a more powerful voice in the matter of resistance to tightening sanctions. Total has been investing in Iran since the time when Obama lifted sanctions against this country after settling the problem with Tehran's nuclear program. They received a large 3-billion contract last Monday. Macron does not want problems with Iran and will side with Russia, as both Macron and Total want what Putin wants: no extra-territorial sanctions against companies like Rosneft, and no tightening of penalties for business cooperation with the Russians.

"We are absolutely frank with the US State Department," says Total SA's CEO Patrick Pouillant. "We are registered in New York and certainly must obey the law. I am sincerely convinced that if we can not find a way to resume the dialogue between Russia, the United States and Europe, it will be very bad for the whole world. Every President of the United States, when he is conducting an election campaign, says he wants to establish a dialogue with Russia. And we have huge investments in Russia ... I would prefer fewer sanctions. "

Mil Pardon, Monsieur Puayan! The US Senate wants more sanctions, not less. They are determined to take an even more bellicose and harsh policy towards Russia, and not at all to reconciliation.

Total also has a business in Russia. It is not clear yet, whether the companies will resist and whether the preservation of the sanctions regime will be achieved in its present form, or they will not succeed and then they are threatened with a more serious punishment for business ties with the Russians.

A source: MixedNews

Author: Kenneth Raposa - an expert in economics, a columnist for Forbes magazine

Tags: USA, Sanctions, Economics, Russia, Gas, Analytics, Laws, Nord Stream, Europe, France, Macron