New Russia Sanctions from Congress

Congress adopted new sanctions in late July to codify and significantly expand U.S. financial restrictions on Russia and tightly constrain the president’s exercise of policy in this domain. The sanctions bill was driven by concerns over Russia’s interference in U.S. elections and destabilizing aggression abroad, as well as a broadly held belief by legislators that the president is mishandling critical national security issues. With these new sanctions authorities, Congress is taking an unprecedented step to assume greater control over a domain of foreign policy.

Close allies in Western Europe have condemned the bill’s interference in continental economic affairs, whereas others in Eastern Europe more vulnerable to Russian coercion have welcomed the tough measures. Unlike the development of transatlantic sanctions on Russia in 2014 in response to its activities in eastern Ukraine and Crimea, this new set of U.S. sanctions features no coordination with, or counterpart in, the European Union. Members of the business community that will be impacted by the bill, particularly in the energy and defense sectors, engaged in a full court press to try and remove themselves from the crosshairs, with some success.

There are three points of significance from the new sanctions:

• Congress has created broad new sanctions on Russian energy, banking, and financial services; intelligence and defense; and railroad, metals, and mining targets, driven by concerns over the Russian occupation of Crimea, its support for eastern Ukrainian separatists, its destabilizing role in Syria, ongoing cybersecurity breaches, and its interference in Western elections.
• Though the sanctions are mandatory, the administration retains some discretion in their application, setting the stage for an ongoing fight between the executive and legislative branches over enforcement.
• Procedural provisions establishing new forms of congressional review will likely serve as a model for future sanctions.

These substantial shifts in U.S. sanctions policy will likely have two serious implications:

• First, if these provisions are replicated in future bills they will make sanctions, as a foreign policy tool, less flexible and more punitive, as Congress lacks the intelligence resources, bureaucratic capability, and legal flexibility to manage sophisticated sanctions implementation with precision or timeliness.
• Second, the new review process mandated by the legislation will immediately minimizes the incentive for adversaries to change policy as a negotiating tactic for sanctions removal. Even in the face of their favorable policy change, Congress will struggle to muster the will and coordination necessary to remove sanctions.