Saturday, August 02, 2014


Russia

U.S. Senators Push For Sanctions On Russia’s Gazprom

A Gazprom employee works at the Sudzha gas-measuring station, in Russia's Kursk region, just 200 meters from the Ukrainian border.
A Gazprom employee works at the Sudzha gas-measuring station, in Russia's Kursk region, just 200 meters from the Ukrainian border.
By Luke Johnson and Carl Schreck
WASHINGTON -- Senior U.S. lawmakers are stepping up pressure on the Obama administration to slap sanctions on state-owned Russian energy giant Gazprom over Moscow’s role the Ukraine crisis, a move that could inflict economic pain beyond Russia’s borders.

Senators Carl Levin, John McCain, and Bob Corker are backing sanctions against Gazprom under an executive order allowing U.S. President Barack Obama to punish broad sectors of the Russian economy after the Kremlin annexed Ukraine’s Crimea territory last month.

“The existing authority is sufficient to take very strong sanctioning action against Russian banks that have correspondent accounts in the United States. The authority exists. It should be used, and that includes Gazprom,” Levin, a Michigan Democrat, told reporters in Kyiv on April 25.

His comments followed a statement earlier this week by Corker, a Republican from Tennessee who vowed to “continue urging the Obama administration to push back on Russia in a much more forceful way,” including with sanctions against Gazprom.

A spokesman for McCain told RFE/RL on April 25 that the Arizona Republican also backs sanctions against the energy giant, the world’s largest gas company and a key driver of the Russian economy.

Amid the specter of having its accounts frozen abroad due to the Ukraine conflict, Gazprom’s lending arm, Gazprombank, moved nearly $7 billion to Russia’s central bank in March, Reuters reported this week.

Executives of the bank, Russia’s third largest, are preparing for potential U.S. sanctions, Bloomberg quoted sources as saying.

The Obama administration -- which has already levied sanctions against senior Russian officials, businessmen seen as close to Russian President Vladimir Putin, and one Russian bank -- has pledged to introduce more sanctions should Moscow make further incursions into eastern Ukraine or otherwise stoke unrest in the country.

But administration officials have also said they are crafting potential punitive measures so as to minimize the economic fallout for U.S. businesses and allies around the globe, including European countries that depend heavily on Russian gas.

Obama and the leaders of Britain, France, Germany, and Italy have agreed to “coordinate additional steps to impose costs” on Russia over its actions in the Ukraine crisis, the White House said in an April 25 statement.

Speaking the previous day in Tokyo, Obama said that new sanctions against Russia are “teed up.”

Global Repercussions

Energy sector experts say the impact of U.S. sanctions against Gazprom would depend on how they are structured and how far Washington is willing to go to punish the energy giant -- and how much economic pain the United States and Europe are willing to endure.

“If the U.S. were to apply pressure to the European companies that [Gazprom] does business with...and say, ‘We are imposing restrictions on certain trade movements because there may be a link to Gazprom,’ that could have a profound impact,” said Edgar van der Meer, a senior analyst with the London-based energy intelligence company NRG Expert.

In his April 25 comments in Kyiv, Levin conceded that sanctions against the Russian energy sector could hurt consumers and businesses in the West.

“But all of us must decide: Would we rather pay a higher price for energy...or see a war take a much higher price?” Levin said, the "Kyiv Post" reported.

One U.S. company that could take a hit should Washington impose sanctions on Gazprom is Ketchum, a global public-relations firm that lobbies for both the Russian government and Gazprom in the United States.

From mid-2006 to mid-2012, Ketchum received $17 million in fees and expenses for its lobbying work for Gazprom, according to the independent U.S. news organization ProPublica, which studied Ketchum’s Foreign Agent Registration Act filings. In the second half of 2013, Ketchum received $3.7 million to cover fees and expenses for its Gazprom account, according to its most recent filing.

Ketchum did not respond to a request for comment.

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