By Jay Solomon and William Mauldin
WASHINGTON -- Leading U.S. senators from both parties proposed
new sanctions against Russia that would markedly increase Moscow's
economic isolation and could limit President-elect Donald Trump's
ability to improve ties with the Kremlin.
Tuesday's proposed legislation would set in stone many of the
sanctions the Obama administration levied against Russia after
revelations of election-related cyberhacking, and significantly
broaden the restrictions against companies seeking to invest in
Russia's energy sector and the state-run corporations that dominate
the country's economy.
The sanctions, which U.S. officials acknowledge could lead to
retaliation by the Kremlin, also would directly target U.S. and
foreign banks that help Russia sell sovereign debt, a restriction
the Obama administration had previously preferred to assert more
informally, through conversations with Wall Street executives.
"We have been attacked by Russia. That's no longer up to any
debate," said Sen. Ben Cardin (D., Md.), one of the sponsors of the
bill. "It cannot be business as usual."
The measure, called the "Countering Russian Hostilities Act of
2017," has been spearheaded as well by Sens. Lindsey Graham of
South Carolina and John McCain of Arizona , Republicans who have
differed sharply with Mr. Trump's skepticism over U.S. intelligence
agencies' finding that the Kremlin was behind last year's
cyberhacking of the Democratic National Committee, Hillary
Clinton's presidential campaign, and some Republican-affiliated
targets.
Other Republican co-sponsors include Sens. Marco Rubio of
Florida, Rob Portman of Ohio and Ben Sasse of Nebraska. The bill so
far has bipartisan support among 10 U.S. senators, its backers
say.
While any bill introduced by the senators could be scaled back
in committee or in the broader Senate or House, Congress in recent
years has been willing to take the lead in punishing Russia, even
when the Obama administration has urged a more targeted
approach.
The measure would provide the White House with the ability to
waive the sanctions, but it would have to certify that Russia's
international behavior has improved. "The waiver is not to be used
unless progress is made," Mr. Cardin said.
Responding to the election-year hacking, the proposed
legislation would impose visa bans and asset freezes on foreigners
tied to cybersecurity breaches, ban transactions with key Russian
intelligence agencies and codify in law President Barack Obama's
recent executive order on cybersecurity.
The bill also would take in the sanctions on Russia,Mr. Obama
imposed after Moscow's interference in Ukraine and its move to
annex Crimea. It could thus hamstring Russian President Vladimir
Putin's efforts to lobby the Trump administration and European
leaders to end those sanctions, a step Mr. Trump hasn't ruled
out.
Moscow's reaction was dismissive. "Every day I read the news
from Washington," said Russian Foreign Ministry spokeswoman Maria
Zakharova. "God created the world in seven days. The Obama
administration has two days more than that to destroy it."
Sanctions brought by the U.S. executive branch can be more
easily removed as Washington's relations with other countries
improve. But it can take years or decades to roll back punitive
laws passed by Congress, such as those that still apply to Cuba and
Iran.
It wasn't clear Tuesday whether the bill is likely to win
congressional approval in time for Mr. Obama to sign it, or wait
for the start of the Trump administration. Either way, if passed it
stands to exert pressure on Mr. Trump's stance on ties with Mr.
Putin.
"None of us know the position of the president-elect, but we do
know and should know the position of the Congress," Mr. McCain
said.
Mr. Graham said he was confident the bill would get overwhelming
support, but allies of Mr. Trump could seek to block it. Mr.
Trump's transition team didn't respond to a request for
comment.
A decision to sign or veto the measure could place Mr. Trump in
an awkward position, but having fresh sanctions in place also would
strain ties with Russia.
Mr. Putin refrained from retaliating after Mr. Obama in December
imposed the new round of cybersecurity-related sanctions and
expelled dozens of alleged Russian intelligence operatives from the
U.S. Mr. Putin's restraint won plaudits from Mr. Trump.
Despite Mr. Putin's reaction last month, the strict new
measures, if enacted, could lead to retaliation from Moscow. After
U.S. enactment of the 2012 Magnitsky Act, Moscow banned U.S.
adoptions of Russian children and took other measures that soured
ties and helped end Mr. Obama's efforts to "reset" relations with
Moscow.
"To criticize and try to isolate Russia is a crazy idea," said
Andranik Migranyan, an top Russian academic at Moscow State
University. "Russia has the luxury at the moment to see what Trump
will try to do."
The proposed legislation would take the Ukraine-related
sanctions even further by ordering sanctions on investments of $20
million or more that help Russia develop its oil and natural-gas
reserves. Most significantly, it would impose mandatory sanctions
on U.S. and other companies that help Russia privatize state-owned
assets.
Stung by the earlier sanctions, Russia has recently reached out
to major international firms to offer stakes in state-run companies
in exchange for increasingly precious foreign currency to pay debt.
The recent gain in energy prices has alleviated some of Moscow's
near-term financial problems, but the sanctions still take a toll
on the economy and the investment climate.
The proposed legislation would establish a unit at the U.S.
Treasury Department to track allegedly illicit financial flows
emanating from Russia and support programs to counteract Russia's
state-led media, which U.S. intelligence services say was used in
the 2016 election in the U.S. and in other countries.
The sanctions legislation could face significant opposition from
U.S. energy companies that do business in Russia, including Exxon
Mobil Corp., whose former chief executive is Mr. Trump's pick for
secretary of state.
The bill could put immediate pressure on the incoming Trump
administration to take a tougher stance on Russia, since broad
skepticism of Moscow on Capitol Hill means lawmakers would have a
shot at overriding a presidential veto.
Write to Jay Solomon at jay.solomon@wsj.com and William Mauldin
at william.mauldin@wsj.com
(END) Dow Jones Newswires
January 10, 2017 19:05 ET (00:05 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.