This article was originally published by Radio Free Europe/Radio Liberty and is reprinted with permission.
A U.S. Senate panel has passed a bill that is designed to punish Russia for its alleged interference in democratic processes abroad as well as “malign” actions in Syria and aggression against Ukraine.
The bipartisan bill — described by Senator Lindsey Graham (Republican-South Carolina), who is a co-sponsor, as the “sanctions bill from hell” — was approved 17 to 5 by the Senate Foreign Relations Committee on December 18.
If the committee approves the bill, the Defending American Security from Kremlin Aggression Act (DASKA), it would move forward for votes in the full House of Representatives and Senate.
To become law it would need to pass both chambers of Congress and be signed by President Donald Trump, and that is not expected to happen until next year.
First introduced in 2018, DASKA is the latest Russian-related legislation to be discussed on Capitol Hill in recent weeks as Congress wraps up unfinished business ahead of the holiday recess.
DASKA targets new Russian sovereign debt, banks that support the Kremlin’s efforts to “undermine democratic institutions in other countries,” individuals selling goods or services to the country’s oil industry, its cyberindustry, as well as figures close to Russian President Vladimir Putin.
Some analysts say its effects could be limited by steps Russia has taken to insulate its economy from the potential threat of sanctions that would prohibit U.S. persons from buying Russian sovereign debt.
Russia’s foreign-exchange and gold reserves have climbed by nearly one-fifth over the past year to almost $550 billion. The country’s sovereign debt represents less than 20 percent of its gross domestic product — a very low number compared with other major economies.
“This was so well telegraphed that it gave Russia time to prepare,” says Elina Ribakova, deputy chief economist at the Washington-based Institute of International Finance. “If the question is, ‘Are we going to hurt Russia?’ the answer is no.”
Russian banks have enough excess cash to buy up the country’s sovereign debt held by foreigners, she said.
Analysts say the lack of a need for Russia to borrow in foreign currency undermined a Treasury Department decision earlier this year to prohibit U.S. banks from participating in new, non-ruble denominated Russian sovereign debt as punishment for the country’s alleged use of a banned nerve agent in an attack on former Russian spy Sergei Skripal and his daughter in Britain in March 2018.
High-profile Russians have also been repatriating money and assets held abroad to protect themselves from being targeted by sanctions like DASKA.
Passing DASKA in the committee now would give lawmakers “the ability to grandstand and say they have done something,” Ribakova says.
The U.S. Chamber of Commerce, an influential pro-business group, urged the Senate committee not to back the bill in its current form, saying it will hurt U.S. companies that do business in Russia.
“While intended to impose constraints on the Russian government, the legislation would have little effect on its ability to secure funds in global markets — given the Russian government’s strong foreign exchange and gold reserves — while severely harming U.S. companies’ operations in Russia,” the organization said in a letter on December 17.
Some analysts and U.S. lawmakers are also questioning whether sanctions against Russia’s $11 billion Nord Stream 2 gas pipeline to Germany will have any impact.
Some lawmakers have been seeking to halt the project amid concern that the pipeline across the Baltic Sea floor will make Europe more dependent on Russian energy.
The Senate on December 17 passed the National Defense Authorization Act (NDAA), which contains a provision that would impose sanctions on companies helping to lay the pipeline.
Trump is expected to sign the NDAA into law this week.
However, Nord Stream 2 is more than 80 percent complete. Senator Chris Murphy (Democrat-Connecticut), a member of the Senate Foreign Relations Committee, said earlier this month he was “doubtful” of the ability to stop the project.