The Issue: The U.S. Senate Foreign Relations Committee in late 2019 approved legislation that would impose new sanctions on Russia. Known as the Defending American Security from Kremlin Aggression Act, or DASKA, the measure targets Russian banks, its sovereign debt and the country’s oil and gas sector. Like many government initiatives, it was passed with the best of intentions: punishing Russia for election interference, aggression toward Ukraine and other bad behavior. But good intensions sometimes lead to unintended, even grave consequences. This is one of those times.
And, it is often small businesses that are disproportionately impacted by actions that lead to unintended consequences. In the global marketplace, small and mid-size businesses account for 97.5% of U.S. exporting firms, and millions of small firms make up the critical supply chain of larger companies whose global footprint drives innovation, jobs and growth back home. Both small and large businesses alike grow significantly through trade, and good intentions gone amiss can significantly impact that growth and investment opportunities.
The Problem: DASKA does the opposite of its stated purpose: it targets U.S. companies instead of the Kremlin. If allowed to become law, DASKA would:
- Enrich Russian interests at the expense of U.S. firms across a variety of sectors, including energy, aerospace, and agribusiness.
- Force major U.S. companies to exit joint ventures with Russian firms or even shut operations in Russia. The effects could include imperiling a major aerospace firm’s ability to secure titanium to build its planes, since nearly all of the metal is obtained from Russia. Major U.S. credit card companies would be unable to service Russian customers, because DASKA would prevent them from operating payment systems in Russia.
- Impact smaller business nationwide that provide major firms with materials and parts and other services and goods, thereby disrupting the supply chain and putting U.S. jobs and economic growth at risk.
- Disrupt financial markets by sanctioning Russia’s government-issued debt, which would prevent U.S. banks from obtaining rubles. In addition to making it very hard for U.S. firms to continue conducting any business involving Russia, it could reduce the retirement accounts of firefighters, police officers and teachers, since U.S. investors hold up to 20 percent of Russian sovereign debt.
- Significantly harm U.S. companies that currently employ thousands of Americans and help to ensure our energy security. The effects could also hit American consumers at the gas pump, as global oil prices could rise.
- Threaten U.S. energy security by forcing American companies to withdraw from nearly150 energy projects involving Russian firms in 53 countries. These projects range from oil and gas exploration to clean energy initiatives. Across the U.S. energy sector, entrepreneurs and small businesses are dominant.
- Benefit our strategic adversaries by strengthening Russian companies as the U.S. withdraws from joint ventures, and opening the door to Russian partnerships with China.
Take Action: It’s not too late to stop this well-intentioned but deeply flawed bill from becoming law! Urge Congress to punish Putin and promote effective sanctions by making these changes to DASKA:
- Focus the bill on specific Russian individuals and companies whose election meddling and other documented adverse conduct demands a U.S. response.
- Protect all key U.S. sectors – aerospace, agri-business, consumer goods and energy – where good-paying jobs and healthy investment is at stake, and where small businesses play a key role as suppliers and innovators.
- Protect the U.S. energy sector and our leading U.S. energy companies by dialing back language that threatens our economic security – and prevents American firms from competing in the international marketplace.
- Alter the bill’s language to allow U.S. companies to continue routine transactions with Russian state-owned entities. This will protect our economic competitiveness – and continue to embed U.S. values of transparency, accountability and good corporate governance to Russia.
- Stand up for our teachers, police and firefighters by changing the bill’s language on Russian debt, making it easier for U.S. banks to finance economic projects in Russia.