Don’t sanction Americans for Russia’s misdeeds
Published 7:12 am Saturday, October 7, 2017
President Trump just signed a Russian sanctions bill into law — and in doing so, narrowly avoided an economic catastrophe. Thanks to modifications to the bill’s language by the House, Americans can rest easy knowing their economic future is protected.
A provision of the bill, passed by the Senate, would have undermined U.S. competitiveness, endangering millions of jobs throughout the country — a consequence that Russia would no doubt have welcomed. Senate changes to what is known as “Directive 4” would have given a leg up to Russian oil and gas firms in their increasingly fierce competition with American companies.
Washington and President Trump are ensuring that any sanctions against Russia hit their intended target — and don’t backfire on American workers.
The provision in question would have expanded the current prohibition against American energy firms engaging in oil and gas projects on Russian soil. That rule, nominally observed by the European Union, has been on the books since 2014.
Under changes to Directive 4 in the Senate bill, U.S. companies would have been banned not just from drilling in Russia, but from participating in any energy venture that involves Russian firms — no matter where that venture is located.
In the domain of deepwater drilling, companies from different countries — including, in some cases, Russia — routinely collaborate to develop a given oil or gas field. The proposed reform would have closed off an untold number of potential deepwater projects to American companies, while leaving Russian firms free to participate.
That’s not a sanction against Russia; it’s a sanction against the United States. And it would have put countless jobs at risk, both in the oil and gas industry and among the complex network of contractors, service-providers, and other businesses that work closely with energy firms.
All told, the oil and gas industry supports more than 9.8 million jobs nationwide. In Maryland alone, over 75,000 workers at more than 90 businesses across the state owe their employment in some way to the oil and gas sector. The same is true of over 141,000 Virginia workers.
The sector supports almost 2 percent of Maryland’s labor income, and 2.5 percent of Virginia’s.
Local state economies — and not Russian oil and gas companies — were the most likely to suffer if the proposed rule had taken effect.
As for Russia, the expansion of Directive 4 would have actually empowered that nation’s energy industry to decide where and when American companies could participate in international oil and gas projects. If the Russian energy sector wanted to lock America out of the global market entirely, it could have involved itself at least nominally in every major exploration project around the globe.
Congress has every right to impose economic sanctions to protect America’s geopolitical interests. But any sanctions that expanded Directive 4 would have strengthened the Putin regime at the expense of American workers. By altering the bill and signing it into law, the House and President Trump secured a win for thousands of Americans.
Dr. Margo Thorning is the senior economic policy advisor of the American Council for Capital Formation (ACCF). This piece originally ran in The Hill.