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Business groups tell Republicans: Go easy on sanctions

As Russian troops invade Ukraine, big corporations are telling Congress go slow on sanctions.
As Russian troops invade Ukraine, big corporations are telling Congress go slow on sanctions.
Photo by Sean Gallup/Getty Images

A few seconds after news of the Ukraine crisis broke, Republicans took to the air and the Internet blasting President Obama and accusing him of being weak and feckless. Most Republican politicians immediately demanded that Obama punish Russia with crippling sanctions. Some urged military action to show Putin who is boss.

Recent polling shows that a very small percentage of Americans want to see the United States get involved in the Ukraine crisis beyond sanctions. A Pew poll found 56 percent do not want to see military provocation used to escalate the crisis and involve our nation in another war – this time with a nuclear power controlled by a power-hungry dictator.

Many feel we have no moral authority to criticize Russia from invading a sovereign nation under false pretenses since that is what we did last three times a Republican occupied the White House — Iraq twice, and tiny Grenada under tough-guy Ronald Reagan.

For all practical purposes, Russia has already annexed Crimea. There is a Soviet-style referendum on Sunday where voters can only choose to join Russia now or join it later, but they can not vote no. They have tens of thousands of troops on the Ukrainian border poised to invade eastern Ukraine.

Now, while Ukraine’s Prime Minister is in the U.S. trying to drum up support, another voice has joined the debate. Big business groups have weighed in, telling Congress to go easy on sanctions against Russia. Coincidentally, some House Republicans have threatened to vote no because the Senate inserted a provision in the sanctions legislation regarding IMF funding.

POLITICO reports that groups representing many of the largest U.S. corporations are raising concerns that overly aggressive measures could fray lucrative relationships with the Kremlin or provoke retaliation by Moscow.

The companies range from ExxonMobil to Boeing to PepsiCo, all of which have sizable business interests that could be interrupted if either country takes draconian action in the Ukraine crisis. Members of one bilateral trade group, the U.S.-Russia Business Council, include some of the biggest names in corporate America, such as Microsoft, General Motors, Citi and Coca-Cola.

The corporations feel that unilateral action by the U.S. could cede market share to European or Asian competitors Blake Marshall, senior vice president of government relations at the international communications firm PBN Hill+Knowlton Strategies, said companies have “two overarching concerns” about sanctions — a desire that they be “targeted very specifically” and that they “not be unilateral, which is really one of the fundamental principles that calls into question their ultimate effectiveness.”

There is a lot of money at stake. The Commerce Department’s Bureau of Economic Analysis reports that U.S. companies invested $14.07 billion in Russia in 2012, and some corporations’ reliance on business with Russia has expanded in recent years.

Exxon, for example, has secured a multibillion-dollar oil exploration deal with Russian state-run oil company Rosneft. Boeing has spent about $7 billion in Russia since 1991, according to The Wall Street Journal, and the company plans to boost that amount to $27 billion by 2021. And Russia is PepsiCo’s second-biggest market, behind the United States, accounting for nearly 8 percent of the company’s $66 billion in sales in 2013, according to recent filings with the Securities and Exchange Commission.

The corporations do not want their fingerprints on the effort to go soft on Russia because they do not want to show daylight between them and Republicans in Congress during an election year. So the effort is being done by business groups, not the companies directly.

Putin’s imperialism is wrong. The question is what can be done to stop him short of a military showdown. Sanctions won’t work unless the rest of the world joins in. While President Obama is working diplomatic channels to get support, Republicans are sabotaging the effort by their ill advised and unpatriotic political attacks on the president.

This Republican political opportunism only makes Putin stronger. Past acts of aggression by Republican presidents make it harder to get the world behind us now.

It will be interesting to see if big business can convince Republican politicians to aim before they shoot, think before they open their mouths.

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