Sanctions Against Russia: DASKA Takes Heat from State Department Lawyers

The DASKA (Defending American Security from Kremlin Aggression Act) bill has once again come under scrutiny. It was approved by the US Senate Committee on Foreign Relations. In theory, the sanctions bill “from hell” could be effectively enacted in the future. In reality, there are a number of major obstacles to this, among them, the executive branch’s objections regarding the viability of imposing more restrictions. They carry risks for US and international businesses, can damage relations with their allies and they duplicate a number of existing rules. This does not mean there are fundamental differences between Congress and the US administration regarding Russia. However, legislators are likely to have to revise the document in a big way. If Russian-US relations remain at their current level and no new crises break out, this discussion could drag on indefinitely.

Since 2014, congresspeople have submitted a great number of Russia-related legislative initiatives. In 2019 alone, there were over 200 of them, the vast majority of which will never be enacted. A similarly vast majority of them have zero impact on market dynamics and investor expectations. However, the DASKA bill stands out amid this general background. It implies the toughest sanctions against Russia and covers almost all Russia-US relations problem areas, including Ukraine, meddling in elections, the Middle East, “chemical” incidents, etc. Unlike the DETER bill, which deals exclusively with [electoral] intervention, this is a comprehensive piece of legislation.

The New DETER Bill: Can Sanctions Help Deter Russia?
Ivan Timofeev
Russia and Russian-US relations are unlikely to become any easier. The issue of “election interference” will remain salient, though some fatigue has already set in. Most likely, its prominence will abate in the US political conversation, though it will remain on the international agenda. It will also remain tethered to US sanctions on Russia, and sanctions will continue to be viewed as a means of deterring Moscow.

The excitement associated with the bill was spurred by the anticipated findings of the investigation conducted by Special Counsel Robert Mueller. The first revision of the bill appeared in the summer of 2018 and caused a noticeable market response. The second revised version appeared in February 2019. Investor concern was well founded. Sanctions against the Russian financial and energy sectors could be significantly expanded if they moved from the category of relatively tolerable sector-specific restrictions to the category of outright bans on investment and “blocking” major Russian banks, as well as energy, shipbuilding and other companies. The document contained other game-changing proposals as well, including a requirement for the State Department to provide an opinion on whether or not Russia is a “state sponsor of terrorism.” This status automatically implies even more restrictions.

After the bill was approved by the Senate Committee on Foreign Affairs, the executive branch made its position known. The document was seriously criticized in a letter dated December 17, 2019 sent by Assistant Secretary for Legislative Affairs of the US Department of State Mary Taylor to Chair of the Senate Foreign Relations Committee James Risch. Even though the letter is informal, it has a number of substantive points. 

  • First, the bill is considered redundant. The executive branch already has a required set of regulations for using sanctions against Russia, including a number of legislative acts (CAATSA, UFSA, SSIDES), as well as a set of presidential executive orders (13660, 13661, 13662, 13685, 13694 and 13848). The administration is already pursuing a tough and offensive policy of sanctions against Russia.

  • A number of DASKA provisions are binding on the administration which deprives the executive branch of flexibility in using sanctions, the ability to increase or, conversely, reduce pressure in light of particular circumstances. In the absence of flexibility, the burden on specialized departments increases significantly, and they will have to divert forces and resources from other important areas. The bill contains a large number of requirements regarding the reports, which are to be submitted by the relevant departments of the executive branch, which may also lead to an overload. In addition, certain DASKA provisions are at odds with the US Constitution with respect to presidential and executive powers.

  • The proposed restriction measures regarding Russia’s energy and financial sectors, as well as its sovereign debt liability, may cause a significant ripple effect on international markets. They can harm both the United States and Russia's many partners in Europe. The same applies to Russia’s shipbuilding industry. (After the Kerch incident, the US Treasury promptly imposed sanctions on eight Russian shipbuilding companies and six individuals based on existing presidential executive orders. Moreover, the sanctions were not lifted even after Ukrainian sailors and ships were returned to Ukraine. This precedent fits into the argumentation of the Bureau of Legislative Affairs quite well).

  • Major economic damage to US allies from imposing more sanctions on Russia will significantly undermine the unity of the sanction coalition and consistency of US and EU restriction measures. (All the more so as there has already been a noticeable imbalance in the actions of the United States and the EU. Since late 2016, the Americans have been taking more aggressive anti-Russia measures than the EU. A sanctions-related discussion related to the Nord Stream 2 project could be considered a major sign as well. Germany objected to the initiative. The final package of measures against the project adopted by Congress is basically a token measure).

  • The bill needs more nuanced and accurate wording in order to avoid erroneous decisions on certain individuals or companies. The sanctions should be applied in a justified manner and be based on verified facts. Vague wording and provisions, all the more so the ones that are binding on the executive authorities, will encumber its work.

  • The requirement for the State Department to categorize Russia as a “state sponsor of terrorism" or not is also redundant. Equally redundant are the proposals to limit Russia’s powers in Interpol. 

Mary Taylor's letter is the most legally nuanced analysis of DASKA's shortcomings. However, it should not be perceived as a sign that Congress and the administration’s positions on Russia are different. The letter clearly and unequivocally shows that the administration is committed to deterring "Russian aggression." The differences come from different assessments of whether the use of certain tools with due account taken for possible costs and limited resources is appropriate or not.

In all likelihood, Congress has two options left. One is to shelve DASKA and forget about it over time, all the more so as there are differences regarding this document in Congress itself. The other is to continue to work on the document knowing that proposals by the executive branch will take a lot of time and effort. These proposals are optional, but they cannot be ignored either, as they are more likely to be pragmatic than political. The big question is whether congresspeople should spend their political capital on promoting a bill that needs so many amendments at a time when Russia as a topic for discussion has lost much of its former appeal. The second option will only become actionable with another crisis in Russia-US relations that’s comparable to the events in Ukraine, election interference, or the Skripal poisoning.

DASKAA and the New Anti-Russia Sanctions: Does the US Want Self-Isolation?
Ivan Timofeev
The US sanctions against Russia have become habitual background news. As in wartime, people get used to daily bombing attacks, so at this point, news on the sanctions will only surprise the few that haven’t been paying attention. However, what US legislators and officials declared in August will have serious repercussions, at least on the stock markets.
Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.