U.S. senators Marco Rubio, a Republican from Florida, and Chris Van Hollen, a Democrat from Maryland, are asking for stronger sanctions against Russia in next year’s defense bill, pushing for the final version to include penalties that would be triggered by "future election meddling" and could hit Russian sovereign debt, energy and defense.
The senators asked the House and Senate Armed Services Committees to revise the 2020 National Defense Authorization Act to include some of their proposals.
In the letter, the senators "urge to ensure that the final conference report includes language to prevent future efforts by foreign governments and foreign actors to interfere in American elections by making it clear that such interference will be met with swift and severe consequences."
One of the amendments prohibits U.S. firms from trading in new Russian sovereign debt within 90 days of enactment. According to the senators, although the amendment is a step in the right direction, they believe the impact of sanctions on Russia’s sovereign debt would be "limited" given Russia’s low stock of sovereign debt, forecasted balanced budget, and substantial foreign currency reserves.
The senators suggest that additional sanctions be levied on Russia’s energy, banking and defense sectors as well as on “oligarchs and senior political figures” that the director of national intelligence determines were involved in election interference, Bloomberg reported.
"By making it clear in advance that attempts to interfere in our elections will be met with swift and severe sanctions, we can deter hostile foreign powers from taking such malign actions — but we must act now," Rubio and Van Hollen said.
But Russian OFZs are in demand among foreigners. According to the Russian Central Bank, non-residents in March bought OFZs for 120.4 billion rubles, and the share of non-residents’ investments in OFZ in the total market volume as of 1 April was 26.7%.
The senior research fellow at the European Research Centre of the International Relations Institute of the Russian Academy of Sciences, Vladimir Olenchenko, speaking to Vestnik Kavkaza, noted that the sanctions regime has become the main tool of the United States in recent years.
"Sanctions are used when the Americans do not find diplomatic solutions. This can be regarded as a weakening of American diplomacy. After all, the sanctions regime is a regime of threats and ultimatums, and using it is evidence of the inability to build relationships in a different way," the expert recalled.
He noted that some American politicians use sanctions for personal purposes: in order to promote themselves, show their political weight, increase their authority. "And we often see new names in American policy who generate various expansions of sanctions or new sanctions inventions. Of course, there are certain forces behind them seeking to benefit from it. But as practice shows, the sanctions introduced by the Americans often affect them as well," the senior research fellow at the European Research Centre of the RAS International Relations Institute stressed.
"If we consider the issue of imposing restrictions on Russian debt, they hope that if they stop buying bonds, they will limit Russian financial resources. These ideas are certainly painful for our economy. But at the same time, we must take into account that the structure of the European economy is different from the American one. The U.S. economy is an economy of constant borrowing, domestic bonds are constantly being issued. Therefore, such sanctions will be painful for the Russian economy, but it won't be dramatic," the expert recalled.
The professor at the department of the stock market and investments at the Higher School of Economics, Alexander Abramov, described the possible new sanctions as a rather unpleasant event. "At the moment, the outflow of non-residents' funds would not be very dramatic for Russia. But oil prices may decline, there can be some unfavorable conditions when Russia will have to borrow money. And even on the domestic market non-residents are about 33% of domestic bonds buyers now. Therefore, these are painful measures. Not dramatic, but painful," the expert explained.
