US firms warn Obama of economic losses if sanctions on Russia take effect
Business officials claim that they have been caught in the middle of the swift-moving US foreign policy and their interests in a market so many have been keeping their eyes on with energy being the most important of sectors to watch. Huge corporations like PepsiCo and General Electric, among others have verbally made clear that their interest and involvement in Russia is key to their global strategic plan.
In all actuality, it seems like aggressive investing has paid off for one company, with PepsiCo earing $4.8 billion in the country during the 2012 year. The company has become the largest food and beverage provider in the Russian Federation. General Electric has partnered with two Russian companies to create gas turbines in Rybinsk. Even Boeing, a top aerospace company, is one of the top US exporters to Russia.
Relations like these have been put in jeopardy should the crisis escalate or if the Obama Administration promises to slowly but steadily make it more difficult for Russia’s economy to flourish. “What we’ve been hearing from our members is a lot of concern that there are two ways America gets hurt in a game like this. One is by American sanctions, that put them out of business, and the other is by Russian retaliation, regardless of what we do,” said William Reinsch, president of the National Foreign Trade Council, according to a Washington Post article.
During closed door meetings with Congressional members and the Obama Administration, “we have not been shy about telling them— if it is not multilateral, it is not going to work,” Reinsch said, according to The Washington Post. Business groups have reacted in this way as officials in the White House and politicians think about the possibility of using economic levers in an attempt to reverse Russia’s steps into Ukraine.
In an initial move, the White House froze assets and denied visas to a select portion of Russian officials. The Foreign Affairs Committee also gave the green light to a nonbinding resolution which condemns Russia’s movement in Ukraine and requests for sanctions to be put on top level Russian officials, state-owned financial institutions, and other state organizations.
The resolution requests that America pushes for an increase in natural gas exports to make their way to Ukraine. That method is seen as a way to help break Ukraine away from Russia as its main gas supplier. Not surprisingly, this has captured the attention of conservationists and US businesses that rely on the cheap fuel supply, and are in opposition of the export idea.
It is believed that sometime this week, the Senate Foreign Relations Committee plans to think up its own Ukraine legislation, according to Senator Democrat representing New Jersey Robert Menendez, who is the panel’s leader.
Ex-US ambassador to Moscow Michael McFaul noted several corporations which be left in a vulnerable state if sanctions were brought into the picture. According to the Washington Post, McFaul said for Severstal, “a well-respected [Russian] steel company with lots of investments in the US and Europe, this can’t be good news for you.” He also mentioned that Exxon Mobil “has just signed up for what would be the biggest venture in the history of capitalism” with Russia’s Rosneft and said the firm has “got to be very nervous.” However, McFaul did make it clear that, “having said all that, I also think that Putin will be ready to make those economic sacrifices if he wants to go forward with this annexation strategy.”
For US companies, Russia is a vital country in their global business strategies. “If we are unable to expand our businesses in emerging market and developing markets…as a result of our investments, particularly in Russia, as a result of economic and political conditions …our financial performance could be adversely affected,” PepsiCo said in its 2012 annual report.
Voice of Russia, The Washington Post