Biz groups fall silent on Russia sanctions

Business groups are silent on whether they will continue to oppose sectoral sanctions against Russia now that a plane appears to have been shot down by separatists in Ukraine.

{mosads}President Obama and members of his diplomatic team are pointing the finger at rebel groups for the crash of Malaysia Airlines Flight 17, though they have yet to definitely attribute blame.

If the separatists were responsible, members of Congress say the United States should punish Russian President Vladimir Putin with crippling economic sanctions.

“Impose the harshest possible sanctions on Vladimir Putin and Russia,” Sen. John McCain (R-Ariz.) told Fox News on Friday.

“There are much tougher sanctions we can issue,” echoed Sen. Kelly Ayotte (R-N.H.) on MSNBC the same day.

Business groups such as the Chamber of Commerce and The National Association of Manufacturers (NAM) have resisted broad, sectoral sanctions against the Russian economy, arguing the step would backfire on U.S. businesses.

Both groups have blanketed Washington with ads opposing unilateral sanctions against Russia.

But the crash of the Malaysia Airlines flight — which killed nearly 300 civilians, including infants and one American — could change the calculus.

Both NAM and The Chamber declined to comment when asked about their position on sanctions in the wake of the crash.

Richard Sawaya, director of USA*Engage, which also was critical of the administration’s sanctions, said that business groups are “watching to see what happens next.”

“The plane incident is a different order — it means everybody should step back and re-calibrate,” Sawaya said.

The administration has imposed several rounds of sanctions since Russia’s incursion into Ukraine began, with many of them targeting banks and associates of Putin.

The step that would pack the biggest punch for Russian’s economy — a sanctions regime targeting entire industries — has faced opposition not only from business groups, but also from European allies that rely on Russia for energy resources.

German Chancellor Angela Merkel, for instance, said on Friday that it was “premature” to discuss new sanctions against Russia.

Supporters of tighter sanctions say businesses need to start putting America’s diplomatic interests ahead of their bottom lines.

Sarah E. Mendelson, a senior adviser at the Center for Strategic and International Studies, said business groups should direct their opposition at Russia President Vladimir Putin, rather than at Obama.

“The business community needs to understand that this is not business as usual — this is a very serious international security situation,” said Mendelson, who worked in the Obama administration until May as the head of the U.S. Agency for International Development’s (USAID) democracy, human rights and governance division.

But business groups argue that unilateral sanctions would be counterproductive, since the restrictions would only followed by the United States. That would allow America’s competitors to pick up new business in Russia, turning the sanctions into a self-inflicted economic wound.

Industry groups have pushed for a multilateral sanctions approach that includes other countries.

A spokeswoman for construction giant Caterpillar, a member of both NAM and The Chamber, said the company is still reviewing the new sanctions that Obama ordered against Russia on Tuesday, before the plane went down in Eastern Ukraine.

“Caterpillar is saddened and extends our condolences to the families of those on board Malaysia Airlines Flight 17,” Caterpillar spokeswoman Molly Donahue said. “We continue to urge all parties to find a peaceful, diplomatic resolution to the Russia-Ukraine crisis.”

When asked about the recent sanctions, Donahue said that Caterpillar is “still reviewing the most recent sanctions to understand the potential impact to Caterpillar and our non-U.S. competitors.”

Following Tuesday’s sanctions, Chamber executive vice president Myron Brilliant said in a statement that they “deplore Russia’s aggressions in Ukraine and fully support the demand of U.S. officials that Russia adhere to international norms.”

“At the same time, we believe history has shown that unilateral sanctions consistently fail to achieve their intended objectives,” Brilliant said on July 16. “As we carefully analyze the impact of these sanctions on the U.S. economy, we hope multilateral effort will follow to support a diplomatic solution to this conflict.”