U.S. House approves stricter sanctions against Russia, codifying into law

The U.S. House of Representatives approved on July 25
legislation that intensifies sanctions against the governments of Russia, Iran
and North Korea. In relation to Ukraine, the legislation codified current
sanctions against Russia into law and requires the U.S. president to obtain
congressional approval before deciding to relax them. The legislation
strengthens sanctions imposed on Russia’s financial and energy sectors, and
opens the window for potential sanctions against state metallurgical, mining
and rail transit enterprises. It also gives the U.S. president the ability to
impose sanctions on Russian hydrocarbon exporters and creates the ability to
impose sanctions against Russia for undermining global cybersecurity.

The legislation calls for supporting reforms in
Ukraine’s energy sector, reducing dependence on Russia energy resources, and
opposing the Nordstream gas transit pipeline that will bypass Ukraine. It
earmarks USD 250 mln for a fund to oppose Russian influence, as well as USD 30
mln to support Ukraine’s energy security.

The legislation expresses its support for the
Ukrainian government in renewing sovereignty and territorial integrity. It
condemns the illegal annexation of Crimea and Russian military invasion of
Ukrainian territory and supports measures to oppose all the Russian government’s
destabilizing activities in Ukraine. 

Zenon Zawada: The
legislation still needs approval of the U.S. Senate, which approved a similar
bill in June. While we don’t expect any hurdles there, we don’t expect it will
gain the signature of U.S. President Trump, not only because he aligned himself
with Russia during the presidential campaign. It makes no sense for a president
to sign legislation that further restricts his authority.

Given the strong support for the legislation
(drawing 419 out of 435 votes in the U.S. House, 98 out of 100 votes in the
U.S. Senate in June), we don’t expect Trump will veto the bill, which would
only lead to defeat. Instead, the most likely scenario is that he won’t sign
it, allowing it to become law after ten days. In a second scenario, Trump
doesn’t sign the bill but Congress adjourns for its summer recess before the
ten days expire, which would require reintroducing the legislation.