Last Thursday, the U.S. House of Representatives Foreign Relations Committee approved the so-called Magnitsky Bill (H.R. 4405), a piece of legislation that would impose visa bans and asset freezes on Russian officials involved in “gross human rights violations in Russia.” More specifically, the bill targets about 60 individuals – already banned from visits to the U.S. by the Department of State — believed to be responsible for the 2009 death of Sergei Magnitsky, an anti-corruption lawyer in Moscow. The hearing was preceded by the habitually incomprehensive statement by Ileana Ros-Lehtinen (R-FL), whom the Congress’ arcane seniority rule had propelled to the Committee Chairmanship, a position she so blatantly misfits.
The Committee decision clears the way for the bill to be taken up by the full House. The fate of the similar Senate bill, S. 1039, is less certain. Just a couple of months ago, it was widely expected that the Senate Foreign Relations Committee, headed by John Kerry (D-MA), would hold similar hearings early May. However, sensing the signals emanating from the White House, Kerry postponed the hearings until June 19.
Enter Max Baucus (D-MT), Chairman of Senate Finance Committee. Baucus’ Committee is in charge of passing the legislation granting Russia permanent normal trade relations (PNTR) status, something the U.S. has to do given Russia’s upcoming entry to the World Trade Organization. Failure of granting Russia the PNTR status will inevitably hurt interest of U.S. multinational corporations who would lose their business in Russia to their European and Japanese competitors. Standing, however, in the way of the PNTR bill is the Jackson-Vanik amendment, the notorious relic of the Cold War that still deprives Russia of the PNTR status as a punishment for restricting Jewish emigration in the 1970s.
And here things get complicated. The Senate Republicans refuse to just repeal the Jackson-Vanik amendment; they insist that something else should be put in place to hold Moscow accountable for what they routinely describe as “human-rights abuses.” Addressing their concerns, Baucus proposed to link both bills and pass the PNTR legislation – while simultaneously repealing the Jackson-Vanik amendment – along with passing the Magnitsky bill. This approach looks increasingly promising after Baucus secured support of Sen. John McCain (R-AZ), the leading anti-Russian voice in the Senate.
The Obama administration initially opposed the Magnitsky bill, arguing that it would negatively affect U.S.-Russia relations. However, sensing that it can’t win this fight, the White House changed the track and instead put pressure on the bill’s sponsor, Sen. Ben Cardin (D-MD). This has worked: recently, Cardin came up with a modified version of the bill addressing some of the administration’s concerns. In particular, the updated version makes it more difficult to add names to the list of human right violators that the bill would create.
Last week, the criticism of the Magnitsky bill was finally articulated by the supposedly most interested party: the American business groups. The National Foreign Trade Council (representing major U.S. exporters such as Boeing, Microsoft and Caterpillar) and USA Engage (a broad coalition of 670 member companies and trade associations) argued that the Magnitsky bill “was seriously flawed.” They also warned that that the bill would make it even more difficult to get Russia’s cooperation on issues vital for U.S. national interests.
The lateness with which U.S. business groups came to the discussion could be explained by their unwise focus on the repealing the Jackson-Vanik amendment and granting Russia the PNTR status. Apparently, they underestimated the potential damage that the supposedly “political” Magnitsky bill could inflict on U.S.-Russia economic and trade relations. Besides, the danger became real that the Magnitsky bill will move through Congress on a faster track than the PNTR legislation, as it might well be the case in the House of Representatives.
Unfortunately, this effort seems to be too little, too late.
In recent days, Moscow repeatedly warned that the Magnitsky bill will have serious consequences for the future of U.S.-Russia relations. However, as the adoption of the bill looks virtually inevitable, it’s time for the Kremlin to put together a list of practical retaliation measures it will undertake. The Russian president Vladimir Putin will have a chance to present this list to his American counterpart during the G20 summit in Mexico next week.