WASHINGTON -- Business groups are pushing to ensure that any economic sanctions the United States imposes on Russia are echoed by as much of the rest of the world as possible, warning Congress and the Obama administration that unilateral U.S. action would put tens of billions of dollars of U.S. investment and trade at risk of retaliation.
Company officials say they are caught between fast-moving U.S. foreign policy and their interests in a market many have been courting -- both in the key energy sector and beyond.
Top U.S. firms such as PepsiCo and General Electric have touted their involvement in Russia as central to their global strategy. That has involved aggressive investing -- PepsiCo is now the largest food and beverage company in Russia, earning $4.8 billion in the country in 2012 -- and joint ventures such as GE's with two Russian firms to manufacture gas turbines in Rybinsk. Ford Motor Co. recently announced a partnership with the Sollers car company. Aerospace giants such as Boeing are among the top U.S. exporters to Russia.
Relations built in an often-difficult environment are now at risk if the crisis escalates, or if the administration makes good on threats to steadily tighten the screws on Russia's economy.
"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. In meetings with the administration and members of Congress, "we have not been shy about telling them ... if it is not multilateral, it is not going to work," he said.
The response from business groups comes as administration officials and lawmakers consider what, if any, economic levers to use to try to reverse Russia's move last week into Ukraine.
The White House took an initial step Thursday, freezing assets and denying visas to some Russian officials, while the House Foreign Affairs Committee approved a nonbinding resolution that condemns Russia's intervention and calls for sanctions on senior Russian Federation officials, state-owned banks and other state agencies.
The resolution also calls on the United States to promote increased natural gas exports to Ukraine. That approach, seen as a way to help free the country from its reliance on Russian gas, has drawn increased attention. But environmentalists and U.S. companies that depend on the inexpensive fuel supply oppose the idea because U.S. global exports would ultimately be apt to raise prices here.
The Senate Foreign Relations Committee plans to consider its own Ukraine legislation next week, chairman Robert Menendez, D-N.J., said Thursday.
Broad sanctions face not only pushback from U.S. business but also practical problems, given Russia's deepening connections to world energy and financial markets. Sanctions that target the energy sector, for example, might damage Russia the most, but could also drive up global prices and undermine an already-weak global economic recovery. Targeting the financial sector, similarly, could damage U.S. and European banks with hundreds of billions of dollars in Russian loans and investments on the line -- and even then prove ineffective unless major Asian financial centers also abide by sanctions.
For firms that trade with or invest in Russia, recent events are a shock that comes only a year after top business leaders lobbied Congress intensively to lift the last Cold War-era trade curbs on Moscow, a step they wanted in order to take advantage of Russia's new membership in the World Trade Organization.