Ukraine Crisis Drives a Quiet Lobbying Boom in U.S.

Photographer: Yuriy Dyachyshyn/AFP via Getty Images

Supporters of Ukrainian independent presidential candidate Petro Poroshenko attend an election campaign rally on May 22, 2014, in the western Ukrainian city of Lviv. Close

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Photographer: Yuriy Dyachyshyn/AFP via Getty Images

Supporters of Ukrainian independent presidential candidate Petro Poroshenko attend an election campaign rally on May 22, 2014, in the western Ukrainian city of Lviv.

Turmoil in Ukraine has sparked a boomlet of lobbying in Washington, with an almost five-fold increase in the number of companies and organizations weighing in with lawmakers and officials.

The subject is so sensitive that the lobbyists even more than usual want to be heard and not seen.

Exxon Mobil Corp. (XOM), Coca-Cola Co., Xerox Corp. and General Motors (GM) Co. were among the 29 companies or interest groups adding Ukraine to the list of issues they discuss with federal officials, according to disclosures filed with the U.S. Senate for the first quarter of 2014. That’s up from six in the final three months of 2013, according to the forms, which don’t say how much is being spent on the issue.

Without fanfare or public display, lobbyists are reminding lawmakers and administration officials of the business interests at stake when sanctions are considered. They are careful to avoid any appearance of trying to dictate U.S. foreign policy.

More on the Crisis in Ukraine:

“They do not want to be saddled with the notion that their particular economic interests, as important as they are to their bottom line, have somehow played a huge role in the political sphere and distorted things,” said Thomas Pickering, a former U.S. ambassador to Russia and the United Nations. “And I think they’re wise.”

At stake are commercial interests with Russia as well as Ukraine. The U.S. has sanctioned members of Russian President Vladimir Putin’s inner circle and is holding out the threat of broader economic penalties that risk disrupting business, from oil development in the Arctic and Black Sea to soft drink sales in Russia to contracts with the Ukrainian and Russian governments. The next benchmark comes May 25, when Ukraine is scheduled to elect a new government.

Russian Commerce

While Russia accounts for only about 1 percent of total U.S. trade, $38 billion in 2013, American-based companies are the biggest source of foreign investment in Russia, according to a 2013 report by Ernst & Young.

Companies are “concerned about potential for a sanctions war, and what sanctions are chosen and how the other side seeks to retaliate,” Pickering said. For the U.S. and Russia, “this could be a very mutually destructive possibility.”

Sensitive to public perception -- and that of the government officials they seek to influence -- many companies are describing their mission as anything but “lobbying.”

The U.S. unit of Royal Dutch Shell PLC (RDSA), for example, describes its efforts as “general in nature and related to education and keeping an open dialogue,” according to Curtis Smith, a spokesman for the company.

“Because we currently operate in Ukraine, it’s important that we continue to monitor and understand trade controls and sanctions closely and respond appropriately to ensure that we comply with all applicable international sanctions and related measures,” Smith said in an e-mail.

Careful Description

A Coca-Cola spokesman referred to the company’s legally required disclosure form.

“We feel that information adequately describes our activity and position and we don’t have anything further to add at this time,” the spokesman, Ben Sheidler, wrote in an e-mail.

The disclosure, referring to legislation authorizing loan guarantees for Ukraine and sanctions against individuals in Russia and Ukraine, states Coke’s interest as in “provisions relating to aid for Ukraine and sanctions on Russia in S.2124, Support for the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act of 2014.”

Russia is the world’s largest oil producer and Ukraine has ambitions to become a shale-gas exporter by 2020, so some of the biggest stakes are in energy.

Energy Interests

Oil, gas and nuclear power companies make up the top group lobbying on Ukraine, records show. Along with Exxon Mobil, Chevron Corp., Anadarko Petroleum Corporation, Westinghouse Electric Co., and the Nuclear Energy Institute also filed first-quarter lobbying reports that cover Ukraine.

Chevron and Shell have signed shale-gas deals with Ukraine and Shell is among a group planning to drill oil and natural gas prospects in the Black Sea. Shell also has plans to expand its Sakhalin-2 oil and gas project in Russia’s Far East.

Exxon has drilling rights to 11.4 million net acres (46,134 square kilometers) in Russia, it’s biggest single cache of drilling rights outside the U.S. The company also is planning Arctic drilling in an alliance with state-owned OAO Rosneft.

Westinghouse, the Pennsylvania-based nuclear reactor arm of Toshiba Corp., listed the loan-guarantee package along with “commercial interests in Ukraine” among the issues it lobbied Congress and the departments of Energy, Commerce and State on in the first quarter of 2014.

Nuclear Fuel

The company announced in April a deal extending a contract to supply fuel rods for two of Ukraine’s 15 Russian-made nuclear reactors. The agreement is similar to one company officials say they reached last year with Ukraine’s prior government.

“It doesn’t matter what color the revolution, Ukraine has supported Westinghouse,” said Michael Kirst, the company’s vice president for strategy and external affairs in Europe, the Middle East and Africa.

Steve Kerekes, a spokesman for the Nuclear Energy Institute, declined to discuss details, saying in an e-mail that “we are monitoring the Ukraine situation carefully because of its potential impact on energy markets.”

For GM, along with other automakers, the interest is in Russia’s car market, which alternates as Europe’s first or second largest.

“We are of course concerned about the impact on business, so we are closely monitoring the situation together with our local teams and we stay in contact with the U.S. government and the European Union,” GM spokeswoman Heather Rosenker said in an e-mail.

Financial services firms Deutsche Bank Securities Inc. and Visa Inc., satellite firms Intelsat SA and Space Exploration Technologies Corp. lobbied on Ukraine as well.

It’s not a one-way street. In some cases, U.S. officials have sought information from companies about how particular U.S. actions might affect their businesses.

White House press secretary Jay Carney said President Barack Obama’s administration is “very mindful” that any additional sanctions “will come at a cost to the global economy. We take that into account as we review our options.”

William T. Wilson, a senior research fellow at the Heritage Foundation, a policy center in Washington, said global commerce means closer interaction between policy and business.

“These are blue-chip companies with large market capitalizations that derive a lot of their business from selling abroad,” Wilson said. “They don’t want to see these markets dry up. They don’t want to see a trade war.”

To contact the reporters on this story: Margaret Talev in Washington at mtalev@bloomberg.net; Jonathan Allen in Washington at jallen149@bloomberg.net

To contact the editors responsible for this story: Steven Komarow at skomarow1@bloomberg.net Joe Sobczyk

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