Russia Takes Aim at Rockets, Workers, Drugs in Counter-Sanctions

Updated on
  • Draft law proposal to be considered in parliament next week
  • Plan would create list of options for Kremlin to choose from
UBS's Dennis Says Russia Attractive Despite Sanctions

Russia outlined a broad range of potential retaliatory moves against new U.S. sanctions, including curbs on imports of American farm products and cooperation in nuclear energy and rocket engines.

The proposals, which also include a potential bar on U.S. consulting and accounting firms from working with state-owned companies and limits on imports of alcohol, will be discussed next week in the lower house of parliament, the State Duma. They also envision restrictions on visas for U.S. specialists working in Russia. Presidential orders would be required to impose specific measures.

U.S. sanctions targeting Russian businessmen, companies and officials imposed a week ago sent Russian markets into a tailspin and brought about promises of retaliation from the Kremlin. Given that Russia has little economic leverage over the U.S., officials said it could use an asymmetrical response as it has in the past to counter anti-Russian measures, as when it banned Americans from adopting its children or cut off student-exchange programs.

“During discussions of the unfriendly actions against our country, we talked about the need to respond to the boorish behavior by the U.S. and its creating obstacles to Russian business,” Duma Speaker Vyacheslav Volodin said Friday, Tass news agency reported. The measures would affect the U.S. and any other countries that join its sanctions on Russia.

Given the Kremlin’s tight control over parliament, the bill is likely to be passed within days. Spokesman Dmitry Peskov said the Kremlin would need some time to study the proposal but noted that no steps would be taken that would harm Russian interests. He declined to comment on specific items.

Fourth-Largest

The U.S. is Russia’s fourth-largest trading partner. Imports from the U.S. totaled $12.7 billion last year, according to International Monetary Fund data, with cars, pharmaceuticals and medical equipment among the top items. Exports to the U.S. were $17 billion.

The draft law, which includes potential curbs on buying Russia’s goods and equipment with rare-earth metals, “will create significant problems because those are strategic materials,” Interfax news service reported, citing a lawmaker Evgeny Serebrennikov.

A legislator from the upper house, Sergei Ryabukhin, was quoted by the official RIA Novosti news agency as saying the law would also ban shipments of titanium to Boeing Co., which relies heavily on Russia, the largest producer of the metal. But Ryabukhin said titanium would be covered under a clause limiting sales of rare-earth metals, which don’t include the super-light material. He didn’t respond to a request for comment.

VSMPO-Avisma, Russia’s titanium monopoly, warned in a statement that any ban in shipments would do lasting damage to its position on global markets, RIA reported.

The draft law envisions curbs on:

  • Use of U.S. software, technology products by government agencies, state companies
  • Use of foreign audit, consulting services by government agencies, state companies
  • “Exclusive rights” to certain trademarks for U.S. firms in Russia
  • Imports of U.S. pharmaceuticals, except those not produced in other countries
  • Imports of U.S. agricultural, alcohol, tobacco products
  • Exports of Russian rare-earth metals to U.S. customers
  • Cooperation in rocket engines, aerospace, nuclear energy
  • Hiring of U.S. citizens in Russia, including highly qualified specialists
  • Bill envisions increase of air-navigation fees for U.S. airlines
  • Restrictions could apply to entities with U.S. ownership of more than 25 percent

— With assistance by Andrey Biryukov

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