K Street’s Russian bonanza
Byron Tau, Politico, Sep 8 2014
One winner from the international standoff between Russia and the West over Ukraine? K Street. Companies all over the world are scrambling to hire legal experts and lobbying firms to ensure that their business interests are protected as sanctions continue against Russia. Unlike other countries under trade embargoes like Iran and Cuba, the Russian sanctions package is narrow and full of exceptions, exemptions and carve-outs, which means lots of legal leeway for those lawyers and lobbyists to navigate. The result is a flood of businesses all over the world working to ensure that they stay on the right side of the law while keeping an eye on the bottom line and profit margins. Gary Hufbauer, a former top Treasury Dept official now at the Peterson Institute for International Economics, said:
These sanctions are a bonanza for K Street. Here there’s a lot of holes and not much cheese. There’s a lot of room to argue.
The Usaian media company Viacom, which owns entertainment brands like BET, MTV, Comedy Central and Paramount Pictures, hired the former House Foreign Affairs Committee Chairman Howard Berman to work on its Russian interests, looking to make sure that the traditional embargo exemptions for media companies and Usaian entertainment remained in place in Russia. The company has several media properties in the country, including MTV Russia, Comedy Central Russia and a newly launched movie channel. Other Usaian or multinational companies that are lobbying Congress critturs and the White House on the Russia sanctions include Chevron, Exxon Mobile, Caterpillar, MasterCard, Visa, Xerox and Coca-Cola, according to federal lobbying records. Russian companies have also been snapping up lobbying talent to push their agenda in Washington. Russian natural gas company OAO Novatek hired the Usaian firm Qorvis in July to work on sanctions issues, and the Russian bank Gazprombank hired former Sens Trent Lott and John Breaux in late August to lobby against them. Usaia first slapped sanctions on a number of Russian individuals in March and April, after Russian forces occupied and annexed the Crimean peninsula. Another round of broader sanctions were announced in July that included Russian energy companies and financial institutions, and more sanctions are on the way, Obama promised in Friday remarks in Wales on the sidelines of a NATO summit there. Obama said:
Usaia & Euia are finalizing measures to deepen and broaden our sanctions across Russia’s banking, energy and defense sectors.
The complicated and piecemeal nature of the sanctions from Usaia & Euia are causing a headache for global businesses. The long-standing Cuba embargo, for example, is much simpler. There’s a near-total ban on Usaian citizens spending money or doing business in the country, with some very narrow and clearly defined exceptions monitored by the Treasury Dept. Other sanctioned countries are bit players in the global economy. Myanmar, Côte d’Ivoire, North Korea, Syria are tiny, poor countries with relatively weak economic ties to the global financial system and low levels of Western investment. Russia, by contrast, is a giant market and a major player in international financial markets where multinational companies often have significant and big investments. And the current sanctions apply only to certain individuals and sectors of the economy. David Johnson, a partner with the firm Vinson & Elkins, wrote in an email:
There is a lot of concern about the sanctions across many Usaian business sectors, and sanctions lawyers have been busy since March on these issues with Russia.
Top law firms firms like Vinson & Elkins, Bryan Cave, Akin Gump and many others all have specialty practices that deal with sanctions law and trade issues. And those attorneys have been very busy since the first round of sanctions were announced earlier this year. It’s the uncertainty of the situation that is causing the most concern among global companies, who can’t make long-term decisions about their business interests in Russia without legal help and lobbying muscle. Wynn Segall, a partner with Akin Gump and an expert on international trade and sanctions, said:
Uncertainty is not the friend of global business, and that’s fundamentally the biggest difficulty for business interests in this context. We’re dealing with a difficult situation with a legal framework that’s being created in a politically charged international environment that is more challenging than we have seen for the Usaian and international business community in other sanctions-related crises in a long time. We’re dealing with a story that is still being written. Nobody really knows how this will all play out in the long term.
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