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LE SHOCK

Why Congress could be stuck on Russia trade relations

On Thursday, the House overwhelmingly passed a bill to rescind favored trade relations with Russia and Belarus while also punishing human rights violators. The measure sailed through with 424 votes. Only eight Republicans opposed it.

That’s where the easy part ends.

Senate Republicans – led by Sen. Mike Crapo (Idaho), the ranking Republican on the Finance Committee – want to amend the House bill with a more comprehensive package that not only rescinds permanent normalized trade relations with Russia and Belarus but bans Russian oil imports too. The Crapo proposal doesn’t include the human rights provisions, which are based on the Global Magnitsky Act. Republicans view the Crapo bill as being closer to a bipartisan agreement reached between the Senate Finance Committee and the Ways and Means Committee. This all raises the prospect that the trade relations piece could be stuck on Capitol Hill.

The House already passed separate legislation to ban Russian oil imports last week, but that remains stalled due, in part, to White House opposition.

There are crosscurrents at play here that demonstrate how complex the Russian sanctions issue has become. The White House wants to put heavy pressure on Russian President Vladimir Putin in response to the increasingly brutal Russian invasion of Ukraine. Yet President Joe Biden also wants flexibility in his dealings with Putin in case the situation shifts dramatically.

Remember, the White House was opposed to a Russian oil ban at first due to fears of what it could do to the cost of oil and the U.S. economy. Part of that calculus as well was Democrats’ political standing heading into the November midterms, another huge challenge. Biden, however, did it on his own by executive order and preempted action by Congress.

Oil was trading in the mid-$70s per barrel just two months ago. On Thursday, oil closed at $105 per barrel, a roughly 40% increase. It could get a lot worse next month, analysts say.

Yet this also is a classic example of a president wanting maximum freedom to operate during a crisis and a Congress bent on taking the toughest possible line in order to send a political message. The same dynamic played out prior to the attack on Ukraine. Republicans and some high-profile Democrats wanted to sanction Russia before the invasion even began. White House officials put the brakes on the effort, and nothing was passed. When Russia did invade, Biden imposed sanctions using existing legal authority. That’s happening again here.

Here are some of the dynamics playing out in this episode on Capitol Hill:

No. 1: The Crapo bill bans the import of Russian oil 45 days after the bill is signed into law. Sen. Joe Manchin (D-W.Va.) says 45 days is too long. The administration believes anything more abrupt could further rattle the already volatile oil market.

No. 2: Furthermore, Manchin does not believe that Congress needs to vote on an oil ban since Biden has already done this by executive order.

“I don’t know what they’re even doing, why they’re even doing it,” Manchin told us this week, referring to Congress voting on the oil ban. “It makes no sense at all. The president has the authority to do it. He did what he’s going to do. I trust him to do it.”

No. 3: Senate Republicans have misgivings about the Magnitsky language. Pelosi, though, is demanding its inclusion.

We asked Senate Finance Committee Chair Ron Wyden (D-Ore.) what the hold up was in that chamber on voting for a Russian oil import ban, especially since the House cleared by a wide margin last week.

A Democratic senator, who asked to speak on the condition of anonymity, said, “This is all the White House. They want flexibility. It’s one thing to do this by executive order, it’s another to do this by law.”

Senate Republicans, for their part, are taking a tough stance, as they have throughout this crisis. Here’s Sen. John Barrasso of Wyoming, the number three Republican. Barrasso is also ranking Republican on Energy and Natural Resources, Manchin’s committee counterpart.

There is more Russia-related legislation coming from Congress soon. The House Financial Services Committee marked up a series of GOP and Democratic bills on Thursday. The measures would prevent Russian and Belarussian officials from participating in meetings of the World Bank, IMF and other international financial organizations. Ukraine would also get U.S. help in suspending debt payments.

One bill targeting the assets of Russian oligarchs drew concerns from Republicans about expanding the authority of the Financial Crimes Enforcement Network, an agency inside the Treasury Department commonly referred to as FinCen. Republicans – with support for some Democratic support – are concerned that FinCen hasn’t complied with all existing reporting requirements yet.

But Financial Services Committee Chair Maxine Waters (D-Calif.) believes she can resolve those issues and get the legislation on the House floor quickly. Here’s what Waters told us:

PUNCHBOWL NEWS x SEN. BILL HAGGERTY

What Bill Hagerty told us

Anna sat down yesterday with Sen. Bill Hagerty (R-Tenn.) to talk about small business and private equity, whether he’ll support a gas tax holiday and much more.

MOMENTS

9 a.m.: President Joe Biden will speak with Chinese President Xi Jinping.

11 a.m.: Biden will get his daily intelligence briefing.

11:30 a.m.: House Minority Leader Kevin McCarthy will hold a news conference.

1:30 p.m.: Biden will meet with patients to discuss cancer research.

2:30 p.m.: Jen Psaki will brief.

5:10 p.m.: Biden will leave the White House for Rehoboth Beach, Del.

6:10 p.m.: Biden will arrive in Rehoboth Beach.

CLIP FILE

NYT

WaPo

“In Ukraine’s second city, a furious rain of bombs and rockets takes a toll: ‘There are no coffins left,’” by Loveday Morris in Kharkiv, Ukraine

WSJ

AP

Politico