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Trump to keep existing US sanctions on Russia

11 Jan 2017, 5.11 pm GMT

Trump to keep existing US sanctions on Russia

Washington, 11 January (Argus) — The administration of president-elect Donald Trump plans to maintain existing US sanctions on the Russian oil sector, US secretary of state nominee Rex Tillerson said today.

Tillerson, in testimony to the US Senate Foreign Relations Committee, evoked his experience in dealing with Russia as the former ExxonMobil chief executive to make a case for a "clear-eyed" relationship with Moscow.

"Russia today poses a danger, but it is not unpredictable in advancing its own interests," Tillerson said, noting Russia's annexation of Crimea and support for Syrian president Bashar al-Assad as part of a long-term plan to claw back its way to its former high-ranking spot in the global world order. "Our NATO allies are right to be alarmed at a resurgent Russia," Tillerson said.

Trump's victory in the US presidential election gave Moscow hope that he would reverse the confrontational tone in bilateral relations in the final years of President Barack Obama's administration and lift the sanctions on Russia. "Nobody believed Trump would win, except for us," Russian president Vladimir Putin said. Putin's aides have described a feeling of euphoria in the Kremlin following Trump's election.

Tillerson's statements today likely will dissipate that euphoria. The US and Russia "are not likely ever to be friends," Tillerson said. "We do not have the same system of values," he said, adding that Russia's recent activities have disregarded US interests.

Sanctions imposed by Obama in 2014 prohibit the sale or transfer of shale, deepwater and arctic drilling equipment and technology to Russian oil companies. The new administration would maintain the current sanctions on Russia as a negotiating tool, Tillerson said at this hearing.

"It is important to keep the status quo [on sanctions] until we develop what our approach will be," Tillerson said. Keeping the sanctions in place would be an incentive for Russia to change its behavior, Tillerson said.

Tillerson's statements diverge from Trump's stated views on Russia's involvement in Ukraine and Syria. Tillerson said he did not have an in-depth discussion with Trump on Russia.

But he said Russia's actions were enabled by an "absence of American leadership" under the current administration. "We need an open and frank dialogue with Russia regarding its ambitions, so that we know how to chart our own course."

Tillerson said he would support sending weapons and other military equipment to Ukraine to enable it to withstand the Russian-backed rebels in the east, a position that Obama resisted in the past two years.

"Russia must know that we will be accountable to our commitments and those of our allies, and that Russia must be held to account for its actions," Tillerson said.

But Tillerson also offered a pragmatic strategy of engaging Russia on issues of common interest, such as addressing the global threat of terrorism. "We need to work with Russia, sometimes as a partner and sometimes as an adversary. With Russia, engagement is necessary."

Trump's administration would take greater care to develop new sanctions on Russia and other countries, Tillerson said, noting that "the primary effect of sanctions is to disrupt US business involvement."

Exxon under the existing sanctions regime in 2014 had to walk away from a promising Arctic exploration opportunity in a joint venture with Russian state-owned company Rosneft. But Tillerson said he accepted that as a fact and never lobbied against the sanctions.

A bipartisan group of US senators ahead of the hearing announced plans to advance a bill imposing additional sanctions on Russia's oil and natural gas sector, in addition to codifying existing sanctions imposed by Obama. The bill would expand those sanctions to target entities from the US and elsewhere buying Russian sovereign debt securities or investing more than $20mn in Russian state-owned oil and gas companies.

Senators John McCain (R-Arizona) and Ben Cardin (D-Maryland), who sponsored the bill with eight other Democrats and Republicans, said the proposed sanctions are an appropriate response to the alleged interference by Russian intelligence agencies in the US presidential election last year.

The US intelligence agencies contend that Russian president Vladimir Putin directed an effort aimed at undermining the US election process. Moscow denies the allegations.

Additional actions against Russia are an example of "sanction-mania, bad manners and Russophobia," Russian deputy foreign minister Sergey Ryabkov said today. "This behavior is simply disgraceful."

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