Business worried as U.S. weighs Russia sanctions

WASHINGTON (Reuters) - U.S. business groups said on Thursday they had received few clues what steps the United States might take to punish Russia for its military action in Georgia, but urged the White House to proceed cautiously.

"We made a real effort to find out and they were entirely uncommunicative," said Bill Reinsch, president of the National Foreign Trade Council, which represents U.S. exporters such as Boeing, Microsoft and General Electric.

But "I came away with a very clear impression that something is going to happen, that doing nothing is not a choice here," Reinsch said.

"We've been telling them to think very carefully before acting and move very cautiously and whatever you do, make sure that it's multilateral, not unilateral," Reinsch said.

Earlier on Thursday, French Foreign Minister Bernard Kouchner told reporters the European Union was considering sanctions against Russia because of Moscow's refusal to pull back troops in Georgia.

White House spokeswoman Dana Perino said the Bush administration was discussing whether to nix a civil nuclear pact with Moscow, but told reporters it was too early to say what action the United States might take.

"It is pretty evident that the European government and our own government are weighing options right now," said Mike Considine, director for Eurasian Affairs at the U.S. Chamber of Commerce. "The situation is clearly at a serious level and they're trying to find the right way to respond to this."

ROBUST TRADE GROWTH SINCE 2002

Trade between the United States and Russia has grown significantly in recent years, with Russian exports to the United States hitting $19.4 billion in 2007, more than double the $8.6 billion in 2002.

Petroleum products accounted for about $11 billion of Russia's exports to the United States last year, followed by about $1.4 billion of bauxite and aluminum and nearly $936 million of nuclear fuels and materials.

U.S. exports to Russia, led by poultry, aircraft, autos and drilling equipment, grew to nearly $7.4 billion last year, compared with $2.4 billion in 2002.

That does not include substantial trade in financial services, or money the two countries have plowed into each other's economies, said Gary Litman, vice president for Europe and Eurasia at the U.S. Chamber of Commerce.

"Russia has about $10 billion invested in the United States in the manufacturing sector and we about the same amount invested there. There's really a very substantial economic exchange," Litman said.

Any punitive U.S. action should be political, rather than economic, and take "into account the fragile state of the young countries between the Black and Caspian Seas" whose economies are closely linked to Russia's, Litman said.

If the United States takes economic action, it should be to "help restore the economic viability of the region" after the damage caused by the war, he said.

The White House has warned one consequence for Russia could be delayed entry into the World Trade Organization, which Moscow has been negotiating for 15 years to join.

But Russian Prime Minister Vladimir Putin and other Russian officials seemed prepared to walk away from the WTO earlier this week by announcing they wanted to withdraw from some of the commitments they had already made.

"If they decide they don't want to pursue WTO accession, we can't make them. If they pull out of something, I'm not sure that qualifies as a sanction," Reinsch said.

"I'm almost more worried about what they're going to do to themselves rather than what we're going to do to them."

(Editing by Peter Cooney)