(Adds potential Russian response, SEC warning on risk
By David Alexander and Krista Hughes
WASHINGTON, March 19 The potential for broader
U.S. sanctions on Russia and Moscow's threat of responding in
kind are raising concerns among U.S. corporations and investors
about the economic fallout from the crisis over Russia's
annexation of Crimea.
Rapped by critics for not taking a harsh enough line with
Russia, the White House is mulling its next moves.
"We are prepared to impose further costs on Russia for its
violation of Ukrainian sovereignty and territorial integrity,"
White House spokesman Jay Carney said on Wednesday.
Russia's deputy foreign minister, meanwhile, promised "a
broad range of responsive measures" that "won't go unnoticed in
At stake from the worst East-West crisis since the Cold War
is goods trade between the two countries that was worth about
$38 billion in 2013.
Machinery, vehicles and aircraft lead the list of U.S.
exports to Russia, which in turn exports crude oil, iron, steel
and platinum to the United States, among other things.
U.S. companies also have $14 billion in direct investment in
Russia, with about half that amount coming the other way, and
mutual fund and hedge fund investments in Russian companies,
many of them state-owned, is much higher.
Oil major ExxonMobil and aircraft maker Boeing
are two companies with strong links to Russia and
involved in joint ventures with Russian partners.
Other U.S. companies active in Russia include Chevron Corp
, General Electric Co, Caterpillar Inc,
John Deere, Ford Motor Co, General Motors Co,
PepsiCo Inc, Mars, Cargill Inc, and Kraft
Randall Stephenson, chairman of the Business Roundtable and
chief executive officer of AT&T, told reporters this week
that the Ukraine crisis was "obviously an area of concern" to
"Anybody doing business in Europe is watching the situation
very, very closely," Stephenson said.
The Roundtable is an association of chief executives of
major U.S. corporations, from the defense industry and consumer
manufacturers to the healthcare and technology sectors, many of
which have global footprints.
Dozens of the group's members had a chance to raise their
concerns in meetings with top administration officials on
Wednesday, at an event featuring Defense Secretary Chuck Hagel
and Trade Representative Michael Froman.
But a Pentagon spokesman said the Ukraine crisis was not a
major talking point, either in the secretary's remarks or in the
questions and answers afterward.
Hagel cited Western tensions with Russia as an example of
the kind of security concerns the United States may have to
address unexpectedly in the future, said Rear Admiral John
CURTAILED TALKS ON TRADE TIES
The Obama administration has curtailed contacts with Russia
since the Ukraine crisis blew up, and Froman this month halted
his agency's talks on deeper trade and investment ties with
The United States and Russia had started talking about a
bilateral investment treaty, and Russian Economy Minister Alexei
Ulyukayev said in February the next step would be a meeting of
The promise of more sanctions has generated some political
posturing as well.
On Wednesday, five U.S. lawmakers, mostly from districts
that are home to major U.S. defense contractors, urged Hagel to
cut off taxpayer dollars to Rosoboronexport, the Russian
state-arms dealer. The U.S. Defense Department has a contract to
buy Russian-made Mi-17 helicopters from the company.
Some critics said the U.S. sanctions so far are too weak to
deter Russian President Vladimir Putin, while others expressed
concern about potential economic impact the sanctions and
expected retaliation by Moscow could have on markets and trade.
The U.S. Chamber of Commerce, another Washington-based
business group, called for close cooperation with Europe, whose
annual trade with Russia is about 15 times larger than that of
the United States.
"A go-it-alone approach by the United States could be both
economically damaging and ineffective in accomplishing its
goals," said the chamber's vice president, Myron Brilliant, who
oversees international affairs for the group.
Russia joined the World Trade Organization in 2012 and so
far has had no trade disputes with the United States, although
U.S. trade officials in December raised concerns over vehicle
fees, copyrights and a meat additive ban.
Risk of further volatility in Russia has U.S. securities
regulators on alert as well.
The Securities and Exchange Commission has contacted public
funds with investments in Russia to make sure they are properly
managing risks and disclosing those holdings to investors,
Regulators are focused on whether funds are being open with
investors, and whether the funds are preparing about how they
might respond to different scenarios or outcomes.
Russia's currency, the rouble, hit a record low this week,
and a rouble-denominated index of Russian stocks is down
12.3 percent for 2014 so far. The dollar-denominated RTS index
is down 20 percent.
(Additional reporting by Sarah N. Lynch, Susan Heavey and Anna
Yukhananov in Washington, Lewis Krauskopf in New York and Thomas
Grove in Moscow; Editing by Ros Krasny, Bernadette Baum, David
Storey, Alden Bentley and Mohammad Zargham)