Economic sanctions against Russia imposed by the United States in 1974 could backfire on America this year, but are likely to stay in place because of persistent political and ideological grudges between the two Cold War rivals, analysts said.
The Jackson-Vanik amendment was defunct in practice over the last two decades, but things got tricky after Russia completed its 18-year-long path to the World Trade Organization (WTO) last year, with more than a little help from the White House.
WTO rules ban formal trade restrictions such as the Jackson-Vanik amendment, which means the United States could face economic sanctions from Moscow and pressure from WTO once Russia completes the treaty's ratification, expected this summer.
"Russia has no practical interest in canceling the Jackson-Vanik amendment," Konstantin Kosachyov, then-State Duma lawmaker with United Russia and deputy head of the international affairs committee at the lower chamber, said in late February.
"Common sense predicts it will be canceled this summer. But it may become a hostage of the election campaign in the United States," Kosachyov said.
The administration of U.S. President Barack Obama is making a push to have Congress formally repeal the Jackson-Vanik amendment in regard to Russia, but this is unlikely to happen before the U.S. presidential elections in November, according to Russian and American pundits contacted by RIA Novosti.
Kosachyov's prediction was echoed by Angela Stent of Georgetown University and Valery Garbuzov of the Russian Institute of the United States and Canada, both of whom said the Jackson-Vanik is expected to stay in place until the U.S. presidential elections.
Obama has spoken against the amendment, a tool of the Cold War that denies Russia the status of permanent normal trade relations over the restriction on emigration of Soviet Jewry in the 1970s.
“I have asked Congress to repeal Jackson-Vanik to make sure that all your companies and American companies all across the country can take advantage of it,” he said in March at a business roundtable in Washington, D.C.
U.S. ambassador to Russia, Michael McFaul, has called repeal of the amendment a top priority for the White House this year. He has repeatedly spoken against Jackson-Vanik, including in an interview with Voice of America last week.
The Obama administration could attempt swaying pro-Jackson-Vanik congressmen one by one or try to get the business lobby to convince the legislators of the damages U.S. businesses faces in Russia over the amendment, Garbuzov said. But neither strategy would yield fast results, he said.
Emigration from Russia is unhindered now, and the White House has waived the amendment since 1989 on an annual basis, but the Congress never removed Russia from its coverage.
Strictly American Business
"Canceling Jackson-Vanik would be a largely symbolic move, but the amendment serves as an invisible red light to Russian-American economic relations," said Arseny Dabbakh, an analyst with Rye, Man & Gor Securities.
The United States are Russia's only eight-biggest trade partner, with bilateral trade standing at $31 billion in 2011, according to Russian Federal Customs Service. China tops the list with $83 billion, followed by Germany with $71 billion and the Netherlands with $68 billion.
Russia needs U.S. investment, which is practically absent now, while American companies are interested in Russia, given their attempts to expand their export operations following the recession that harmed the internal market, Dabbakh said by telephone.
"International business views Russia as an unsaturated market for housing, durable and consumer goods, oil and gas services, and ... even infrastructure," said Ariel Cohen, a leading expert with the Washington, D.C.-based Heritage Foundation.
"Investors still pay a high price for the Kremlin's domestic heavy-handedness," he said by email.
Human Rights Trade-Off
The stumbling block is Russia's track record on human rights, which remains unimpressive: Russia has been ranked a "Not Free" country in all annual Freedom in the World surveys by U.S.-based rights watchdog Freedom House since 2004.
U.S. legislators are unlikely to repeal the Jackson-Vanik amendment until "there is some substitute legislation that will monitor the human rights situation in Russia," Director of the Center for Russian, Eurasian and East European Studies at Georgetown University, Angela Stent, said in emailed comments.
The prime candidate is the Magnitsky Act, which proposes to blacklist for entry and seize U.S. assets of some 60 Russian officials linked to the death of Hermitage Capital lawyer Sergei Magnitsky in pretrial prison in 2009. Magnitsky's supporters insist he was unfairly arrested and possibly abused in prison for exposing a $230-million fraud involving tax and police officials.
The State Department admitted last year to separately blacklisting at least some officials on the list for U.S. entry, triggering an angry diplomatic reaction from Moscow.
The White House opposes linking the Jackson-Vanik amendment with any other legislation on human rights in Russia, McFaul said earlier this month, The Cable foreign policy blog reported.
But the Republicans, who control the House of Representatives, will not cave in easily even if the decision to keep Jackson-Vanik in place has "more political meaning than common sense," said Valery Garbuzov of the Institute of the United States and Canada.
"They have a negative attitude toward Russia and see Obama as playing too soft, giving concessions to Russia that it uses to get stronger," Garbuzov said. Stent of Georgetown University said the pro-Jackson-Vanik lobby in Congress is in fact a bipartisan group.
Congress will not consider cancellation of the amendment before Russia ratifies the WTO treaty, said Max Baucus, the chairman of the U.S. Senate Committee on Finance. The Magnitsky Act, meanwhile, will likely be considered by the Foreign Relations Committee in April, committee head Senator John Kerry said on Tuesday.