Russia/Ukraine Crisis

Last Wednesday, 11 March, the Department of the Treasury announced the addition of 14 individuals and two organizations to its list of Specially Designated Nationals (SDN), pursuant to Executive Order 13660. The individuals include eight Ukrainian individuals identified as separatists, three former Ukrainian officials associated with former President Yanukovich, a Russian pro-separatist organization and three of its leaders, and one bank for operating in Crimea. The new designations also attempt to further align U.S. sanctions with designations previously made by the EU and Canada. Meanwhile, EU leaders will meet this week (19-20 March) on the situation in Ukraine, though it appears unlikely they will act to tighten sanctions on Russia.

Shortly after the Treasury Department’s sanctions announcement, the White House released a readout of Vice President Joe Biden’s conversation with Ukraine President Petro Poroshenko. The two discussed the situation in east Ukraine, $75 million in additional non-lethal U.S. security assistance to Ukraine, and the new sanctions on Russian-backed separatists and their supporters. Vice President Biden also noted ongoing ceasefire violations by Russia-backed separatists near Donetsk and Mariupol and their refusal to allow Organization for Security and Co-operation in Europe (OSCE) monitors “unfettered access to the territory they occupy.” Vice President Biden and President Poroshenko spoke again on Saturday, with President Poroshenko confirming Ukraine had taken additional steps in keeping with the Minsk agreements to delineate the provisions of the law on special status passed by the Rada in September 2014. Both leaders also welcomed the disbursement of the first tranche of the new IMF program for Ukraine. The OSCE’s mission in Ukraine was formally extended last week through March 2016.

Last Tuesday, Assistant Secretary of State for European and Eurasian Affairs Victoria Nuland testified before the Senate Foreign Relations Committee (SFRC) on U.S. policy toward Ukraine. She testified that the Obama Administration continues to apply pressure on those European countries – including Hungary, Greece, and Cyprus – that oppose sanctions against Russia, confirming that she will soon travel to visit with officials in some of these countries. Bipartisan Members of Congress continue to pressure the Obama Administration to provide lethal defensive assistance to Ukraine, with SFRC Chairman Bob Corker (R-Tennessee) expressing anger at the hearing over reports that President Barack Obama made a “secret deal” with German Chancellor Angela Merkel when she was in Washington to not provide lethal assistance to Ukraine.

Iran

Iranian Supreme Leader Ayatollah Khamenei joined Secretary Kerry in condemning the Republican open letter sent early last week. President Obama, Vice President Joe Biden, and other senior Administration officials have also taken strong exception to the Republican move.

Secretary Kerry will meet with his Iranian counterpart this week as the P5+1 Talks work towards a framework agreement in advance of the 24 March deadline. At another SFRC hearing last week, Chairman Bob Corker (R-Tennessee) warned Secretary Kerry that Congress must weigh-in on any deal with Iran.

• Thursday, 19 March: The House Foreign Affairs Committee will hold a hearing titled, “Negotiations with Iran: Blocking or Paving Tehran’s Path to Nuclear Weapons?” Deputy Secretary of State Tony Blinken and Acting Under Secretary of Treasury for Terrorism and Financial Intelligence Adam Szubin are scheduled to testify.

Syria/Iraq Crises

On 15 March, the fourth anniversary of the start of the Syrian revolution was observed. Last Thursday, the State Department reiterated President Barack Obama’s position that Syrian President Bashar al-Assad must be replaced through a negotiated political transition that is representative of the Syrian people.

• Wednesday, 18 March: The House Foreign Affairs Subcommittee on the Middle East will hold a hearing titled, “Does the President’s FY 2016 Budget Request Address the Crises in the Middle East and North Africa?”

Western Hemisphere

President Obama issued an Executive Order (EO) last week to implement and expand on congressional sanctions enacted under The Venezuela Defense of Human Rights and Civil Society Act of 2014. The EO imposed sanctions on seven Venezuelan individuals.

• Tuesday, 17, March: The Senate Foreign Relations Committee will hold a hearing titled, “Deepening Political and Economic Crisis in Venezuela: Implications for U.S. Interests and the Western Hemisphere.”

• Wednesday, 18 March: The House Foreign Affairs Subcommittees on the Western Hemisphere and the Middle East will jointly hold a hearing titled, “Iran and Hezbollah in the Western Hemisphere.”

Trade Developments

A bipartisan group of 19 former lawmakers – including former Senate Majority Leader Trent Lott, Senator John Breaux and Congressman Jim Matheson; who are now at Squire Patton Boggs – sent a letter to Congress last week urging both chambers of Congress to act swiftly on Trade Promotion Authority (TPA). Looking ahead, consideration of TPA in both chambers of Congress faces the following time constraints: Easter recess (27 March – 12 April), a House recess the first full week of May, and the Memorial Day recess (22 May – 1 June). Meanwhile, Representative Tom Emmer (R-Minnesota) is rallying the Republican freshman class to support and sign a letter he has drafted calling for TPA’s swift passage.

In Hawaii last week, Trans-Pacific Partnership (TPP) negotiators met to discuss the intellectual property (IP), market access, rules of origin, and state-owned enterprises (SOEs) chapters. On 11 March, four Democratic Members of the Senate Finance Committee sent a letter to President Barack Obama, urging 12 – not seven – years of data exclusivity for biologic drugs. This issue remains one of the more contentious topics being negotiated in the IP chapter, as well as how to transition less-developed TPP countries to a higher IP standard for pharmaceuticals.   Without knowing specifics of the reported U.S. negotiated side letters with some TPP countries on pharmaceutical IP issues, the U.S. brand-name pharmaceutical industry is reportedly taking a wait-and-see approach. With respect to market access, progress has reportedly been difficult because some TPP countries have refused to compromise on the market access text until other countries show flexibility on tariff cuts. Negotiators were also expected to narrow the list of SOEs they want exempted, with some observing that final decisions on certain exceptions may only be resolved at a political level.

Transparency provisions and the dispute settlement mechanism also continue to be challenging issues in the TPP negotiations. In response to Senator Elizabeth Warren’s (D-Massachusetts) Op-Ed against the Investor-State Dispute Settlement (ISDS) mechanism in the TPP negotiations, the Office of the U.S. Trade Representative posted a fact sheet last week explaining ISDS and the “state-of-the-art protections” included in the TPP to prevent abuse of the legal process. Meanwhile, Representative Rosa DeLauro (D-Connecticut) continues to argue against free trade agreements, saying in her home state last week that bad trade agreements have lowered worker wages and sent U.S. jobs overseas.

While Japan’s minister in charge of the TPP negotiations signaled the U.S. and Japan failed to make significant progress in its recent parallel negotiations on market access and auto trade, Japan’s deputy chief TPP negotiator indicated a bilateral deal could be concluded without Congress first passing TPA. This raises the possibility that both countries could aim to conclude a bilateral deal during Prime Minister Shinzo Abe’s late April visit to Washington.

Last Monday, prior to a meeting with President Obama, European Council President Donald Tusk said the meeting priorities for him included: (1) relations with Russia in the Ukrainian context; (2) the threat of terrorism and actions of ISIL in the context of Libya; and (3) ongoing Transatlantic Trade and Investment Partnership negotiations.

• Tuesday, 17 March: The House Foreign Affairs Subcommittee on Trade will hold a hearing titled, “National Security Benefits of Trade Agreements with Asia and Europe.”

• Tuesday, 17 March: The House Financial Services Committee will hold a hearing titled, “The Annual Testimony of the Secretary of the Treasury on the State of the International Financial System”   Treasury Secretary Jack Lew is scheduled to testify.

• Tuesday, 17 March: The Senate Finance Committee will hold a hearing titled, “Building a Competitive U.S. International Tax System.”

State Department/USAID

Following-on the revelation that former Secretary of State Hillary Clinton had not used the State Department’s e-mail system, a State Department oversight entity reported that only a fraction of the agency’s emails have been preserved. According to the Inspector General’s report, of the one billion emails sent by State Department employees in 2011, just over 61,000 were retained. Secretary Clinton addressed the controversy surrounding her recordkeeping practices this week, saying she did not violate any existing federal records rules at the time she was in office.

• Tuesday, 17 March: The House Foreign Affairs Committee will hold a hearing titled, “The FY 2016 Budget Request: Assessing U.S. Foreign Assistance Effectiveness.” Administration officials from USAID and the Millennium Challenge Corporation are scheduled to testify.

Looking Ahead

Washington will likely focus on the following upcoming matters:

• 19 March: President Obama to host the Prince of Wales and Duchess of Cornwall

• 24 March: Deadline for framework deal with Iran

• 24 March: President Obama to host Afghan President Ashraf Ghani

• 17-19 April: 2015 Spring Meetings of the World Bank Group and the IMF in Washington

• 7-8 June: G-7 Summit in Schloss Elmau, Germany

• 30 June: U.S. Export-Import Bank charter expire

• 15 September: 70th Session of the U.N. General Assembly (UNGA) opens in New York City

• 24 September: Pope Francis to address Congress

• 28 September: General debate of the UNGA begins