The Cable

McFaul: We must give Russia privileged trade status

Mike McFaul, the National Security Council senior director for Russia, will testify before senators this afternoon and say that that the Obama administration's "reset" policy with Russia is working and that Congress must terminate an antiquated law that prevents full and normalized trade relations with Moscow.

McFaul is nominated to be the next U.S. ambassador to Moscow. Although several GOP senators have serious concerns about the reset policy and are critical of what they see as Obama's concessions to Russia, McFaul is expected to be confirmed. In his testimony this afternoon before the Senate Foreign Relations Committee he will argue for the repeal of what's known as the Jackson-Vanik Amendment, a 1974 legal provision that punished the Soviet Union for restricting Jewish emigration, and which continues to prevent the United States from granting Russia permanent normal trade relations (PNTR) status.

"In order for U.S. businesses, farmers and workers to receive the maximum benefit from Russia's WTO accession ... we will need to give the same unconditional permanent normal trading relations treatment to Russia's goods that we provide to those of all other WTO members," McFaul will say in his opening statement, obtained in advance by The Cable. "That commitment requires us to terminate the application of the Jackson-Vanik Amendment and extend permanent normal trading relations to Russia."

WTO membership for Russia is a key goal of Obama's reset policy and the administration has been working hard behind the scenes to help Moscow finalize its bid. But several senior Republican lawmakers want to keep Jackson-Vanik in place to keep the pressure on Russia and prevent further backsliding on democratization, human rights, and respect for the rule of law.

McFaul will testify that the administration wants to terminate Jackson-Vanik before Russia joins WTO. Russia could win membership as early as December, if they are able to strike a deal with Georgia. The WTO typically only accepts new members by consensus. The agreement between the two nations would likely have to do with international customs monitoring along the Russia-Georgia border, which is currently run by the Russian military. The Obama administration said it's not involved in the Russia-Georgia negotiations, but at other times officials have admitted that it is.

Either way, it's unclear how the administration plans to convince intransigent GOP leaders, such as House Foreign Affairs Committee chairwoman Ileana Ros-Lehtinen (R-FL), to abandon their opposition to granting Russia PNTR status, much less before December. 

But the Obama administration has decided to make the termination of Jackson-Vanik a jobs issue, thus placing the GOP in the position of being against American workers.

"Four decades after Jackson-Vanik was passed, a vote to grant Russia PNTR is a vote to help our economy and create jobs," McFaul will say. "At a time when we need to increase exports to preserve and create American jobs, we cannot afford to put our farmers, manufacturers, and workers at a disadvantage when competing against other WTO members for market share in Russia." 

Support in both parties is strong for McFaul's ambassador nomination, despite that he is a key architect of the reset policy that many Republicans oppose. McFaul has a long track record as a democracy advocate, and unlike most other top administration officials, he has maintained close and longstanding relationships with leaders on the GOP side of the aisle.

McFaul often engages with a wide range of people in the broader policy community, meets with administration critics and even meets with representatives from countries he doesn't cover, such as European officials who have an interest in U.S.-Russia relations.

McFaul's attitude and relationships have bought him a measure of credibility and support from the GOP. Several typically hawkish Russia experts have been lobbying GOP senators on behalf of McFaul's nomination. Sen. Jon Kyl (R-AZ), had threatened to hold the nomination, but now that hold is not expected to materialize.

"People have a lot of respect for Mike. Everybody knows that is a very passionate supporter of democracy," said Bob Kagan, a Brookings Institution scholar who co-authored a Washington Post op-ed in support of the nomination with Freedom House's David Kramer.  "He's got a long reputation, good contacts, and he's part of a larger pro-democracy community, so the opposition in Russia will feel like it has somebody they can talk to, which isn't always the case."

The Cable

Kirk: Time to collapse the central bank of Iran

The Obama administration must take stronger steps than just sanctioning five Iranian individuals, as it announced today, in response to the alleged plot to assassinate the Saudi envoy in Washington, Sen. Mark Kirk (R-IL) told The Cable.

"That's just charging the individuals involved," Kirk said in a Tuesday afternoon interview, emphasizing that the Iranian government should be held responsible for the plot directly. "What the administration should do is prepare to move against Bank Markazi [Iran's Central Bank] in response to the bomb plot."

Kirk took to the floor of the Senate on Tuesday to call on the Federal Reserve and the EU Central Bank to ban all transactions with Iran's central bank, which Kirk said would have the effect of crippling the value of Iran's currency.

"Their currency would become like North Korea's currency," Kirk said, arguing that the move would constitute a proportional and appropriate response to the Iranian government's involvement in the plot.

The administration did not brief Congress before announcing the plot in a press conference earlier today, but Treasury Undersecretary David Cohen is set to brief members of the Banking Committee tomorrow in private and then in public on Thursday.

Members will be pressing Cohen on what further steps will be taken to punish Iran for the plot in addition to what was announced today. By tomorrow, senators will put forward several more requests for specific actions against Iran, Kirk said.

"We're looking at a range of policies, but no military action, because the plot was foiled," Kirk said. "The level of anger in Congress tonight is only a fraction of what it will be tomorrow morning."

Senate Majority Whip Richard Durbin (D-IL) also called for additional measures against Iran in a speech on the Senate floor today. "We need to heighten the sanctions on Iran and make it clear that this type of action will not be countenanced," he said.

In August, more than 90 senators signed a letter to President Barack Obama, written by Kirk and Sen. Chuck Schumer (D-NY), which stated, "The time has come to impose crippling sanctions on Iran's financial system by cutting off the Central Bank of Iran. There is strong bipartisan support in Congress for the imposition of sanctions on the Central Bank of Iran."

Secretary of State Hillary Clinton spoke vaguely about possible future measures against Iran in response to the plot in a short comment onTuesday afternoon.

"We will be consulting with our friends and partners around the world about how we can send a strong message that this kind of action, which violates international norms, must be ended," she said.  "And other areas where we can cooperate more closely in order to send a strong message to Iran and other actions to isolate it from the international community will also be considered."

But Clinton got a bit more specific about the State Department's behind the scenes outreach regarding the plot in a Tuesday interview with the AP.

"We are actively engaged in a very concerted diplomatic outreach to many capitals, to the U.N. in New York, to not only to explain what happened so we can try to pre-empt any efforts by Iran to be successful in what would be their denial and their efforts to try to deflect responsibility but so that we also enlist more countries in working together against what is becoming a clearer and clearer threat" from Iran, Clinton said.

UPDATE: Late Tuesday evening, the State Department issued a new worldwide travel alert in response to the assassination plot. 

"The Department of State alerts U.S. citizens of the potential for anti-U.S. actions following the disruption of a plot, linked to Iran, to commit a significant terrorist act in the United States," it stated. "The U.S. government assesses that this Iranian-backed plan to assassinate the Saudi Ambassador may indicate a more aggressive focus by the Iranian Government on terrorist activity against diplomats from certain countries, to include possible attacks in the United States."