Europe against sanctions: US decision mobilized EU "anti-American coalition"

Author : Viktor Savinok

Source : 112 Ukraine

The bill gives possibility of introducing restrictions regarding Russian companies and other countries that cooperate with the Russian side
17:51, 19 June 2017

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June 14, the US Senate almost unanimously (98 votes to 2), approved a bill on sanctions against Iran and the Russian Federation. The document caused a very positive assessment of those who expected to increase the pressure on Russia, and this is not surprising. It legally captures prior sanctions imposed on Russia by the decree of President Obama, so in case of its approval by the House of Representatives and signing by the President Trump, current US administration would have far fewer opportunities for formal lifting of sanctions against Moscow.

Related: Russia calls new US sanctions inadequate

Reasons for strengthening sanctions are unchanged. The bill accuses the Russian side in cyberattacks, annexation of Crimean peninsula, promoting escalation in Syria and interfering in the presidential elections in the United States.

Besides introducing a mechanism of "Trump’s protection," new sanctions project reinforces current operating constraints. In particular, it has options of imposing sanctions on Russian infrastructure, mining, shipping, etc. In addition, it gives the possibility of introducing restrictions regarding companies and other countries that cooperate with the Russian side.

This position is not extraordinary for sanctions practice of the US, however it has caused violent protests in Europe. Berlin and Vienna have expressed a negative official reaction. It was declared by a joint statement of German Foreign Minister Sigmar Gabriel and Austrian Chancellor Christian Kern. In particular, they believe that with this decision the US would intervene in their internal affairs, dictating its own will in EU energy policy.

Subsequently, "anti-American coalition" has expanded, Ministry of Foreign Affairs of France has also criticized the US decision, which has not been negotiated with Europe.

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Sanctions as a competitive weapon

The expert community immediately voiced some assumption that the reaction of Gabriel is related to his SPD membership, the former chancellor of which, Gerhard Schroeder, heads the supervisory board of "Nord Stream".

In addition, the situation is hardly unique. Let us recall what happened in recent months with the issue of energy transportation. First, in mid-April, "Nord Stream 2" building countries agreed on the distribution of funding for the project and started to make adequate funds. Secondly, since the end of April, it has been reported that the US intends to begin deliveries of liquefied gas to Europe.

Thirdly, given the pressure of some EU member states to Nord Stream 2, the European Commission in early June directed to the Council request to verify the draft legislation of the European Union. So, the game has a new factor - US-Russian competition for the supply of hydrocarbons to the EU.

Obviously, Europe is on the verge of large-scale confrontation between Russian Federation and the "new energy giant" (the United States) for the redistribution of energy markets.

The US would also have some benefits from Donald Trump’s course at expanding oil and gas production in the country, which will expand export opportunities of official Washington.

On the other hand, already existing US and EU sanctions against Russia have de facto blocked most of the investments in Russia’s exploration and production of oil and gas (of the new continental deposits and of the Arctic shelf).

This would lead to the fact that after 2020 gas production in Russia would decline.

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Ambiguous Nord Stream 2

A few hours after the publication of the German-Austrian statement, it was confirmed that Sigmar Gabriel’s report reflects not only the party position.

Angela Merkel has also influenced the decision of the US Senate and on possible problems Nord Stream 2.

German Chancellor called "excessive" the request to the European Commission a mandate to research the legality of "Nord Stream", claiming that the project is commercial, so we cannot interfere in it. Merkel has also criticized the bill approved by the Senate because it is contrary to the principle of common sanctions against Russia in Europe and America. However, it criticized one point – position about the possible spread of US sanctions on European projects, even those shared with the Russians.

Paris has also protested against this particular item. "For several years, we have been emphasizing the difficulties with the extraterritorial legislation," said the spokesman of the French Foreign Ministry.

Later, Merkel stressed that European companies should not have to bear the financial costs of the restrictions imposed by the United States. We should specify that the BASF/Wintershall - German company involved in the construction of the "Nord Stream 2", 49% are owned by JSC "Gazprom". So we might not agree with this argument of the Chancellor.

Related: Vladimir Putin and German Foreign Minister discuss situation in Ukraine

Such statements (as well as the general attitude of the German side to the "North Stream-2") from the Ukrainian perspective seems to be controversial. On the one hand, Germany is a party of Normandy quartet, it supports Ukrainian immigrants, civil society, and reforms. On the other hand, Germany, directly or indirectly is causing losses of several billion US dollars to Ukraine, which are now coming to the budget at the expense of fuel transit to the EU.

At the same time the German side tried to persuade Ukraine and other countries of the EU that are skeptical about the "Nord Stream 2", that the project would increase the dependence of European gas market on Russian supplies. On the contrary, the pipeline is defined as an attempt to diversify them.

The German side does not see the "North stream 2" as a threats to itself through significant diversification of its own domestic market. Currently, the share of JSC "Gazprom" in the supply of fuel to the EU is 34%. The project, in turn, leads to an increase in Russia's presence in the energy market of the EU and attempts to broaden the impact on pricing in the entire region of North-Eastern Europe.

Related: Ukrainian military to take part in exercises in Germany

Speaking about German market, supplies from Russia would occupy 60% of total gas imports instead of the current 40%. Also JSC "Gazprom" at the expense of "continental production" fuel would offshore dumping in terms of gas from Norway, the Netherlands, the United Kingdom, and future supply of liquefied natural gas from the United States.

Thus over 80% of Russian gas supplies to Europe will be concentrated in Germany.

Construction of the Nord Stream 2 would mean not only a significant blow to EU policies in terms of diversification of energy supplies, but also a significant loss in transit countries such as Ukraine, Slovakia, Czech Republic, and Poland.

This German course provides additional chances for the Eurosceptics within the Union, this mainly applies to the Polish government party "Law and Justice" and critics of European sanctions policy from Slovakia and Hungary.

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