As if transatlantic relations weren’t bad enough already. U.S. President Donald Trump’s protectionist policies and his decision not to implement the Paris Agreement on climate change were more than enough to rattle Washington’s European allies and expose fundamental differences in the transatlantic relationship.
But now, a sanctions bill agreed by the U.S. Senate and House of Representatives aimed at punishing Russia for its alleged interference in the 2016 U.S. presidential election has further exacerbated ties and is leading to a nasty dispute. In reality, the bill punishes European companies working with Russia.
This row is not just between Washington and Brussels. It is also between EU member states. The big risk is that if the bill is passed when lawmakers vote on July 25, it could break the unity that Europe and the United States forged in imposing and rolling over sanctions against Russia for its annexation of Crimea in March 2014 and its subsequent invasion of parts of eastern Ukraine. Russia could end up as the main beneficiary of this latest transatlantic spat. European companies and European unity would be the losers.
Under the bill, companies that support Russia in building energy export pipelines would be fined. In particular, the bill singles out Nord Stream 2. This project, which would expand an existing gas pipeline from Russia to Germany under the Baltic Sea, is led by Russian energy giant Gazprom. Its partners consist of five major European energy companies: France’s Engie, the British-Dutch firm Royal Dutch Shell, Austria’s OMV, and Germany’s Uniper and Wintershall. Nord Stream 2 is just as controversial as the original Nord Stream pipeline.
Poland and the Baltic states claim that Nord Stream 2 will increase, not weaken, Europe’s dependence on Russian gas. After several years of criticizing the German government’s support for Nord Stream 2, maybe these countries view the U.S. sanctions as a chance to put pressure on Berlin to end its support for the project. Ukraine, which is still a major transit country for Russian gas exports to Europe, argues the expansion project will rob Kyiv of much-needed transit fees. The main supporters of Nord Stream 2 maintain it will increase the EU’s plans to diversify its gas imports at a time when Europe’s own gas production is declining.
When the new U.S. sanctions bill was first unveiled, Germany and Austria accused Washington of using the measures to allow U.S. energy companies to enter the lucrative European market by shipping liquefied natural gas to new terminals in Europe and thus make up any shortfall in Russian gas imports. Critics of Nord Stream 2 argued that Berlin and Vienna were simply defending their energy ties with Gazprom and their investments in the project.
There is, however, a wider aspect to the bill that goes beyond Nord Stream 2. Companies working with the Russian energy company Lukoil, which is developing the large Shah Deniz gas field in Azerbaijan, would also be fined. Caspian gas shipments to Europe via the Southern Gas Corridor, which would be fed gas from the Shah Deniz field, would be affected. That would deny Europe the chance of more energy security and diversification.
Then there is the Caspian Pipeline Consortium, in which the U.S. company Chevron holds a 15 percent stake. That too would be hit, because Russia holds a 24 percent stake in the project. As for the planned Turkish Stream pipeline, which would send Russian gas to Turkey under the Black Sea, the proposed U.S. sanctions would further increase antagonism between Ankara and Washington.
The European Commission, the EU’s executive, has stepped into this dispute in an uncharacteristically robust fashion—though frankly, it’s hard to see how much leverage the commission has at its disposal. The commission’s president, Jean-Claude Juncker, warned that “the measures could impact a potentially large number of European companies doing legitimate business . . . with Russian entities.” Juncker proposed to seek “public or written reassurance” from the United States that sanctions would not target EU interests. Another option being considered is to use European law to prevent the U.S. measures from being “recognised or enforceable” in Europe.
The reaction from the commission is understandable. The U.S. measures hit European interests. The sanctions serve the interests of American companies that want to expand their presence in Europe. Above all, these unilateral measures could damage the unity of the transatlantic relationship when it comes to keeping the existing sanctions on Russia.
There is one glimmer of hope. The latest version of the bill states that the president may introduce sanctions “in coordination with allies of the United States.” That just might avert a dispute that would deal another blow to transatlantic unity.
Comments(4)
It is almost inconceivable that Eurasia, US (including the space of the Monroe doctrine), Mexico, Canada don’t have a simple agreement: free movement of people, goods, services, capital. Don’t be misled by believing this is what the EU has, not even remotely. Every “free” comes with many strings attached. But let’s settle for controlled “free” between the EU, US, Canada and Mexico, and postpone free movement of people to a later date. An accord along these lines should have been one of the first priorities of any US administration since the 70’s, when there was room for growth. In an ideal world Europe (1789, 1848, Smith, Keynes, Piketty) would have balanced the US (Friedman, Friedman, Rand, Gates, financial engineering), isn’t it that the West is an idea based on checks and balances? Moreover, the US was ready to be incinerated fighting for the Fulda Gap, but an US student couldn’t go and study at the French ENA or German Universities (assuming passing the entrance exam). Actually, anything would have been better than getting to the point where there is talk about trade sanctions again Germany and whatnot in the EU space. Strange enough it was never clarified that for years the EU bought Opel, Jaguar, Land Rover Saab, which were American cars. It is long overdue for a renegotiated NAFTA space to engage the EU (and the UK) in a comprehensive, multidimensional agreement based on the above enumerated freedoms. TTIP was based on a false premise: that the US middle class has something to give (far worse TPP, a geopolitical tool targeting India, looking for 800 million jobs, rightfully so from Modi’s perspective). Worse, in his address in Greece President Obama told a young, flabbergasted Greek audience that they should stay put in Greece (plus references to spanakopita, fustanella), exactly the opposite of what globalization means (sirtaki was not mentioned). It is hard to believe that the US and the EU didn’t combine their scientific capabilities to develop fusion based energy generation. This is probably the only truly long term solution, which would actually allow expansion to other solar systems (the actual purpose of humanity is not to produce and concentrate wealth, it is to expand). In reference to climate, fossil fuels are not a real solution. The oxygen we breathe is an excretion of the humble plants surrounding us; for eons there was no big oxygen on Earth. CO2 is an issue, but do we have enough oxygen, needed to burn basically dead plants and animals?
"European companies that work with Russia". There is no such thing. Russia is employing its well versed tactics of exploiting European companies' weaknesses. To paraphrase Edward Lucas they are hitting the West at our weakest point which is our love for Russian money. Nordstream 2 is purely a Russian tool to use economic means to further political goals. There are no Russian "companies", they are all instruments of the Kremlin be they Gazprom, Kaspersky, etc...
Siemens recent attempts to claim innocence in the sale of their gas turbines to Russian occupied Crimea, which clearly violated the sanctions in place, are an example of European companies putting "money" ahead of the "lives of people". Russia is run by the Kremlin Mafia. Is it ethical to do business with such criminals who lie, steal, and murder innocent people as fecklessly as Putin's Russia?
This is a bit of a one-sided argument. Perhaps Europe really needs to show its muscle and/or resolve against Russia's aggression direct and indirect, in elections and in foreign affairs generally. There is I believe a feeling of 'we go it alone in the U.S., and our allies really aren't allies' - here's another example of Europe standing by without doing much. It is almost completely silent on Crimea and what's going on in Eastern Europe - nothing like the vocal outrage experience before and around the U.S.'s invasion into Iraq. European energy security has long been a topic, and maybe now is the time to take advantage of US energy and develop additional sources say in North Africa - Med zone. Europe's soft power is what is wanting these days.
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