The European Commission plans to hit back “within days” at the United States if possible new sanctions against Russia, which could be finalized by the end of the month, are agreed upon and leave European energy and other companies vulnerable to US interference.
The draft US sanctions law would target Russian energy, financial, railways, shipping and metals and mining sectors, Politico.eu reported.
Republican and Democratic lawmakers reached a deal on the sanctions Saturday, and the House of Representatives is due to vote on the bill Tuesday.
According to an internal note prepared for commissioners, and seen by Politico, Commission President Jean-Claude Juncker is particularly concerned about energy-related measures in the sanctions, which he believes could be used unfairly against European energy companies.
The note, dated July 19, said, “The measures risk breaking the transatlantic and G7 unity” on handling Russia’s occupation of Crimea, Ukraine. The draft measures are designed to give US President Donald Trump discretion to impose sanctions on any company (including European) which contributes to the development or operation energy export pipelines in the Russian Federation or to Europe, or engages in oil ventures with Russian companies.
The biggest affected interest would be the mooted Nord Stream 2 gas pipeline from Russia to Germany, itself a source of political controversy in the EU, though the commission note says “the impact would in reality be much wider.”
Germany and Austria lashed out at the proposed sanctions in June, accusing the US of politicizing its economic interest in selling shipments of liquefied natural gas to Europe, which would compete with projects like Nord Stream 2 or the Southern Gas Corridor from the Caspian.
Other affected projects could include Caspian Sea oil and gas projects, Ukraine gas transit and the Zohr field off the coast of Egypt, due to the participation of Russian companies.
Meanwhile, Germany is urging the European Union to add up to four more Russian nationals and companies to the bloc's sanctions blacklist over Siemens gas turbines delivered to Moscow-annexed Crimea, two sources in Brussels said.
The EU's blacklist comprises 150 people and 37 entities subject to an asset freeze and a travel ban. The restrictions are in place until Sept. 15.
3-Pronged Approach
The European Commission’s mitigation approach would be split into three strands:
1) Seeking a public declaration from the US administration, as ex-president Barack Obama provided in 2014, that discretionary powers would not be used against European companies.
2) Making use of the EU “Blocking Statute,” an EU regulation (Council Regulation 2771/96) that says no decision based on extraterritorial US laws is enforceable in the EU.
3) Possible World Trade Organization retaliatory measures.
A European Commission source told Politico changes late last week to the draft bill “look much better for EU interests.”
Strong Resistance in Congress
A presidential veto on the Russian sanctions bill would encounter strong resistance in Congress, with Republicans and Democrats both backing the legislation in equal measure, particularly as questions remain about interaction between top Trump aides and Moscow during last year’s election.
Sarah Huckabee Sanders, the White House press secretary, announced on Sunday that the administration supported the new language of the bill and suggested that Trump would sign it.
“The administration is supportive of being tough on Russia, particularly in putting these sanctions in place,” Huckabee Sanders told ABC News. “The original piece of legislation was poorly written but we were able to work with the house and senate. And the administration is happy with the ability to do that and make those changes that were necessary. And we support where the legislation is now.”
It is unclear whether Brussels’ planned response will affect the White House’s thinking on the bill.
No Significant Effect
Prospective US Congress sanctions against Russia will not dramatically hamper the country's gross domestic product and economic position, Russian upper house of parliament speaker Valentina Matvienko said Monday, Tass reported.
"Sanctions will not affect the pace of Russia's economic development," Matvienko said at a briefing in Moscow.
She noted that European Union member states view negatively "Washington's evident desire to oust Russian energy suppliers from the European market."
"I hope these sanctions will be balanced, if they happen at all," Matvienko said, adding that "there are no grounds for them".
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