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Europe cries foul at vote to tighten US sanctions on Russia

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Europe cries foul at vote to tighten US sanctions on Russia

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Europe cries foul at vote to tighten US sanctions on Russia

Alarm among America’s old allies makes prospect of unified action against Moscow more complex

Part of the proposed US legislation is aimed at the Nord Stream 2 project to bring Russian gas to Germany © Bloomberg

US lawmakers sparked an expected angry response from Moscow when they voted overwhelmingly to tighten the screws on Russia with stronger sanctions. Yet some of the loudest outrage has come from traditional European allies who fear the collateral damage to their own commercial interests.

A 419-3 vote in the US House of Representatives, and a previous and similarly all but unanimous outcome in the US Senate, have increased the likelihood of widely expanded sanctions against Moscow, part of Capitol Hill’s desire to punish Russia for its alleged meddling in last year’s presidential election.

Tuesday’s House vote left Russia warning there was now little hope for normalising relations with the US. “There are practically no chances that the situation will change for the better,” Sergei Ryabkov, deputy foreign minister, said in an interview with Interfax.

But it also raised hackles in the heart of Europe, showing how competing transatlantic priorities are making unified action against Moscow more complex.

“America-first cannot mean that Europe’s interests come last,” warned Jean-Claude Juncker, president of the European Commission, on Wednesday. “The US bill could have unintended unilateral effects.”

Brussels is concerned that big European energy groups such as Shell, Eni and BP that do business with Russia could be caught in the crossfire of sanctions, damaging strategic investments and jeopardising the continent’s energy security.

Part of the proposed US legislation takes aim at Nord Stream 2, a project to bring Russian gas to Germany. Other infrastructure projects straddling Russia in areas between the Baltic and Black seas could also be at risk, European officials say, harming the interests of European companies that have invested in projects such as pipelines.

The commission has refused to say how it might retaliate against Europe’s single most important ally. The row comes at a time of anxiety in Europe over a possible separate move by President Donald Trump’s administration to raise tariffs on European steel in a crackdown on imports, which has also led to warnings of EU retaliation.

Diplomats insist the overriding strategic priority remains to preserve unity with the US against Russia’s belligerence on its western frontiers and in Ukraine. “Transatlantic unity is what is at stake because it was always present on this [Russian] issue and there was always co-ordination, and there is a clear commitment on both sides of the Atlantic to continue this,” said a senior European diplomat.

Fabrice Pothier, senior associate at Rasmussen Global, a consulting firm owned by Anders Fogh Rasmussen, a former chief of Nato, noted that the bill’s preamble clearly states that the US president should co-ordinate Russian sanctions with US allies in Europe.

“It’s a long shot to think that President Trump would put sanctions on European companies,” Mr Pothier said. “The EU’s options are pretty limited. They can go off on a tit-for-tat basis with penalties that could hit US energy companies but that would be obviously very escalatory and it would miss the point that these provisions are discretionary. It would be an overreaction to something that is pretty mild.”

Concern about the US bill is at its most acute in Germany, the biggest supporter of Nord Stream 2. The €9.5bn pipeline is being co-financed by Engie of France, Anglo-Dutch group Shell, Austria’s OMV and German groups Uniper and Wintershall.

Germany is gravely concerned by what it sees as a US claim to extraterritorial rights over the European energy market and about the clear aim of the US legislation to protect US economic interests. The foreign ministry in Berlin said it stood by the tough position set out a month ago, when Germany and Austria jointly condemned the US bill for introducing a “new and very negative quality” into transatlantic relations.

Angela Merkel’s government said it still saw an opportunity to persuade Washington to step back from legislation that also still needs Mr Trump’s signature. The proposals also need to go back to the Senate, which approved a different version of the legislation.

Berlin’s position on Nord Stream 2 is not shared within the EU: Poland and other eastern and central European countries strongly oppose the project, fearing it will increase dependence on Russian energy supplies.

“Located where we are, we feel the hot breath of the Russian bear at our neck and they have already blackmailed Europe twice with gas,” said Mateusz Morawiecki, Poland’s finance minister and deputy premier. “We support the US sanctions on Russia and in particular those sanctions that are going to make the Nord Stream 2 project more costly or maybe less likely to happen.”

European concerns are not confined to Nord Stream 2. Other projects at risk, officials say, include a proposed liquefied natural gas plant on the Gulf of Finland in the Baltic Sea, in which Shell has a stake alongside Russia’s Gazprom. Another is the Blue Stream gas pipeline linking Russia with Turkey, in which Eni of Italy has a 50 per cent stake.

Brussels also believes BP “would not be able to engage” in its activities with Rosneft if the US penalties affected operations by European companies to maintain, repair or expand pipelines in Russia.

Hosuk Lee-Makiyama, director the European Centre for International Political Economy think-tank in Brussels, said the force of the commission’s response to the US underscored Berlin’s influence on the bloc’s energy policy. “Energy speaks with a German accent,” he said. “Europe is supposed to be a bulwark against Russia, but here we are rushing to Moscow’s defence while the US intensifies sanctions.”

Additional reporting by James Shotter in London

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