EU "Sounds Alarm" Over New US Sanctions On Russia; Germany Threatens Retaliation

EU "Sounds Alarm" Over New US Sanctions On Russia; Germany Threatens Retaliation

Zero Hedge - Sunday July 23, 2017

by Tyler Durden

Late on Friday, Congressional negotiators reached a deal to advance a bill that would punish Russia for its interference in the 2016 election and restrict the president’s power to remove sanctions on Moscow, according to the WSJ. The measure, if signed into law, will also give Congress veto powers to block any easing of Russian sanctions by the president. And while it remained unclear if President Donald Trump would sign the bill if it reaches his desk, which is now likely, the loudest complaint about the bill so far has emerged from the EU, which has once again urged US lawmakers to coordinate their anti-Russia actions with European partners. 

As Reuters reports, the European Union "sounded an alarm on Saturday" about moves in the U.S. Congress to step up U.S. sanctions on Russia, urging Washington to keep coordinating with its G7 partners.  In a statement by a spokeswoman after Republicans and Democrats in the U.S. Congress reached a deal that could see new legislation pass, the European Commission warned of possibly "wide and indiscriminate" "unintended consequences", especially on the EU's efforts to diversify energy sources away from Russia, adding that "unilateral measures" by the US could undermine transatlantic unity.

"We highly value the unity that is prevailing among international partners in our approach towards Russia's action in Ukraine and the subsequent sanctions. This unity is the guarantee of the efficiency and credibility of our measures," the Commission said in its statement.

 

"We understand that the Russia/Iran sanctions bill is driven primarily by domestic considerations," it went on, referring to a bill passed in the U.S. Senate last month and to which lawmakers said on Saturday they had unblocked further obstacles.

 

"As we have said repeatedly, it is important that any possible new measures are coordinated between international partners to maintain unity among partners on the sanctions that has been underpinning the efforts for full implementation of the Minsk Agreements," the Commission said, referring to an accord struck with Moscow to try to end the conflicts in Ukraine.

 

"We are concerned the measures discussed in the U.S. Congress could have unintended consequences, not only when it comes to Transatlantic/G7 unity, but also on EU economic and energy security interests. This impact could be potentially wide and indiscriminate, including when it comes to energy sources diversification efforts.

 

"Sanctions are at their most effective when they are coordinated. Currently our sanctions regimes are coordinated. As a result their impact on the ground is increased and through coordination we are able to avoid surprises, manage potential impact on our own economic operators and address collectively efforts to circumvent such measures. Unilateral measures would undermine this," the Commission said.

 

"We therefore call on the U.S. Congress/authorities to engage with the partners, including the EU, to ensure coordination and to avoid any unintended consequences of the measures discussed."

Furthermore, Germany has already warned of "possible retaliation" if the United States moves to sanction German firms involved with building a new Baltic pipeline for Russian gas. EU diplomats are concerned that a German-U.S. row over the Nord Stream 2 pipeline being built by Russia's state-owned Gazprom could complicate efforts in Brussels to forge an EU consensus on negotiating with Russia over the project.

The proposed restrictions against Moscow are part of the Countering Iran’s Destabilizing Activities Act, aimed not only at Tehran, but also North Korea. Passed by the Senate last month, the measures seek to impose new economic measures on sectors of Russia’s economy. Among the new anti-Russia proposals, the legislation aims to introduce individual sanctions for investing in Russian pipeline project. It also outlines steps to hamper construction of Russia’s Gazprom’s Nord Stream 2 gas pipeline project, and is the reason why America's European allies are on edge, worried they may be penalized for continuing a project in which they have already invested hundreds of millions.

The House is set to vote on the proposed legislation Tuesday, Brussels has already registered its unease even before the bill hits Donald Trump’s desk, urging Washington to consider European interests, especially in the energy sector. Noting that “the Russia/Iran sanctions bill is driven primarily by domestic considerations,” the European Commission has asked its American partners to coordinate measures against Russia with Europe and the rest of the G7.   

One month ago, we reported that Austria and Germany accused the U.S. of having ulterior motives in seeking to enforce the energy blockade, which they said is trying to help American natural gas suppliers at the expense of their Russian rivals. They also warned the threat of fining European companies participating in the Nord Stream 2 project "introduces a completely new, very negative dimension into European-American relations."  At the time, the foreign minister of Austria and Germany, Kern and Gabriel, urged the United States to back off from linking the situation in Ukraine to the question of who can sell gas to Europe. "Europe's energy supply is a matter for Europe, and not for the United States of America," Kern and Gabriel said. The reason why Europe is angry Some Eastern European countries, including Poland and Ukraine, fear the loss of transit revenue if Russian gas supplies don't pass through their territory anymore once the new pipeline is built.

Fast forward to today, when Reuters quoted the European Commission saying that “as we have said repeatedly, it is important that any possible new measures are coordinated between international partners to maintain unity among partners on the sanctions." It added that “we are concerned the measures discussed in the US Congress could have unintended consequences, not only when it comes to Transatlantic/G7 unity, but also on EU economic and energy security interests."

“This impact could be potentially wide and indiscriminate,” the Commission warned. “We therefore call on the US Congress/authorities to engage with the partners, including the EU, to ensure coordination and to avoid any unintended consequences of the measures discussed.”

Addressing the proposed bill, Kremlin spokesman Dmitry Peskov said that Moscow takes an “extremely negative” view of the new developments. President Vladimir Putin earlier cautioned that any new sanctions against Russia will only make US-Russian relations worse.

But it wasn't just Russia and Europe eager to warn the US that any ongoing attempts to trap Trump into perpetuating the Deep State's Russian policies would backfire: ahead of Congress clearing all potential hurdles for the bill, a number of American multinationals – including ExxonMobil, General Electric and Boeing, as well as MasterCard and Visa – raised concerns that the punitive measures will ultimately harm their interests, rather than that of the Kremlin.

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