America's push for tougher sanctions could crack Western unity on Russia31 July 2017 | 17:17 | The Telegraph
On Russia, the bill strengthens existing sanctions as well as adding new measures. The Kremlin has responded by ordering the US Embassy to cut more than 700 staff and by seizing two US diplomatic properties.
The bill is of course heavily connected to domestic US politics. This is a significant moment, in as much as it is an acknowledgement that President Trump cannot be the pro-Russian dealmaker many expected – in the short-term at least. The “deal making” on offer from Mr Trump had raised bipartisan fears that he would soften or lift sanctions in a bid to restore relations with Russia – at the expense of undermining policy on Ukraine.
When Mr Trump signs the bill into law – which he is likely to do owing to the very large “veto-proof” majorities with which it was passed in both houses – it will greatly reduce his ability to ease sanctions on Russia unilaterally, instead requiring congressional approval.
However, the bill greatly diverges from the approach under the Obama Administration in one particular area: it does not ensure alignment with the EU. Efforts to harmonise sanctions policy, although not always perfect, have been a key factor in presenting a united front against Russia’s actions in Ukraine. But this approach shows a divide between the hitherto transatlantic partners.
One particular section in the new bill has been met with vocal criticism from the EU. Section 232 seeks to curtail Russia’s ability to build pipelines. The powers created appear wide-reaching; the President is offered twelve sanction options that can be used against any person that knowingly makes an investment (or provides goods, services, technology, information or support) that enhance Russia’s ability to construct, maintain, expand, modernise or repair energy export pipelines. Sanctions may include things like prohibiting banking transactions if they are subject to the jurisdiction of the US, or preventing issuance of specific licenses to export goods or technology to targets of the sanctions.
The fear is that this will impact European projects, in particular Nord Stream 2, which seeks to transport Russian gas via the Baltic Sea to Germany. The project not only involves Russian state-owned gas giant Gazprom, but also Germany’s Wintershall, British-Dutch Shell and Austria’s OMV, among others. Despite the EU’s emphasis on Ukrainian energy security in light of Russia’s repeated use of gas supply for political leverage, this project makes the EU more dependent on Russian gas.
These fears are not unfounded. The US has highlighted the seeming contradiction in German policy, stating in the bill that the US directly opposes Nord Stream 2, given its “detrimental impacts on the European Union’s energy security”. Yet, for Germany in particular, this is a pragmatic business approach that addresses gas demand and is not considered an issue for the US to decide.
This divergence is not necessarily going to see the end of EU cooperation with the US on sanctions policy. Vocal opposition from within the EU towards sanctions does not always mean a shift in policy. Previously, certain EU member states such as Italy, Greece and Hungary, have been vocal about their irritation with EU sanctions on Russia. And yet when the vote comes round to renew them, consensus is maintained. Moreover, the bill is offering the President options, rather than mandating action, and it does state that action will be taken on pipelines “in coordination with allies of the United States”.
However, transatlantic unity will be damaged by this move, which has been important for trust and coordination. The pipeline issue highlights key differences in economic inter-relations with Russia and thus the limitations of the EU. Russia is the EU’s largest gas supplier, while the US, which is far less economically connected with Russia, is seeking to become a major LNG exporter.
Rather unhelpfully, this American national interest is mentioned in the sanctions bill, stating that the US government should “prioritise the export of the United States energy resources in order to create American jobs”, as well as help US allies and partners. And efforts towards this end have already been made. In June, for example, Poland received its first shipment of US gas, and the event was celebrated in a major speech by Donald Trump, when he visited Warsaw a few weeks later. This language plays into a Russian narrative that this is all really a ploy for the Americans to replace Russia as the key energy supplier in Europe, and thus take advantage of the geopolitical situation in Ukraine to undermine its European gas projects.
So what is the upshot? EU sanctions are likely to continue, and broad unity will be maintained on the overall policy towards Russia. But there is a risk that, if the energy sanctions are used to target EU companies, this will cause a greater rift between the EU and the US. Greater efforts could be made to bypass or avoid such sanctions, thus weakening foreign policy efforts and striking a damaging blow to the transatlantic cohesion towards Russia.
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