How Will EU Respond to Possible Damage from US Sanctions Against Russia?

04.08.2017

New US sanctions against Russia irritate the EU, as they in fact represent interference with the European energy policy, Valdai Club experts Reinhard Krumm and Gerhard Mangott say. But don’t expect counter-measures anytime soon: as long as European companies do not feel the real impact of US sanctions, the European Commission will not publicly announce any retaliation.

On Wednesday, August 2, US President Donald Trump signed into law a new bill on sanctions against Russia, earlier almost unanimously approved by the Congress. At the same time, he indicated that the bill was “seriously flawed,” as it “disadvantages American companies, and hurts the interests of our European allies.” The European Union said it could take countermeasures if provisions of the act aimed at restricting exports of the Russian energy to Europe damaged European companies.

Criticism of the sanctions on the part of the EU is unanimous, Reinhard Krumm, head of the Central and Eastern Europe department at the Friedrich Ebert Foundation, told valdaiclub.com in a telephone interview. “The root cause is that the sanctions are not, as it was done in the past, discussed by the EU and the United States of America,” he said.

This criticism is due to the fact that the new sanctions actually represent interference with the European energy policy, Krumm pointed out. If Europeans do not have enough Russian gas because of the sanctions, they will be able to fill this gap with liquefied natural gas from the US, but it is much more expensive. Only staunchly pro-American states of the European periphery, such as Lithuania, which has been increasing its LNG imports over the past years, are ready to overpay for the sake of getting rid of “energy dependence on Moscow.” “Even in the European Union, there are different opinions of the Nord Stream-2 [gas pipeline], but it seems to be a European and so far commercial project and sanctions unilaterally done by the US are seen as an unfriendly act,” Krumm said. According to the expert, the EU “is also concerned that possibly not enough gas will reach Ukraine, even if this was not intended”.

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“Several, but not all EU members push the European Commission, which is responsible for the bloc’s trade policies, to prepare counter-measures against the US sanctions bill,” said Gerhard Mangott, international relations professor at Leopold-Franzens Universität Innsbruck, senior consultant on post-Soviet problems at the Austrian Institute of International Relations in Vienna. “It is the countries whose companies may be affected by US measures who argue for a detailed plan, first and foremost the German government.”

Nevertheless, according to Mangott, trade and investment measures against the US companies are still far away. “The Commission will most certainly plan for retaliation in trade and investment against US companies. However, only when and if European energy companies who cooperate with Gazprom on pipeline projects, will feel the heat,” he said. “As long as there is no case of US punishment of EU companies, the Commission will not announce its countermeasures publicly. Behind closed doors, however, the US government has already been informed about the seriousness of this issue.”

He was echoed by Krumm, who said that it was too early to talk about any counter-measures. “The European Parliament is on vacation right now. They have to see in what way these sanctions concerning Nord Stream-2 etc. would be concrete. There is a chance that the United States is willing to discuss these things with the EU. And, because of the summer, the discussions will take a lot of time,” he said.
Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.

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