International Forecaster Weekly

US Sanctions on Russia: Dagger At the Heart of Europe

Despite tough talk from Brussels (and Berlin) about “retaliation” over these new measures, no shots will be fired, no diplomatic relations broken, no dramatic shifts away from Washington and toward Moscow will be taking place.

James Corbett | July 29, 2017

In a nearly unanimous vote on Tuesday, the House passed a bill that imposes new sanctions on Moscow and forces Trump to seek Congressional approval before easing any restrictions on Russia. The bill is part of a larger sanctions regimen that would also impose new restrictions and punitive measures on Iran and North Korea and it was passed by the Senate in another nearly unanimous vote (98-2) on Thursday.

It is unclear at press time whether Trump will attempt to veto the bill, but even if he does the veto could likely be overridden by popular support from both houses.

The reaction to the bill from Russia is precisely as one would expect:

The sanctions are “equally dreadful from the point of view of international law and international trade relations,” Kremlin press secretary Dmitry Peskov told reporters on Wednesday, warning that “such actions would not be left without a response.”

“This is already having an extremely negative impact on the process of normalising our relations,” Russian Deputy Foreign Minister Sergei Ryabkov told the Interfax news agency, warning that the sanctions are taking the US and Russia into “uncharted territory in a political and diplomatic sense.”

“We should look for counter measures that won’t harm our national interests, but will be painful for the Americans,” said Konstantin Kosachev, the head of the foreign relations committee in Russia’s upper house, stressing that such retaliation “should not be just symbolic.”

And in the wake of the bill’s passage by the Senate, Russia began its retaliation, forcing the US to cut its diplomatic corps in Moscow and suspending America’s use of a storage facility in the Russian capital.

But that is all to be expected.

How about this quote: “In a remarkable moment of candor, the US draft law reveals what this is really about: the sale of American liquefied gas and the displacement of Russian natural gas supplies from the European market. The aim of the sanctions is to secure jobs in the natural gas and oil industry in the USA. Political sanctions should not be associated with economic interests.”

Is this (quite accurate) description of the bill and its contents the work of an angry Russian diplomat? A Russian military officer or businessman?

Nope. It’s part of a joint statement from German Foreign Minister Sigmar Gabriel and Austrian Chancellor Christian Kern. And they’re not alone. A number of high-ranking European officials have sounded off about this bill and recognize that, whatever else might be going on here, the widening rift between Russia and the US is a dagger pointed at the heart of Europe.

Take European Commission President Jean-Claude Juncker, who said of the new sanctions regime: “The EU is fully committed to the Russia sanctions regime. However, G7 unity on sanctions and close coordination among allies are at the heart of ensuring the full implementation of the Minsk Agreements. This is a core objective that the EU and the US share. The US Bill could have unintended unilateral effects that impact the EU’s energy security interests. This is why the Commission concluded today that if our concerns are not taken into account sufficiently, we stand ready to act appropriately within a matter of days. America first cannot mean that Europe’s interests come last.”

Or the remarks of Austrian Chancellor Christian Kern: “I consider the Russia sanctions imposed by the US absolutely unacceptable. Confusing political interests with economic interests at the expense of European jobs is a no-go. The energy supply of Europe is a matter for Europe!”

So what’s this about? Why is Europe so upset by sanctions on Russia?

Well, if you read the bill itself you’ll find that there’s an entire section devoted to sanctioning entities related to “special Russian crude oil projects,” which the EU understands to mean “Nord Stream 2.”

Nord Stream 2 is, as the name suggests, an extension of Nord Stream, the natural gas pipeline connecting the Russian port town of Vyborg to the German university city of Greifswald. The two parallel lines of Nord Stream currently have a capacity of 1.9 trillion cubic feet, but the Nord Stream 2 expansion is expected to increase that capacity to 3.9 trillion cubic feet.

The problem from the EU perspective (or at least from the German perspective, which, from the bureaucratic level, may amount to the same thing) is that these new US sanctions on Russia, depending how they are implemented, could punish European companies working on the pipeline, including limiting those companies’ access to US banks. As Sigmar and Kern point out in their joint statement above, it’s not difficult to construe this move by the US as a cynical attempt to boost America’s burgeoning oil and gas export sector by disrupting the EU’s energy dependence on Russia.

This is why we’ve seen a remarkable amount of front and back-door diplomacy from the EU on this American sanctions bill. As is now being reported, EU officials in Washington have been lobbying hard behind the scenes to limit the scope of these new sanctions, and even managed to insert language directly into the text of the bill calling on Trump to “uphold and seek unity with European and other key partners on sanctions implemented against the Russian Federation.”

On the big scheme of things, this is not an earth-shattering rupture. Despite tough talk from Brussels (and Berlin) about “retaliation” over these new measures, no shots will be fired, no diplomatic relations broken, no dramatic shifts away from Washington and toward Moscow will be taking place. Yet.

But still, this is an interesting window into the fundamental question facing Europe in this ever-escalating Cold War 2.0 between Russia and the US. At what point will Europe have to pick a side? And is it necessarily and unquestionably the case that, if it does come to that, they will side with Uncle Sam over Comrade Vlad?

Others have framed this debate for the heart of Europe as one between the Atlanticists, who see the status quo of a Washington-run Pax Americana as essential to Europe’s livelihood, and the Eurasianists, who see the rise of Chinese and Russian-led institutions and initiatives as a sign that Europe’s future prosperity lies in aligning itself with the rising economy of Asia. For those interested in seeing an end to an oligarchical world order this is of course a false dialectic, excluding free association between independent people and reducing the world’s decision to one of Nato or SCO, World Bank or BRICS Bank, EU or EAEU.

False choice though it may be, it is still a choice, however, and one that is going to effect the look and feel of the world in the decades to come. And although the EU is not going to defy the US on the world stage at this point, a growing alliance between Trump’s America and Brexited Britain might just turn European public opinion away from the status quo and into the embrace of Russia and China.