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How Will The EU Respond To Fresh US Sanctions On Russia?

“Okay, you think we’re the bad guys, we’re going to be bad guys and we’ll see whether you like it or not” Konstatin Eggert, a political commentator, told The Washington Post in response to U.S.’s bid to introduce fresh economic sanctions on Russia. With the expulsion of tens of U.S. diplomats from Russia, this next stage in the great political battle is underway.

Though the Trump administration has given mixed signals about whether it would sign the new sanctions bill into law, it might not matter. Combined with an earlier piece of legislation based by the Senate this summer, there could be, as Vox says, veto-proof majorities in both chambers of Congress. Effectively it would mean Trump would require permission before he could ease any sanctions on Russia – creating an obstacle in his bid to develop improved relations with Moscow.

And it’s not just causing ructions between Washington and Moscow. It’s deeply unpopular in some parts of the EU, with close U.S. allies warning it will hit their economies and they will act “within days if sanctions are adopted without EU concerns being taken into account.”

EU Commission President Jen-Claude Juncker sent a note to his fellow commissioners in which he expressed his concerns that “The measures risk breaking the transatlantic and G7 unity.”

There have already been tensions between Germany and the U.S. after it entered the EU market selling liquefied gas. This move was seen as being in direct competition to projects like Nord Stream 2, which would bring 55 bn cubic meters of natural gas from Russia under the Baltic Sea, demonstrating the bloc’s dependence on Russian energy. And this project could be in jeopardy if/when the new bill is made law. Related: Will Sanctions On Russia Push The EU To US Energy?

That’s because the U.S. would be able to impose sanctions on any company that contributes to the maintenance or development of Russia’s energy export pipelines. The Nord Stream 2 line is owned by Gazprom but there are five Western firms who are working on this project.

But it’s not the only one. It is understood that there are eight others which could be affected including oil majors Eni, BP and Shell. Alexey Pushkov, an international relations commentator said: “The exceptional nation wants to block Russian gas supplies to Europe and to sell expensive shale gas from the US to its European servants. That’s the entire ‘morality’ of Congress.”

There are actions the EU could take. It could demand a public declaration from the president that discretionary powers would not be used against European companies; use the EU ‘Blocking Statute’ which effectively prevents the enforcement in the EU of any decision made by the U.S.; or possibly call for WTO retaliatory measures. Reuters suggests it may even “impose outright bans on doing business with certain US companies.”

Seeing this as unintended consequences of a domestic battle between Trump and Congress has not endeared Trump to Juncker, who warned after the difficult G20 amid Trump’s suggestions of hiked U.S. tariffs on steel imports, that the EU is “prepared to take up arms if necessary.”

According to the most recent reports the bill which will finally be presented will have fresh accommodations of EU concerns. The sanctions language is believed to have been softened. And we’ll watch with baited breath to see how this develops.

By Precise Consultants

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