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July 27, 2017

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House votes 419-3 in favour of anti-EU sanctions bill

So it happened. The US House of Representative has passed its own version of a sanctions bill against Russia, Iran, and North Korea, by 419 to 3 votes. From a European perspective this is a really bad version of the bill - it only demands that the US administration consults with the EU before taking any decision. The Senate had earlier voted 98 to 2 in favour of its version, which did not contain the consultation pledge, but the deal is now effectively done. The EU has expressed hope that some of its concerns may be reflected in the final reconciled bill, or that the bill may even be vetoed by Donald Trump; but, as the New York Times reports, President Trump cannot veto a bill with a veto-proof majority. This is not a battle the White House will fight. 

The Europeans are not targeted directly, but the bill has extraterritorial effects because it targets companies of third countries that have dealings with Russia. The EU is falling victim to domestic US politics. At a time when the president and family members are under investigation of their secret links to Russian officials during and after the campaign, the Russia policy of the US is now effectively in the hands of Congress. The paper quotes a Russian MP as saying that Trump was now a prisoner of Congress and of the anti-Russian hysteria that has swept the US.

Another aspect is the perceived need by US lawmakers to strengthen domestic energy companies. The hope is to help the country’s flagging shale gas industry, and to pry open the EU market for US energy imports by clamping down on EU/Russia energy ties. 

The amended bill by the House also includes North Korea, which was absent in the Senate version. 

The US coverage of the story hardly even mentions the EU, but the EU is massively concerned. As Frankfurter Allgemeine reports the EU is already is considering counter-measures, in case European companies are targeted by US sanctions. As the paper reports, the bill not only affects the Nord Stream II gas pipeline project in the Baltic, but also the liquid gas terminal Baltic LNG, which Gazprom wants to build with Shell in Russia. Other targets include the Bluestream pipeline from Russia to Turkey, in which ENI is invested; the liquid gas terminal Sachalin 2, another Gazprom/Shell cooperation; gas exploration in the Caspian Sea; and a pipeline from Azerbaijan to Georgia, where BP participates. 

The EU is considering counter-sanctions under WTO rules, as well as under its own rules according to which it can protect EU companies that are targeted by third countries. The East-West committee of German industry, the single most powerful lobbying group in Berlin, has announced massive resistance to the US plans, which it regards as an attempt by the Americans to seek an advantage for their domestic energy industry.

Our other stories

We also have stories on the deep political impact of the Swedish data leak scandal; on why a sustained 3.5% primary surplus for Greece is ludicrous; on Greek banks preparing their own bond issues; on the nearing end of fossil-fuel burning car engines; on why banking union will never replace a fiscal union; and on why a second UK referendum will not happen, and should not happen.

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