July 31, 2017
Russia sanctions bill becomes US law
There is a quaint story in FAZ this morning that Sigmar Gabriel will not accept the extraterritorial aspects of the Russia sanctions bill, but the story fails to explain how he can stop US legislation that has now passed both houses of Congress with near unanimity, and which President Donald Trump has now confirmed he will sign into law. Trump was unhappy with the bill - not because he shared European sensibilities but because it curtails his freedom of manoeuvre to lift the sanctions on Russia. The US will soon have a law in place that will force the extension of sanctions to third-country companies that co-operate with Russia on large infrastructure projects, notably in the energy sector.
The only concession gained by the Europeans in their backdoor diplomacy is a 30-day consultation period. The EU has so far not reacted to the bill, although the Commission must surely be getting ready to draw up a list of counter-measures should the US target EU energy companies. Moscow has expelled 200 US diplomats in response to this legislation in protest at what it calls unlawful sanctions. The EU’s position is also that the extraterritorial aspects of the legislation violate international law. And the really big trade dispute is yet to come, if or when Trump imposes tariffs on steel imports.