Posted by on July 26, 2017 9:00 am
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Categories: Austrian Institute of Economic Research Baltic States Congress donald trump Economy EU Commission EU’s Council of Permanent Representatives European Commission European Union Foreign relations of Russia germany Government of Russia Greece International relations International sanctions International sanctions during the Ukrainian crisis Iran italy National Aeronautics and Space Administration Natural Gas north korea Poland Politics Politics of Russia Possible World Trade Organization Presidency of Donald Trump Romania Russia–European Union relations Strategic Culture Foundation Trade War Trump Administration Ukraine United States Senate US Administration white house World Trade World Trade Organization

Authored by Alex Gorka via The Strategic Culture Foundation,

The White House indicated that President Donald Trump is preparing to sign a sweeping Russia sanctions measure, which the House took up last night, that requires him to get Congress’ permission before lifting or easing the economic penalties against Russia

“While the President supports tough sanctions on North Korea, Iran and Russia, the White House is reviewing the House legislation and awaits a final legislative package for the President’s desk,” White House spokeswoman Sarah Huckabee Sanders said in a statement on Tuesday after the House vote.

The punitive measures against Russia come as part of the Countering Iran’s Destabilizing Activities Act, targeting not only Tehran, but also North Korea. The measure seeks to impose new sanctions on major sectors of the Russian economy.

With all promises and pledges forgotten, the US has taken a unilateral decision with no regard to the opinion of its European partners.

In its turn, the EU is preparing to retaliate against the US if the new sanctions on Russia that hit European businesses come into force. The European Commission, the EU’s executive, has called for an urgent review of retaliatory measures. It believes that Brussels «should stand ready to act within days» if the US measures were «adopted without EU concerns being taken into account». The response may include limiting US jurisdiction over EU companies.

According to the Financial Times, the options set out in the EU Commission’s note include using European law to prevent the US measures from being «recognized or enforceable» in Europe, and preparing «WTO-compliant retaliatory measures». As cited by Politicothe memo suggests that Brussels is seeking «a public declaration» from the Trump administration that it will not apply the new sanctions in a way that targets European interests. The European measures may include:

1) Seeking a public declaration from the US administration that discretionary powers would not be used against European companies.

2) Making use of the EU «Blocking Statute», an EU regulation (Council Regulation 2771/96) that says no decision based on extraterritorial  US laws is enforceable in the EU.

3) Possible World Trade Organization retaliatory measures.

Germany has already warned of possible retaliation if the US moves to sanction German firms involved with building a new Baltic pipeline for Russian gas.

It is widely believed in Europe that the US punitive measures could stretch far beyond the Nord Stream 2 gas project to include the pipelines crossing the territory of Ukraine, as well as pipeline projects in the Caspian region and the development of the Zohr gas field off the coast of Egypt. Besides, the legislation «could impact a potentially large number of European companies doing legitimate business under EU measures with Russian entities in the railways, financial, shipping or mining sectors, among others».

In June, Germany and Austria sharply criticized the US Senate for tightening sanctions on Russia, accusing the US of threatening Europe’s energy supplies.

With Russia responding to the Western sanctions imposed in 2014, European economies have been hit hardest. Last year, the Austrian Institute of Economic Research estimated that the trade war will cost the EU over €100 billion in business and up to 2.5 million in jobs. By contrast, the US has scarcely felt a pinch from the trade impasse. Business communities in Germany, Italy, Greece and other countries in the European Union have publicly protested against the continuing sanctions.

Germany, Europe’s biggest economy with the largest trade links to Russia, has suffered most from the sanctions rift. Up to 30,000 German businesses have invested in Russia, amounting to as many as half a million jobs in danger and €30 billion in lost revenues, according to the Austrian Institute of Economic Research. One of Germany’s largest opposition parties, Alternative for Germany, even demanded an end to sanctions, which it said had rode roughshod over the German federal state of Baden-Wurttemberg. The region’s highly developed economy is home to more than 900 companies which have offices in Russia.

The bill openly promotes the US interests with American Liquefied Natural Gas (LNG) suppliers to compete with Russian Gazprom. Washington can silently exert pressure on EU decisions as the Union’s dominant silent partner. US envoys regularly attend meetings of the EU’s Council of Permanent Representatives (ambassadors). Besides, Washington can still rely on the UK and on some other EU countries like Poland, Romania and the Baltic States.

The US is not looking back at European allies because it knows that the EU is going through hard times facing a deep rift among its members. Internal divisions put its future in question. There is a host of problems it needs to find solutions to. It allows Washington to do its own thing. The Russian RD-180, RD 181 rocket engines are excluded from the bill to meet the interests of NASA, but European pipe construction projects will be affected if the bill becomes a law.

Here is another example. The National Defense Authorization Act for fiscal year 2018 includes the development of Intermediate-Range Ground-Launched Missile System in defiance of Article VI of the INF Treaty. The only place the missile could be deployed to is Europe. The bill envisages the development of the weapon to protect Europeans without their consent! Russia will have to respond by deploying intermediate range missiles of its own. As a result, American allies in Europe will become targets supposedly enhancing US security by providing the military with the opportunity to deliver first strikes against Russian strategic forces with the US strategic arsenal remaining intact. Actually, the United States will boost the first strike capability while undermining European security.

Until now Europe has failed to resist American pressure. This is another opportunity to take a stand and defy Washington. The European Commission will discuss next steps today. It does not mean it’ll take final decisions on what to do if US approves the measure as it is expected to do but it’ll be a start of serious debates on urgent measures to be agreed on without much delay. All 28 EU members have to agree. The outcome will be a litmus test for Europe’s unity to show whether the bloc is really a powerful alliance of the countries ready to protect their interests or it is nothing more than a puppet on a string dancing to the US tune.

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