Energy Interference

Latest US Russia Sanctions Draw European Ire

Russian President Putin meets with German Foreign Minister Gabriel in Moscow
You sure have some nice-looking gas! Picture source: Reuters

The US Senate’s latest raft of Russia sanctions has met fierce opposition from two of the United States’ traditionally closest allies. In a joint statement, German Foreign Minister Sigmar Gabriel and Austrian Chancellor Christian Kern condemned the threats as “illegal” and decried the measures as an attempt to advance US economic interests.

“Europe’s energy supply is a matter for Europe, not the United States of America,” they said in the statement on Thursday. “We cannot accept . . . the threat of illegal extraterritorial sanctions against European companies that participate in the development of European energy supply.”

US Senators on Wednesday supported an amendment which strengthens existing sanctions against Moscow. But the measure would also introduce new restrictions aimed at companies that provide “goods, services, technology, information, or support” to Russian “energy export pipelines,” which the two politicians regard as a direct attack on European energy sovereignty.

At the center of the dispute is the planned $10 billion Nord Stream 2 gas pipeline from Russia to Germany. The pipeline, fully owned by Russia’s Gazprom, is supported by European energy companies Shell, BASF, Uniper, Wintershall, Engie and OMV, which have together agreed to meet half of the project’s costs. The pipeline, planned for completion by the end of 2019, would double the supply of Russian gas from an already existing route to Germany.

“The goal is to secure jobs in the oil and gas industry in the USA. Who gives us energy and how we decide is according to the rules of openness and market competition.”

Sigmar Gabriel and Christian Kern, German foreign minister and Austrian chancellor

The US Senate in its new sanctions bill said it will “continue to oppose Nord Stream 2,” which Mr. Gabriel and Mr. Kern interpret as an attempt to squash Russian competition for Europe’s energy supply.  The United States delivers liquid natural gas (LNG) to Europe.

“The goal is to secure jobs in the oil and gas industry in the USA,” Mr. Gabriel and Mr. Kern said. “Who gives us energy and how we decide is according to the rules of openness and market competition.”

Russia’s Gazprom backed that interpretation. “This unprecedented course of action is clearly aimed at undermining the position of a future commercial competitor in an already diversified market,” the company said in a statement. “It follows similar scare tactics by some European countries with existing or planned gas import infrastructure to protect their own commercial interests by using political arguments.”

But the Nord Stream 2 project is also under fire from within Europe, where Poland and other eastern European nations have urged regulators in Brussels to block the pipeline, wary of the continent’s increasing dependence on Russian gas.

Russian President Putin meets with Austrian Chancellor Kern during the St. Petersburg International Economic Forum
Austria's Chancellor Christian Kern and Russian President Vladimir Putin appear to be on the same page. Picture source: Reuters

The German foreign minister and Austrian chancellor also said the bill, which still has to be approved by the House of Representatives, brings a “new and very negative quality to European-American relations.” The episode is the latest indication of worsening US-European ties, which deteriorated ever since US President Donald Trump’s administration took over the White House in January this year.

Mr. Gabriel, known for his ruthless candor, at an event in Berlin on Thursday accused the United States of turning the international stage into a “battle arena,” according to news agency Reuters. He added that the current international debate no longer revolved around the rule of law, but instead the “law of the strongest.”

“There is a new form of authoritarianism, which is the greatest challenge for liberal democracies as we know them,“ Mr. Gabriel said according to Reuters.

Tina Bellon is an editor with Handelsblatt, based in New York. To contact the author: T.Bellon@extern.vhb.de

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