EU Divided On How To Answer New US Sanctions Against Russia



Reuters

BRUSSELS, July 24 (Reuters) - European Commission preparations to retaliate against proposed new U.S. sanctions on Russia that could affect European firms are likely to face resistance within a bloc divided on how to deal with Moscow, diplomats, officials and experts say.

A bill agreed by U.S. Senate and House leaders foresees fines for companies aiding Russia to build energy export pipelines. EU firms involved in Nord Stream 2, a 9.5 billion euro ($11.1 billion) project to carry Russian gas across the Baltic, are likely to be affected.

Both the European Union and the United States imposed broad economic sanctions on Russia's financial, defence and energy sectors in response to Moscow's annexation of Crimea from Ukraine in 2014 and its direct support for separatists in eastern Ukraine.

But northern EU states in particular have sought to shield the supplies of Russian gas that they rely on.

Markus Beyrer, director of the EU's main business lobby, Business Europe, urged Washington to "avoid unilateral actions that would mainly hit the EU, its citizens and its companies".

The Commission, the EU executive, will discuss next steps on Wednesday, a day after the U.S. House of Representatives votes on the legislation, knowing that the U.S. move threatens to reopen divisions over the bloc's own Russia sanctions.

Among the European companies involved in Nord Stream 2 are German oil and gas group Wintershall, German energy trading firm Uniper, Anglo-Dutch Royal Dutch Shell, Austria's OMV and France's Engie.

The Commission could demand a formal U.S. promise to exclude EU energy companies; use EU laws to block U.S. measures against European entities; or impose outright bans on doing business with certain U.S. companies, an EU official said.

But if no such promise is offered, punitive sanctions such as limiting the access of U.S. companies to EU banks require unanimity from the 28 EU member states.

Ex-Soviet states such as Poland and the Baltic states are unlikely to vote for retaliation to protect a project they have resisted because it would increase EU dependence on Russian gas.

Few Tools Available

An EU official said most member states saw Nord Stream 2 as "contrary or at least not fully in line with European objectives" of reducing reliance on Russian energy.

Britain, one of the United States' closest allies, is also wary of challenging the U.S. Congress as it prepares to leave the EU and seeks a trade deal with Washington.

In fact, the EU's chief executive, Jean-Claude Juncker, has few tools that do not require unanimous support from the bloc's 28 governments.

The Commission could act alone to file a complaint at the World Trade Organisation. But imposing punitive tariffs on U.S. goods would require detailed proof to be gathered that European companies were being unfairly disadvantaged - a process that would take many months.


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