Russian President Vladimir Putin, left, and German Chancellor Angela Merkel arrive for talks at Putin’s residence in the Russian Black Sea resort of Sochi, Russia, Tuesday, May 2, 2017. (AP/Alexander Zemlianichenko)
In what appears set to be major diplomatic showdown between Washington D.C. and Brussels, on Sunday the White House said that President Trump was open to signing legislation toughening sanctions on Russia after Senate and House leaders reached agreement on a bill late last week.
“We support where the legislation is now and will continue working with the House and Senate to put those tough sanctions in place on Russia until the situation in Ukraine is fully resolved and it certainly isn’t right now,” White House Press Secretary Sarah Sanders told ABC’s “This Week with George Stephanopoulos” program.
As noted yesterday, congressional Democrats said on Saturday they had agreed with Republicans on a deal allowing new sanctions targeting Russia, Iran and North Korea in a bill that would limit any potential effort by Trump to try to lift sanctions against Moscow. A White House official quoted by Reuters later said the administration’s view of the legislation evolved after changes were made, including the addition of sanctions on North Korea. The official said the administration “supports the direction the bill is headed, but won’t weigh in conclusively until there is a final piece of legislation and no more changes are being made.”
Restrictions against Russia come as part of the Countering Iran’s Destabilizing Activities Act, targeting not only Tehran, but also North Korea. Initially passed by the Senate last month, the measures seek to impose new economic measures on major sectors of the Russian economy. The draft legislation would also introduce individual sanctions for investing in Gazprom’s Nord Stream 2 gas pipeline project, outlining steps to hamper construction of the pipeline and imposing sanctions on European companies which contribute to the project.
Other energy projects, such as the Caspian Sea oil and gas pipelines, the Ukraine gas transit, and the Zohr field off the Egyptian coast, may also be affected due to the participation of Russian companies.
Yet while Russia’s adverse reaction is to be expected, and will likely lead to immediate counter sanctions, perhaps coupled with the expulsion of the aforementioned 35 diplomats as well as confiscation of US properties in Russia, it is the EU’s response that will be closely watched.
According to an internal memo leaked to the press, Brussles said it should act “within days” if new sanctions the US plans to impose on Russia prove to be damaging to Europe’s trade ties with Moscow. Retaliatory measures may include limiting US jurisdiction over EU companies. The memo, seen by the Financial Times and Politico, has emerged amid mounting opposition to a US bill seeking to hit Russia with a new round of sanctions. The bill, if signed into law by the U.S. President, will also give US lawmakers the power to veto any attempt by the president to lift the sanctions.
The document reportedly said European Commission chief Jean-Claude Juncker was particularly concerned the sanctions would neglect the interests of European companies. Juncker said Brussels “should stand ready to act within days” if sanctions on Russia are “adopted without EU concerns being taken into account,” according to the Financial Times.
Morning London, while you were sleeping this was our most read story https://t.co/eC4kSgYeHN
— Financial Times (@FT) July 24, 2017
The EU memo also warns that “the measures 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.”
The freshly leaked memo suggests that the EU is seeking “a public declaration” from the Trump administration that it will not apply the new sanctions in a way that targets European interests, as cited by Politico. Other options on the table include triggering the ‘Blocking Statute,’ an EU regulation that limits the enforcement of extraterritorial US laws in Europe. A number of “WTO-compliant retaliatory measures” are also being considered, according to the memo.
Earlier on Sunday, we reported that the bloc expressed its unease over the sanctions bill, when the European Commission said in a statement that “the Russia/Iran sanctions bill is driven primarily by domestic considerations,” adding that it “could have unintended consequences, not only when it comes to Transatlantic/G7 unity, but also on EU economic and energy security interests.”
On Monday, Kremlin spokesman Dmitry Peskov said that “we heard of some corrections to the administration’s stance on sanctions and will wait patiently until it is clearly articulated.” He reiterated that Russia believes the restrictions are “counterproductive” and are harming both US and Russian interests. Russian President Vladimir Putin also warned that any new sanctions on Russia will only result in the deterioration of US-Russia relations.
Germany, Russia’s main European trading partner, called the bill “a peculiar move,” also promising a swift response to it. Some American corporations, including BP, ExxonMobil, General Electric, Boeing, Citigroup, MasterCard, and Visa, have reportedly lobbied against the move.The corporations, according to a CNN report, want changes to the bill, while lobbyists and trade associations have been visiting Capitol Hill in recent days meeting with members of Congress.
The House of Representatives is expected to vote on the controversial sanctions bill on Tuesday. Previously, adoption of the draft was put on hold as the House was reluctant to pass it, citing “procedural issues.”
With the vote assured passage it will be up to Trump to determine if the feud with Russia dumped on his lap now escalates, and involves European nations who are far closer to Russia in socio-economic terms than they would like to admit.
© ZeroHedge.com
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