With eye toward EU energy security, US dulls Russia sanctions

President Trump signed new U.S. sanctions on Russia, Iran and North Korea into law on Wednesday. The new sanctions were met with a harsh European response, with European Commission President Jean-Claude Juncker stating, “We must defend our economic interests vis-a-vis the United States.”

For decades, the U.S. and the EU have disagreed over sanctions on Russia, and based on the current rhetorical spat, this new U.S. effort is no different. Beneath the surface, however, the sanctions legislation actually reveals that Europe and the U.S. are much better coordinated on energy policy than it appears.

{mosads}The European public response to the new U.S. sanctions has been strong, with German Foreign Minister Sigmar Gabriel, commenting, “We will not accept any extraterritorial use whatsoever of these U.S. sanctions against European companies.” Many other senior European policymakers have called them a ploy to force greater U.S. liquefied natural gas (LNG) exports to Europe.  

European states usually object to U.S. sanctions on Russia because they have much higher trade volumes with the country, and these sanctions almost always affect Europe more than the U.S. Moreover, U.S. sanctions often target Russia’s energy exports, and Europe is Russia’s main market for oil and natural gas. 

In fact, however, the final U.S. sections legislation reflects European interests and obligates U.S. government consultations with Europe. European efforts to alter earlier drafts of the legislation apparently bore results.  

For example, proposed sanctions on Russian energy export pipelines, almost all of which go to Europe, were significantly watered down. In the final bill, Congress stated that the U.S. president “may” impose sanctions on those involved in Russian pipelines and that this should be done “in coordination with allies of the U.S.,” which presumably means Europe. 

The legislation was also weakened as it relates to new oil projects involving Russian entities. The final bill says that sanctions will only be applied to projects in which Russian companies hold at least one-third of the shares, while exempting those with lesser Russian participation.

In addition, the new legislation opposes — but more importantly fails to take any concrete U.S. action against — the construction of the Nord Stream 2 pipeline, which is planned to be built under the Baltic Sea between Russia and Germany and is backed by the German government.

The modification of U.S. sanctions on Russia based on European interests is not without historical precedent. When the Reagan administration applied sanctions designed to obstruct the building of the Siberian Gas Pipeline from the USSR to Western Europe, harsh rhetoric erupted between the U.S. and Europe.

For instance, when the U.S. attempted to deepen the sanctions, French Foreign Minister Claude Cheysson said the decision “could well go down as the beginning of the end of the Atlantic alliance.” Instead, respectful of France and Europe’s wishes, the Reagan administration refrained from deepening the sanctions and subsequently lifted the U.S. sanctions altogether.  

The closeness between Washington and Europe on energy policy should not be surprising, despite their very different energy resource bases and level of energy trade with Russia. The U.S. has traditionally viewed the preservation of Europe’s energy security as part of the American national interest.

In addition, the U.S. and Europe have worked intensively together on projects such as Caspian oil and gas exports that, while greatly enhancing European energy security, had little direct impact on the U.S. Without the combined effort, these mega-projects to Europe most likely would not have materialized.

In today’s already tense international environment, news of an expanding rift between the U.S. and Europe makes for good headlines, but the reality of the sanctions tells a different story. When it comes to energy policy, the U.S.–EU relationship remains incredibly potent; even if it’s not quite able to overcome the countervailing rhetoric.

Brenda Shaffer is a specialist on energy and foreign policy. She is a visiting researcher and professor at Georgetown University’s Center for Eurasian, Russian and East European Studies and a senior fellow at the Atlantic Council’s Global Energy Center. She is the author of  several books, including “Partners in Need: the Strategic Relationship of Russia and Iran” and “Energy Politics.”

The views expressed by contributors are their own and not the views of The Hill.