Germany threatens retaliation if US sanctions against Russia harm European firms

angela merkel germany
Chancellor Angela Merkel speaks during a press conference with
Estonian Prime Minister Juri Ratas at the Chancellery in Berlin,
Germany, June 15, 2017.

Reuters/Hannibal Hanschke

BERLIN/BRUSSELS (Reuters) – Germany threatened on Friday to
retaliate against the United States if new sanctions on Russia
being proposed by the US Senate end up penalizing German firms.

The Senate bill, approved on Thursday by a margin of 98-2,
includes new sanctions against Russia and Iran. Crucially, it
foresees punitive measures against entities that provide material
support to Russia in building energy export pipelines.

Berlin fears that could pave the way for fines against German and
European firms involved in Nord Stream 2, a project to build a
pipeline carrying Russian gas across the Baltic.

Among the European companies involved in the project are German
oil and gas group Wintershall, German energy trading firm Uniper,
Royal Dutch Shell, Austria’s OMV and France’s Engie.

German Chancellor Angela Merkel’s spokesman described the Senate
bill, which must be approved by the House of Representatives and
signed by President Donald Trump before it becomes law, as “a
peculiar move”.

He said it was “strange” that sanctions intended to punish Russia
for alleged interference in the US elections could also trigger
penalties against European companies.

“That must not happen,” said the spokesman, Steffen Seibert.

In an interview with Reuters, German Economy Minister Brigitte
Zypries said Berlin would have to think about counter-measures if
Trump backed the plan.

“If he does, we’ll have to consider what we are going to do
against it,” Zypries said.

The sharp response from Berlin comes at a time of deep strains in
the transatlantic relationship due to shifts in US policy and a
more confrontational rhetoric towards Europe under Trump.

The new US president has lambasted European partners for not
contributing more to NATO, slammed Germany for running a large
trade surplus with the United States and broken with allies on
climate change with his decision to exit the landmark Paris
agreement on combating greenhouse gas emissions.

Ironically, the part of the Senate bill that targets Russia was
introduced by some of the president’s top critics, including
Republican hawk John McCain.

They are intent on limiting Trump’s ability to forge warmer ties
with Russia, a key foreign policy pledge during his campaign for
the presidency, but one he has been unable to deliver on amid
investigations into alleged Russian meddling in the US election.

Donald Trump
President Donald Trump announces his decision that the United
States will withdraw from the Paris Climate Agreement, in the
Rose Garden of the White House in Washington, U.S., June 1,


Dialogue breaks down

Under Trump’s predecessor Barack Obama, Washington and Europe
coordinated closely as they ramped up sanctions against Moscow
for its 2014 annexation of Ukraine’s Crimea region.

But the dialogue has broken down under Trump, who considered
easing sanctions against Russia when he first came into office,
according to US officials.

“I regret that the joint approach of Europe and the United States
on Russia and sanctions has been undermined and abandoned in this
way,” Zypries told Reuters.

France and the European Commission also urged the United States
to coordinate with its partners on such matters.

“For several years, we have underlined to the United States the
difficulties that extraterritorial legislation spark,” a French
foreign ministry spokesman told reporters.

The Nord Stream 2 pipeline, due to start pumping gas from Russia
to Europe from 2019, has been dogged by controversy.

Eastern European and Baltic states fear it will make them hostage
to Russian gas and undercut Ukraine by depriving it of transit
fees for Russian gas supplies to Europe.

Nordic nations, meanwhile, have security concerns over the
pipeline running through territorial waters, where Russia has
bolstered its military presence in recent months.

Some EU diplomats fear the threat of new measures out of
Washington may harden Germany’s defense of Nord Stream and
complicate already difficult talks among EU nations over whether
to seek joint talks with Russia over the pipeline.

“This is not helpful now. It tends to stir up desires to protect
our territorial space,” one EU diplomat said.

The House of Representatives is expected to debate the Senate
bill in the coming weeks but it is unclear whether it will come
up for a final vote before lawmakers leave Washington at the end
of July for their summer recess.

(Additional reporting by Michael Nienaber; Writing by Noah
Barkin; Editing by Andrew Roche)

Read the original article on Reuters. Copyright 2017. Follow Reuters on Twitter.