Wednesday

20th Feb 2019

Trump signs Russia sanctions, targeting EU firms

  • US leader signed the "flawed" bill away from cameras (Photo: consilium.europa.eu)

[Updated at 8.25 on Thursday] US leader Donald Trump has signed into life new Russia sanctions that put EU firms, such as OMV, Wintershall, and Shell, at risk of fines.

The president said in a note published the same day (2 August) that the sanctions bill was “significantly flawed” because it undermined his “exclusive constitutional authority” on foreign relations.

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He also said Congress should “refrain from using this flawed bill to hinder our important work with our European allies to resolve the conflict in Ukraine”.

The law threatens to penalise companies that invest in big Russian energy projects or that help it to sell arms.

It also imposes tighter credit controls on Russian banks and stops Trump, who is under suspicion of colluding with Russia to sway last year’s US election, from undoing Russia sanctions without a Congressional review.

Trump signed the bill out of sight of cameras instead of his normal pomp.

The bill was earlier backed by a huge majority in Congress meaning that Trump’s veto would likely have been overturned had he chosen to wield it.

The EU had also threatened to react, with the European Commission saying last week that it would act within "days" of the sanctions becoming law.

But in statement on Wednesday, the commission's president, Jean-Claude Juncker, noted that "a significant proportion of the intended sanctions against Russia have been dropped" and that Congress "has committed to only apply sanctions after the country's allies are consulted."

Still allies?

"I do believe we are still allies of the US," Juncker noted.

"European interests can thus be taken into account in the implementation of any sanctions."

Juncker added that he retained the right to take "adequate measures" if the US sanctions, once implemented, "specifically disadvantage EU companies trading with Russia in the energy sector".

The commission's options, as set out in a leaked internal memo, included trying to circumscribe US jurisdiction or imposing counter-sanctions on US firms.

Russia has already reacted by forcing the US to cut 755 diplomatic staff in Moscow, a move that mostly affected Russian nationals who worked in the US embassy’s consular department.

On Wednesday, Russian prime minister Dmitri Medvedev said that "a fully-fledged trade war has been declared on Russia."

In a message on his Facebook page, he added that "it is the death of hopes to improve our relations with the new American administration."

Germany and Austria have also threatened retaliation because the fines could hit Austrian firm OMV and German firms Uniper and Wintershal, as well as French firm Engie and Anglo-Dutch firm Shell, for their role in Nord Stream II, Russia’s planned gas pipeline to Germany.

Russia hawks in Washington hate the pipeline, which they say would reduce Russia's cost for invading Ukraine and would be used to buy influence in Berlin.

Business as usual

But European firms' willingness to do business in Russia despite its invasion of Ukraine was highlighted on Wednesday in an investigation by the Reuters news agency.

Its probe found that Norway’s Statoil was helping Russian firm Rosneft to get oil out of limestone using high-pressured water, a process known as fracking.

Earlier EU sanctions on Russia had banned firms from helping it to extract resources “located in shale formations by way of hydraulic fracturing”.

Rosneft and Statoil had initially said the project, in the so called Domanik formation, was a “shale” project, but Statoil later amended its literature.

"In the original press release, and communication following that, we used an imprecise geological term," a Statoil spokesman told Reuters.

Trump has said he wanted better relations with Russia, but other members of his administration have sounded a more adversarial note.

Russia push-back

US vice president Mike Pence said in Montenegro, Nato’s newest member, on Wednesday that Russia was trying to “destabilise” the Balkans and that the region's future lay in the West.

“Here in the Western Balkans, Russia has worked to destabilise the region, undermine democracies and divide you from each other and from the rest of Europe,” he told a mini-summit in Podgorice.

“We truly believe the future of the Western Balkans is in the West,” he said earlier the same day, after recently visiting the Baltic states where he also pledged Nato support against Russian aggression.

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