Germany Fears Economic Fallout From New US Sanctions Targeting Russia, Calls for E.U. ‘Countermeasures’

By James Carstensen | August 3, 2017 | 12:14am EDT
NordStream pipeline technicians in Vyborg, Russia. (Photo: NordStream)

Berlin ( – Germany has urged the European Union to consider countermeasures against the U.S. in response to new sanctions Russia, fearing harm to European economic interests, particularly relating to an offshore natural gas pipeline from Russia to Germany.

U.S. legislation signed into law on Wednesday imposes sweeping punitive measures against Russia, Iran and North Korea.

The Russia elements, focusing on key sectors of the economy including arms sales and energy exports, are in response to Russia’s intervention in Ukraine, alleged interference in th

e U.S. election, and support for the Assad regime in Syria.

President of the E.U.’s executive Commission, Jean-Claude Juncker, said he was satisfied that the U.S. had taken into account some E.U. concerns over the new sanctions, amending the legislation so that penalties only apply if Russia holds a 33 percent or larger stake in the targeted entity.

But he also signaled the E.U. was ready to retaliate if the measures turn out to hurt its economic interests.

"We are ready: we must defend our economic interests vis a vis the United States, and we will do that," Juncker told a German radio station.

The E.U. had previously imposed sanctions in coordination with the U.S. against Russia over Ukraine, but is frustrated by the unilateral nature of the new measures, adopted without input from the E.U.

German Economy Minister Brigitte Zypries said earlier this week the move was “against international law” and called for an immediate E.U. response.

“The Americans can’t punish German companies because they have business interests in another country,” she told the Funke media group.

"Of course we don't want a trade war,” Zypries said. “But it is important the European Commission now looks into countermeasures.”

According to a Reuters report, an E.U. memo indicates measures could include invoking an E.U. regulation that says no decision based on extraterritorial U.S. laws is enforceable in the E.U., along with possible World Trade Organization retaliatory measures.

The Russian sanctions could in theory lead to fines against European companies supporting Russian energy exports, especially the $11.2 billion NordStream 2 gas pipeline. The project, taking Russian gas under the Baltic Sea to Germany, is being constructed with the help of German firm Wintershall and Austrian firm ÖMV, along with companies from France, Britain and the Netherlands.

Some E.U. member countries not involved in the NordStream 2 pipeline fear economic repercussions as well.

Christian Tybring-Gjedde, a lawmaker with Norway’s ruling Progress Party told the Aftenposten newspaper that restrictions entailed in the bill “could have direct consequences for Norwegian companies cooperating with their Russian counterparts in the oil and gas sphere."

“That will hit the European oil and gas sector, and the U.S. could potentially stand to gain from that,” he said.

Germany and Austria earlier this summer condemned the sanctions proposal, saying it was intended to benefit U.S. interests, notably the selling of U.S. liquefied natural gas (LNG) to Europe.

A July poll by the Forsa Institute reported that 77 percent of Germans felt sanctions against Russia were a way for the U.S. to gain business in the European market.

“One is left with the sense that the United States is looking to its own economic interests,”  German Chamber of Industry and Commerce head Volker Triere said last week.

A clearly-stated aim of the sanctions bill is to reduce E.U. reliance on Russian energy. It also declares that U.S. policy is to “continue to oppose the NordStream 2 pipeline” and to “prioritize the export of United States energy resources in order to create American jobs, help United States allies and partners, and strengthen United States foreign policy.”

Not all E.U. countries are critical of the new sanctions legislation. Lithuanian President Dalia Grybauskaite welcomed the challenge to Russia’s supply power in the region.

She said that her country previously paid 40 percent more for Russian gas than Germany was paying, “because Russia always used energy projects as a tool of influence, a tool of suppression and a tool of manipulation.”

Lithuania is expecting its first delivery of LNG from the U.S. this month.

Speaking in Finland before Trump signed the bill, Russian President Vladimir Putin suggested they would be “illegal,” and dismissed claims of alleged 2016 election hacking as “anti-Russian hysteria.”

“Such boorish behavior towards our country cannot be tolerated indefinitely,” he said.

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