Germany Calls on Europe to Take Protective Measures Against the US

Matty-Sways

Germany to take action against the US after threats of sanctions on Allseas Group S.A. halted completion of pipeline.

German politicians are beside themselves after threats of US sanctions from Washington halted completion of a new submarine gas pipeline linking Russia directly to Germany.

The bipartisan U.S. move initiated by Congress last week threatened sanctions against companies working on completing Nord Stream 2, Europe’s biggest energy-infrastructure project. The move caused Allseas Group S.A. to stop work on the $10 billion pipeline, just weeks from completion. The pipe would double direct gas shipments to Germany by Russian’s state-owned gas giant PAO Gazprom.

Despite announcement of the stoppage, Russian energy minister Alexander Novak told a state-owned press agency on Thursday that only 160 km remained to be completed and that would be finished within months by using Russian ships. The U.S.’s move sparked outrage in Germany, prompting senior officials and politicians to call for a coordinated approach to protect the strategic interests of European Union members against future U.S. sanctions.

“Europe needs new instruments to be able to defend itself from licentious extraterritorial sanctions,” wrote Niels Annen, Germany’s deputy foreign minister, in a tweet last week.

Miguel Berger, the German foreign office’s director general in charge of economic affairs, wrote in a tweet last week that the sanctions were an “attempt to use coercive measures for selling LNG to Europe.”

A senior German government official said, in response to the pipeline sanctions, that Germany would make a renewed European push to build a firewall against U.S. sanctions when it takes over the EU’s rotating presidency next year.

One goal would be to create a separate financial infrastructure that would allow European companies to escape the scope of U.S. sanctions. The banks involved would have to be based in jurisdictions out of the U.S.’s reach, such as China or possibly Russia, the official said.

“Washington is treating the EU as an adversary. It is dealing the same way with Mexico, Canada, and with allies in Asia. This policy will provoke counter-reactions across the world,” this official said.

Some European officials have even toyed with the idea of adopting sanctions of their own against the U.S., for instance to deter policies they think endanger the environment.

“What if the EU parliament would sanction the Keystone pipeline on environmental grounds,” a senior German diplomat asked, speaking to The Wall Street Journal this week.

Building a shield against U.S. sanctions is difficult because of the size of the U.S. economy, the role of the dollar in international transactions, and the fact that the U.S. has control over much of the world’s financial plumbing.

Russia and China have banks and other companies that do no business in the U.S. and are thus immune from U.S. sanctions. Some of those firms, like China’s Bank of Kunlun, were the main conduit for China’s Iran sales under the previous pre-nuclear-deal set of Iran sanctions.

Although tension still remain between the US and China it has become more common for Chinese firms to be cautious about bucking U.S. sanctions. Bank of Kunlun, whose China National Petroleum Corp. parent is listed on the New York Stock Exchange, has repeatedly frozen business with Iranian firms over the last year. China’s purchase of Iranian oil plummeted after U.S. sanctions waivers were removed.

Peter Beyer, German Chancellor Angela Merkel’s trans-Atlantic affairs coordinator, told German radio on Wednesday that finishing the pipeline would now be more expensive, but that it would be completed in the second half of 2020.

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