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Abu Dhabi, UAEMonday 18 June 2018

EU ready to hit back if Washington triggers sanctions against Russia affecting energy companies

Tensions follow disagreements over Trump's "America First" policy

epaselect epa05662430 A worker inspects stacks of pipes weighing several tons each which will be used for the construction of the Nord Stream gas pipeline in the Sassnitz-Mukran harbour in northeastern Germany, 06 December 2016. The first sections of the 1,200 kilometer pipeline were delivered in late October 2016. Around 2,000 of a total 90,000 steal pipe components are currently being stored on the island of Ruegen. According to the Gazprom subsidiary Nord Stream 2 AG, the assembly works will begin in mid-2017. So far the political controversial pipeline, which will have a total capacity of some 55 billion cubic meters, has not recieved building permission.  EPA/JENS BUETTNER
epaselect epa05662430 A worker inspects stacks of pipes weighing several tons each which will be used for the construction of the Nord Stream gas pipeline in the Sassnitz-Mukran harbour in northeastern Germany, 06 December 2016. The first sections of the 1,200 kilometer pipeline were delivered in late October 2016. Around 2,000 of a total 90,000 steal pipe components are currently being stored on the island of Ruegen. According to the Gazprom subsidiary Nord Stream 2 AG, the assembly works will begin in mid-2017. So far the political controversial pipeline, which will have a total capacity of some 55 billion cubic meters, has not recieved building permission. EPA/JENS BUETTNER

The European Union said it would be prepared to retaliate against the US should Washington hit Russia with new sanctions that affect EU-based energy companies, risking a deeper transatlantic split over economic and security policies.

The European Commission, the bloc’s executive arm, made the threat as US lawmakers prepare to give the green light as soon as this week to economic penalties against Russia over its meddling in last year’s American presidential election. The draft US measures would prohibit American businesses from being involved in energy projects that include Russian companies, including ventures outside Russia.

“The EU is always ready to respond adequately and imminently should the case be needed,” Margaritis Schinas, the commission’s chief spokesman, said yesterday in Brussels. “I will not speculate on any retaliation.”

The latest transatlantic tensions follow sharp disagreements over the US president Donald Trump’s “America First” agenda, including his anti-trade stance, his withdrawal from an international treaty to fight climate change and his criticism of European nations for failing to spend more on defence. The fresh friction also contrasts with close cooperation between the EU and former US president Barack Obama over sanctions against Russia for its encroachment in Ukraine.

The commission, led by president Jean-Claude Juncker, is echoing concerns expressed by German chancellor Angela Merkel, whose spokesman said last month that the US Congress plan for expanded sanctions against Russia posed a threat to European economic interests. One casualty could be the planned US$10 billion Nord Stream 2 natural gas pipeline between Russia and Germany, a project that to some extent would compete with US exports of liquefied natural gas to Europe.

Mr Schinas said the adequacy of energy supplies for the EU is at stake and the commission is engaged in a diplomatic offensive to limit the impact of any US measures on the bloc, expressing “hope” that no European countersteps will be necessary.

“We are activating all diplomatic channels to address these concerns – from these US measures – with our US counterparts,” he said. “We expect” Europe’s “interests to be addressed by the ongoing, pre-legislative process.”

The Financial Times and Politico reported yesterday that Mr Juncker planned to put retaliation against the US on the agenda of a regular meeting of EU commissioners tomorrow, citing an internal commission note. Both reports said the goal is for the 28-nation bloc to be able to react “within days”.

Separately, the commission is preparing for possible retaliation against the US over a threat by Mr Trump to curb steel imports on national security grounds. In June, the EU trade commissioner Cecilia Malmstrom said she was “extremely worried” about the possibility of such American trade restrictions, saying they could trigger protectionist reactions around the globe.

* Bloomberg