Page 4 - FSU OGM Week 26

FSUOGM COMMENTARY FSUOGM

EU mulls response to US sanctions

on Nord Stream 2

The punitive measures may prove ineffectual and undermine relations

between the US and its European allies

EUROPE THE US risks creating a substantial rift with sanctions, and German business lobbies have
Germany and its other key allies in Europe by urged funds to be made available to affected
WHAT: imposing extra sanctions Russia’s Nord Stream companies.
A bill is making its way 2 pipeline project. The new sanctions would need to be
through US Congress US senators introduced a bill in early June approved by both chambers of US Congress and
that would impose extra which made its way to the House of Represent- then signed into law by US President Donald
sanctions on the Nord atives last week. It calls for broadened sanctions Trump. US officials have already conceded that
Stream 2 project. against any companies involved in helping Rus- Washington would struggle to thwart the project
sia lay Nord Stream 2. Only 6% of the pipeline, at such a late stage of development.
WHY: which makes landfall in Germany, is left to com- As stated, Russia already has its own pipe-
The US says the Russian plete. But work was halted after a first round laying vessels, Akademik Cherskiy and For-
pipeline is a threat to EU of sanctions forced Swiss contractor Allseas to tuna, stationed nearby. The former had to
energy security and will withdraw from the project in December last year. travel for months from the Russian Far East
be used by Moscow as a Russia now has two of its own pipelaying vessels and around Asia and Africa to get to European
political tool. on standby off the German port of Mukran, waters. It is unclear whether the vessels will
ready to finish the job. need any non-Russian assistance to finish the
WHAT NEXT: The European Commission is preparing pipeline.
At such a late stage, the measures to protect the EU from the sanctions, Gazprom recently requested a permit from
sanctions may not affect its foreign policy chief Josep Borrell has said, regulators in Denmark to anchor a pipelayer
Nord Stream 2, although warning that Washington’s measures could to complete Nord Stream 2, “as a precaution-
the project faces other break international law. ary measure.” It is understood that Cherskiy is
challenges. “The EU’s position on US sanctions against equipped with the dynamic positioning system
European companies that carry out legitimate (DPS) required to work in Danish waters, where
and lawful activities under European law is une- the remainder of Nord Stream 2 will be built, but
quivocal,” he told Reuters. “They are unaccept- it lacks a crane big enough for its 48-inch (1,220-
able and contrary to international law, and the mm) pipes. Fortuna, on the other hand, does not
Union firmly opposes them. have DPS but has a big enough crane.
The EC is “preparing the group for the adop- NewsBase understands that Gazprom’s plan
tion of an enhanced sanctions mechanism that is to couple the two ships, but there is a risk that
will improve Europe’s resilience to the effects Cherskiy’s DPS will not work if this is done. They
of extra-territorial sanctions imposed by third would therefore have to be anchored, requiring
countries,” he said, without saying what form an additional permit from Denmark.
this mechanism would take. Obtaining this permit could represent a
Borrell went on to say that by hurting the significant hurdle, given how long it took for
EU’s economic interests, US sanctions would Denmark to issue previous permits last year. US
undermine the two parties’ unified front against pressure was reported to have been behind the
Russian activities in Ukraine. The EU and US delay.
began imposing sanctions on Russia together Then again, as Gazprom has suggested,
after Moscow’s annexation of Ukraine’s Crimea anchoring may only be a back-up option if it is
peninsula in early 2014. unable to lay the pipeline using Cherskiy’s DPS.
Nord Stream 2, which would deliver an extra Despite US claims, Russia’s ability to use
55bn cubic metres per year of gas to Gazprom’s Nord Stream 2 as a tool for political influence
customers in Europe, enjoys strong support in in Europe is somewhat limited. Europe has
Berlin. worked hard over the last decade to build up its
“New sanctions would constitute a serious LNG import capacity and expand cross-border
interference in European energy security and EU connections. Furthermore, a recent EU antitrust
sovereignty,” Germany’s foreign minister said in ruling has restricted Gazprom’s ability to over-
a statement earlier this month. charge for its gas. What this means is that Russia
Germany’s parliament is due to hold a hear- has far less leverage over Europe as its top gas
ing on July 1 on a potential response to the US supplier than it once did. ™

P4 www. NEWSBASE .com Week 26 01•July•2020