Trade

EU disunity on USs anti-Nord Stream 2 push

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The European Commission doesnt like the Nord Stream 2 gas pipeline. But it also doesnt like the idea of the U.S. imposing sanctions to stop the Russia-backed project.

Thats creating an awkward snarl of conflicting lobbying and policy efforts that undermines action to block U.S. measures — as happened when a U.S. Senate committee this week backed sanctions.

In Brussels, the Commission and the Nord Stream 2 company are at loggerheads over new EU gas rules that the Gazprom-led project is trying to dodge.

In Washington, EU diplomats are lobbying hard to make sure the U.S. wont slap sanctions on companies helping build the pipeline. Those companies are European and sanctions would worsen commercial tensions between the Trump administration and the EU.

But its tough for the EU to push a unified Nord Stream policy because member countries are deeply divided over the project.

“Its not good for the European Union because we should speak with one voice” — Klaus-Dieter Borchardt, deputy director general of the Commissions energy department

The Washington efforts of EU diplomats, who represent the entire bloc, are challenged by countries like Poland lobbying in favor of sanctions, while countries like Germany, a supporter of the project, lobby against.

“We are not happy at all about this because this is exactly what we should not do as the EU,” Klaus-Dieter Borchardt, the deputy director general of the Commissions energy department, told POLITICO. “Its not good for the European Union because we should speak with one voice.”

More Russian gas

Nord Stream 2 is meant to run 1,200 kilometres from Russia to Germany, carrying 55 billion cubic meters of gas a year and doubling the capacity of the existing Nord Stream 1 pipeline.

Russias Gazprom is the sole shareholder of the project but has financial backing from five Western European companies — Austrias OMV, Anglo-Dutch Shell, Frances Engie, and Germanys Uniper and Wintershall. Italys Saipem and Swiss-based Allseas are helping with pipe-laying.

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Gazprom is the sole shareholder on the Nord Stream 2 project | Alexander Nemenov/AFP via Getty Images

Proponents say the project makes economic sense and the EU will need the gas. But its construction has come under fire from the U.S. and many Central and Eastern European countries, worried the pipeline would boost the Kremlins influence and allow Russia to end gas transit via cash-strapped Ukraine.

The U.S. Senate foreign relations committee this week backed a bill that would sanction individuals and companies assisting in the construction of Russia-backed natural gas export pipelines. That would target Nord Stream 2 as well as TurkStream, a separate project bringing gas to Turkey and later the EU.

A similar bill passed the Democrat-led House committee on foreign affairs. Its not yet clear if and when the bills will be brought to the floor of the Senate and the House.

U.S. President Donald Trump has repeatedly slammed Nord Stream 2 and criticized Germany for supporting it, saying in June that hes considering sanctions.

This is one case where the EU is at least partly on board with Trump.

The Commission wasnt able to block the project. However, it did secure a change to the blocs gas rules to make sure Nord Stream 2 would fall under the EUs regulatory umbrella. Thats not enough to stop the pipeline, but complying with the rules would be complicated and expensive, which is why Nord Stream 2 has filed a lawsuit against the Commission at the European Court of Justice. It wants to avoid the rules, while the Commission insists they should apply.

U.S. President Donald Trump has repeatedly criticized Nord Stream 2 | Andrew Spear/Getty Images

But creating problems for Gazprom isnt the same as imposing sanctions against European companies — and thats where Brussels and Washington part ways.

“This is clearly our preferred way of dealing with projects being built on the EU territory rather than unilateral sanctions being imposed by a third country with extra-territorial effect,” an EU official said.

Sanctions would hit EU-U.S. trade relations hard. Tensions are already high following Trumps recent threat to impose tariffs on French wine in retaliation for Frances digital services tax. Crushing U.S. sanctions against Iran and pressure on Europe to cut business contact with Tehran have furtherRead More – Source

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