New Russia sanctions risk driving a wedge between US and allies, Richard Connolly says
Some European countries see move as a naked economic power grab by US, he says
Editor’s Note: Richard Connolly is an associate fellow of the Russia and Eurasia program at Chatham House, a foreign affairs think tank based in London. The opinions in this article belong to the author.
Since the annexation of Crimea in March 2014 and the subsequent involvement of Russia in the conflict in eastern Ukraine, Western powers – led by the United States and European Union – have been remarkably firm in maintaining a united front when it came to the hard business of dealing with Russia.
This was nowhere more notable than in the West’s use of economic statecraft as the primary tool in exerting pressure on Russia to change its policy concerning Ukraine.
The sanctions regime that gradually came into effect targeted strategic sectors of the Russian economy, including energy, defense and finance. But as well as hitting Russian entities, Western firms also suffered.
American and European manufacturing and energy giants lost a lot of money. The sale of French warships and German machinery was halted. Billions of dollars’ worth of investments by energy giants such as ExxonMobil, Total and Shell were postponed. Businesses in countries with historically close commercial ties with Russia – such as Italy, Hungary and Bulgaria – were hit especially hard.
But the considerable economic cost paid by Western firms made the political cohesion on sanctions that has held until today all the more impressive. Despite the economic pain, the political gain of maintaining a unified front was considered to be more important. Central to this cohesion sticking was a clear effort at coordination between Washington and Brussels.
But this unity could soon come to an end.
The US Congress – in its desire to be seen to do something about alleged Russian interference in the American election as well as its desire to punish Russia for its activities in Syria and beyond – is doing something that Russia has failed to do to the West since March 2014.
By pushing through a new round of sanctions that will expand on those that already exist against Russia, US legislators may be inadvertently giving the Kremlin something it has hoped would happen ever since the Crimea crisis began: driving a wedge between Europe and the United States.
Officials in several influential European countries feel that this latest round of sanctions is moving well beyond their comfort zone. Instead of targeting sanctions to apply pressure on Russia to reduce its interference in Ukraine, the United States is now moving toward using them as the primary instrument for expressing its dissatisfaction with all aspects of Russian domestic and foreign policy. Some EU officials see this as too blunt an instrument.
Far from being targeted and surgical – as they were initially packaged in 2014 – these sanctions are far-reaching in scope, targeting mining and railway enterprises as well as Russian energy projects beyond its own borders.
The proposed sanctions are also broad in their objectives: US legislators are, in the same bill, seeking to influence the transfer of arms to Syria, the sale of Russian energy and how the privatization of Russian state-owned enterprises takes place.
Seeking to target Russian corruption and foreign policy with the same policy instrument may appear attractive in Washington, but some influential voices in key European countries – most notably Germany – see the new bill as a naked economic power grab.
The stated desire to target the proposed Nord Stream 2 gas pipeline, for instance, is seen by some European officials as an attempt to replace cheap Russian gas with more expensive US liquefied natural gas.
Not only would this disrupt existing gas relationships between Russia and European countries such as Austria, Germany and Italy, but it would also result in European industrial firms paying a higher price for energy than their US competitors. EU officials are already hinting at retaliation against the United States if their interests are threatened.
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The view from Moscow – despite the shrill reaction of lawmakers and foreign policy officials – is likely to be relaxed. While the sanctions imposed in 2014 caused some disruption to the Russian economy, the overall cost was modest, and Russia adjusted to the new economic reality. The proposed new sanctions are, if implemented in their current form, bound to cause further disruption. But this would be more than compensated for by the creation of the first real trans-Atlantic split since 2014.
In the broader geopolitical conflict between Russia and the West, this would surely be the most significant consequence of Congress’ actions.