Earlier this month the United States took another whack at the transatlantic relationship. Only this time, Donald Trump was not the perpetrator; it was the U.S. Congress. The vehicle was the “Countering America’s Adversaries Through Sanctions Act,” a package containing new tools to allow the executive branch to punish Russia for its interference in the 2016 U.S. presidential election. It also restricts the Russia-friendly White House from rolling back existing anti-Russia sanctions — mainly imposed jointly with the European Union — since Russia’s 2014 incursion into Ukraine. In what was arguably Trump’s worst week as president until then (as it also contained the failure of the health bill in the Senate, as well as spasms of personnel turnover in the White House), the Congress served up to the President a big, bipartisan bill, with veto-proof majorities, containing virtually none of the White House’s requested changes. In Washington parlance, the President “got rolled” by Congress, and rolled in a big way.
The White House palace intrigue and the failure of health care notwithstanding, the most breathtaking political drama in Washington in late July might have been watching the legislative branch all but hand the presidential pen to Trump and force him to sign a bill restricting his own authority — which he did away from the cameras, and while vocally objecting. In a characteristically unconventional move, President Trump released a second signing statement (to accompany a more traditional signing statement) mocking Congress for sending him what he considers a lousy bill, declaring that “Congress could not even negotiate a health care bill after seven years of talking.”
Much of the mainstream American political journalism on the sanctions bill (e.g. this piece in the New York Times) has understandably focused on the bill as an expression of a unified legislature out-muscling a chief executive whom they don’t trust to handle Russia. But also tucked into the sanctions law is new authority that pits the United States against European economic interests — and those of Germany in particular. Section 232 of the Act allows the president to sanction any entity that plays a significant role helping Russia construct, modernize, or repair “energy export pipelines.” This provision immediately exposes to punishment — among others — the consortium of EU-based companies working with Russia to build Nord Stream 2, a planned $11 billion pipeline that is scheduled to deliver natural gas from Russia to Germany beginning in 2019, and could make Germany a major E.U. energy hub. Two of the five consortium partners are German-based (Wintershall and Uniper).
The menu of sanctions now at President Trump’s disposal for Nord Stream 2 includes banning an entity from receiving any number of U.S. government approvals, licenses, or contracts, not to mention walling off the entity from financing from a U.S. banking institution. And while the bill explicitly opposes the pipeline for geopolitical reasons (continuing a position held by the Obama Administration), it ups the ante by adding that “the United States government should prioritize the export of United States energy resources in order to create American jobs, help United States allies and partners, and strengthen U.S. foreign policy.”
When the initial version of the bill passed through the U.S. Senate in June, the official reaction from Germany was fiercely critical. German Foreign Minister Sigmar Gabriel stated that using sanctions to threaten the businesses involved with Nord Stream 2 “brings a completely new and very negative quality into the European-American relationship.” Chancellor Angela Merkel’s spokesperson expressed “the same level of concern with the same vehemence.” Germany’s Commerce Minister stated that retaliatory measures could be on the table. The concerns fell into at least two categories: first, lamenting that after three years of coordination between the U.S. and the E.U. on anti-Russia sanctions, the U.S. is now acting unilaterally; and second, pointing out the mixed motives animating the new authority against Russian energy export pipelines — not only to punish Russia but also to give U.S. companies an assist in the European energy market (the timing coincided with the first ever American liquified natural gas shipment to Poland earlier this summer).
By late July the bill had evolved to assuage somewhat the German and European concerns. Importantly, Congress added to the final bill new language requiring any American sanctions on the export pipeline entities to be issued “in coordination with allies of the United States.” This softened language helped lower the temperature in Brussels and Berlin over the provision. European Commission president Jean-Claude Juncker noted that Congress “has committed to only apply sanctions after the country’s allies are consulted,” while also hinting at countermeasures if such coordination does not take place. Press reports about the German response have been more varied (from Spiegel’s take that Berlin had “verbally disarmed” to FAZ’s take that Berlin is still sending warnings to Washington that sanctions are “acceptable under no circumstances”). But regardless, the U.S. Congress did hear and act upon concerns from across the Atlantic.
Now that the dust has settled on the bill, the remaining question is whether President Trump would ever use the new authority. According to one Reuters report, “most White House watchers believe he will not take action against Russia’s energy infrastructure.” A legal analysis of the bill from a prominent Washington law firm agrees that “it appears to be unlikely that the president will impose these sanctions at this time.” Such inaction would certainly coincide with all of Trump’s Russia-friendly actions to date, including his bizarre “thank you” to Vladimir Putin for ejecting hundreds of American diplomats in response to Congress’s enactment of this bill.
But on the other hand, Trump’s explicit “America First” domestic-policy agenda revolves around the creation of American jobs, and he has more than hinted at wanting to wage trade wars with Germany, among other nations. Ultimately, the unembellished “in coordination with” language has no real teeth — after all, what is coordination in the Trump era? A message sent on twitter? Could the E.U. mobilize all 28 member nations to agree to retaliate, including one that is about to exit the bloc and will want to begin its own trade negotiations with America? Even if it could, does the threat of retaliation matter to a president with a protectionist trade agenda? Of course, Trump has thus far signaled that he wants to roll back sanctions against Russia — not impose new ones. However, in such a volatile political environment, starting a trade war with Western Europe, while giving the U.S. energy industry a boost and create American jobs, could be a very tempting offer for this very unpredictable president.