World News

EU must retaliate if hurt by U.S. sanctions on Russia - German business group

BERLIN (Reuters) - Europe must be prepared to respond in kind if the United States’ proposed new sanctions against Russia end up hurting its companies, an influential German industry association said on Thursday.

Economy Minister Brigitte Zypries attends the weekly cabinet meeting at the Chancellery in Berlin, Germany July 19, 2017. REUTERS/Axel Schmidt

U.S. lawmakers reached an agreement on Wednesday paving the way for the U.S. Senate to pass a bill as early as this week to impose the new sanctions on Russia and bar President Donald Trump from easing them without Congress’ approval.

The European Union fears the new U.S. restrictions could be an obstacle to its companies doing business with Russia and threaten the bloc’s energy supply lines, but the 28-country bloc is divided over how to respond.

The head of the German Committee on East European Economic Relations said potential damage to European energy sector companies with business interests in Russia could justify counter-sanctions.

“It’s the last thing we want, but we must keep the option open,” Michael Harms told a news conference in Berlin.

“The sanctions they want against pipeline projects seem designed to boost U.S. energy exports to Europe, create U.S. jobs and strengthen U.S. foreign policy.”

Unlike the United States, whose growing production of shale gas has slashed its reliance on energy imports, much of Central Europe depends on imports of Russian gas through a vast latticework of pipelines.

“Imposing sanctions that hit a third party, namely Europe, and at the same time promoting the American economy with the slogan ‘buy American gas’ - that’s pretty striking,” said Kurt Bock, chief executive of Germans chemicals giant BASF , which drills for gas in Russia.

The EU has imposed its own sanctions against Russia over its role in the Ukraine crisis, and Germany has taken a particularly tough stance towards Moscow.

Last week Reuters reported that Germany was urging Brussels to add four more Russian nationals and companies to its blacklist over Siemens gas turbines delivered to Ukraine’s Crimea region, annexed by Moscow in 2014.

German economy minister Brigitte Zyries complained on Thursday that Washington had abandoned the “common line” it has maintained with Europe over Russia.

But despite the EU sanctions and Europe’s criticism of Moscow on other fronts as well as Ukraine - including allegations that Russian spies are meddling in Western elections - Russia remains a crucial business partner for Germany.

On Thursday, the Committee raised to 20 percent its forecast for growth in German exports to Russia in 2017, compared to 10 percent in its previous forecast.

Reporting By Thomas Escritt and Gernot Heller; Editing by Arno Schuetze and Gareth Jones