US Sanctions bill: a further lurch towards war with Russia – and towards trade war against NATO allies

sanctionsThe latest anti-Russian sanctions bill to be passed by the US Congress and Senate, supposedly in response to Moscow’s (non-existent) cyberattacks during the US presidential election, in practice has two functions. On one side it signals a virtual declaration of trade war against America’s European ‘allies’ who will suffer the consequences of sanctions targeting all who do business with Russia. This trade-war aspect of the bill chimes with Trump’s ‘America First’ bluster. On the other side, by attacking Russia’s economy on so many fronts, it marks an acceleration in the US drive to war against Russia. This side of the bill goes against the grain of Trump’s Russia policy, which, in spite of repeated acts of US aggression in Syria, seeks to keep alive the option of a pragmatic ‘deal’ with Moscow. By forbidding Trump to water down or suspend any sanctions without the express permission of Congress (whose brainchild it is), this bill targets Trump at least as much as it does Russia.

Moscow’s measured response to date has been to order the US to scale down its diplomatic presence in Russia to the same level as Russia’s presence in America. Trump’s response was less measured. After gritting his teeth and signing into law the offending bill, he tweeted that “Our relationship with Russia is at an all-time and very dangerous low. You can thank Congress, the same people that can’t even give us Hcare!” (Steven Erlanger and Neil MacFarquhar, ‘EU is uneasy, and divided about US sanctions on Russia’, New York Times, 25 July 2017).

Both the trade-war aspect of the bill and the Russophobe aspect are primarily dictated, not by who is sitting in the Oval Office or scheming on Capitol Hill, but by the capitalist overproduction crisis, which, on one side, imposes sharpening inter-imperialist competition in the battle for markets and, on the other, impels imperialism into conflict with Russia and China. To win a further temporary breathing space from the crisis of monopoly capitalism, imperialism must seek to overcome the steadfast refusal of the powerful, industrially advanced and independent countries of Russia and China to allow their enormous markets to suffer absorption and neo-colonisation by US-anchored monopoly capital – the ultimate ‘colour revolution’.

The spat between the White House and Congress, whilst good knockabout stuff, actually points to the deep and unavoidable contradictions besetting US imperialism, caught between the need to mobilise Western Europe in a common front against Russia and the no less imperative need to win the trade war against those same NATO allies. In pursuing these two contradictory goals, US imperialism could well find itself achieving neither. Dumping Trump will not get America out of this double bind.

Juncker “takes up arms

In response to the raw ‘America first’ bluster of Donald Trump, the president of the European Commission, Jean-Claude Juncker, asserted that “America first cannot mean that Europe’s interests come last”, adding that the commission “concluded today that if our concerns are not taken into account sufficiently we stand ready to act appropriately within a matter of days” (‘”America First doesn’t mean Europe last” – EU lashes out at US sanctions against Russia’, RT, 26 July 2017).

What is bothering Juncker are the clauses in the new sanctions bill which threaten to punish third parties who, through simply conducting normal commercial relations with Russia, fall foul of the unilateral sanctions regime. What the US Congress presents as retaliation for Russia’s (fictitious) meddling in the US presidential elections in fact turns out to be a particularly blunt weapon in America’s trade war. Behind all the ballyhoo about protecting America’s sacred democracy from Russian subversion lies something more prosaic: the protection of America’s right to dominate the world’s markets at the expense of all rivals, not excluding its NATO allies.

The new sanctions, which also target the DPRK and Iran, cover a wide range of Russian economic activity, notably in the fields of defence, mining, shipping, steel and energy. The bill’s punitive tariffs on steel imports would also affect over twelve countries, some of them in Europe. Juncker was moved to the startling announcement at the recent G-20 meeting that “We are prepared to take up arms if need be” in response to this friendly fire. In particular, member states are discussing the possibility of implementing a ‘blocking statute’ to limit the enforcement of extraterritorial US laws in Europe, as well as taking certain “WTO-compliant retail-tory measures” (op.cit. Erlanger, MacFarquhar). The knives are out in Brussels.

Governmental statements from across western Europe have been in a similar vein. Martin Schaefer, speaking for the German foreign ministry, recently told a press conference that “This concerns not only German industry … Sanctions against Russia should not become a tool of industrial policy [pursued] in the US interests,” adding that “In our opinion, it is not in the Americans’ right to judge or stipulate which way European companies may engage in cooperation with any third parties – particularly, with Russian energy companies.” On the same occasion Ulrike Demmer, another German government spokesman, insisted that “European industry should not become the target of US sanctions.” In a statement from the foreign ministry, the French government asserted that the proposed sanctions “contradict international law” because of their “extraterritorial reach”, allowing “measures against European natural or juridical persons for situations that have no connection with the United States.” And in a bizarre twist, even US corporations like ExxonMobil, General Electric, Boeing and Visa have been lobbying against the bill, finding that ‘America first’ economic nationalism offers no protection for US-based multinationals caught in the cross-fire (op.cit. America First).

Nord Stream 2

Nowhere is the trade war agenda more visible than in the furore over the proposed construction of the Nord Stream 2 (NS2) pipeline. The plan is for NS2 to pipe gas from Russia to Germany, just like the earlier Nord Stream 1, only in hugely increased volumes. Traditionally, the main pipeline from Russia to Europe went through neighbouring Ukraine. This was fine so long as Russia and Ukraine remained good neighbours within the USSR, but as relations subsequently deteriorated, Ukraine took to using its transit status as a lever to apply pressure on Moscow, threatening to meddle with Europe’s supply unless Russia agreed to commercial terms imposed under duress. This situation, predictably turned upside down and presented in the imperialist media as “Russia playing politics and blackmailing Europe”, degenerated into farce with the fascist coup of 2014 and the arrival of the western-backed ultra-nationalist junta, now headed by Petro Poroshenko. After the junta ran up enormous gas bills, Moscow declined to supply any more on tick. Russia is now seeking repayment of the debts through international courts, whilst Kiev has forsworn Russian gas in favour of German gas – which is to say, Russian gas bought by Germany then resold to Ukraine with a handsome mark-up.

Given this vexatious history, it is understandable that Gazprom, the Russian state-owned energy giant which owns the NS2 project, should favour a route which by-passes Ukraine (and anywhere else susceptible to threats or bribes from imperialism). NS2 will simply suck up the gas in Russia, pipe it all along the Baltic seabed and deliver it straight to Russia’s biggest European trade partner, Germany. This is great news for Germany and France, but less so for the US. A Ukraine which is no longer a key link in Europe’s energy chain no longer serves as such a potent geopolitical tool against Russia. Equally, a western Europe whose fuel security is no longer dependent on the vagaries of a tinpot junta in Kiev and whose energy needs are amply satisfied elsewhere is less likely to prove an eager market for America’s own more expensive energy exports. Why pay through the nose for US shale-oil when NS2 can deliver competitively priced energy to your doorstep?

The EU is in danger of tearing itself in half over the new anti-Russia sanctions, particularly as they impact on NS2 plans. Whilst Gazprom owns the NS2 project, half of the funding is coming from a consortium of five European companies: Engie, OMV, Royal Dutch Shell, Uniper and Wintershall. As each company is committed to contribute about 950 million Euros to the project, the possibility of its being scuttled by third party sanctions enrages not only the companies concerned but also their respective governments.

At the same time as Juncker, president of the European Commission, straps on the armour of a defender of European imperialism from US sabotage, Donald Tusk, president of the European Council, is himself hell-bent on stopping NS2, resorting to the stalest cold war nonsense in his letter of protest to the Commission. He claims that letting the pipe go through would run ‘opposite’ to EU efforts to bolster energy security, allowing Russia “to close down the transit route through Ukraine, leaving our partners at Russia’s mercy” (Rochelle Toplensky, ‘Tusk adds voice to calls for greater EU control over Nord Stream 2’, Financial Times, 5 June 2017).

But whilst some Eastern European countries have been sufficiently browbeaten by the US to fall for this nonsense, it will no longer wash with key imperialist players in Western Europe. Gone is the day when the likes of France and Germany could be persuaded to subordinate their national interests to those of America and dutifully unite as the ‘free world’ against the ‘Russian bear’. After suffering years of economic tit-for-tat blowback from previous US-driven anti-Russian sanctions, renewed appeals for unity against Russia’s (non-existent) ‘aggression’ are getting an increasingly frosty welcome.

Coals to Newcastle

Meanwhile back in the Ukraine, the Kiev junta is finding a novel solution to its own energy security crisis. Ever since the junta imposed a road and rail blockade of the Donetsk and Lugansk People’s Republics, all coal supplies from the coal-rich Donbass have ground to a halt. In particular, supplies of anthracite crucial to Ukraine’s steel production dried up, massively disrupting the steel industry. Kiev refused to ask Russia to make good the shortfall, then discovered that South African coal was way over budget. But then Uncle Sam came to the rescue, promising to supply Ukraine’s fuel requirements. US Energy Secretary Rick Perry was moved to say that US coal exports to the Ukraine “will have more to do with keeping our allies free and building their confidence in us than anything I’ve seen” (‘US wants to sell coal to coal-rich Ukraine’, RT, 30 June 2017). However these benevolent sentiments appeared in a somewhat different light when figures released by the US Energy Information Administration revealed that the US almost tripled the price of coal shipped to the Ukraine in the first quarter of the year when compared to the same period in 2016.

Europe cannot forever be counted on to help the IMF pay the rent on America’s dirty war in the Ukraine, least of all when Trump is simultaneously bragging about the killing he is making on his coal exports to Ukraine (truly a case of ‘coals to Newcastle’). At the same time that the US is unleashing its new sanctions, Russia is asking the World Trade Organisation to hold Ukraine itself to account for its actions, claiming that they violate Ukraine’s obligations towards the WTO. Imperialists in Europe are starting to question what sense it can make to go on paying for America’s wars – not least her trade-wars, whose biggest victims as often as not prove to be the United States’ own NATO ‘allies’ Whilst Russia responds to sanctions by diversifying its economy away from reliance on energy exports and deepening economic ties with China, Germany has to suffer ambush from America (and its fifth column within the EU) over the simple matter of running in a pipeline from its Eurasian neighbour. As the inter-imperialist contradiction sharpens, France and Germany will be obliged to look to their own national interests.