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September 9, 2019

Economic Sanctions On Russian Energy May Have “Unintended Consequences”

By Rainey Center

Robert Dillon, associate fellow for energy security, was recently published in Bloomberg Environment discussing the United State’s sanctions of Russia’s Nord Stream 2 pipeline.

Dillon believes that blocking Russia’s energy sector may have unintended consequences. He said, “While this effort may be a potent economic weapon against the Kremlin, it may also have the unintended consequence of drawing Russia closer to China.”

A major issue with these sanctions is our relationship with European Union member countries. Congress is overlooking that “the Russian-EU relationship is much more mutually dependent when it comes to energy than Washington appreciates,” according to Dillon.

Before leaving town for the August recess, the Senate Foreign Relations Committee advanced legislation by a sizable 20-2 vote that would penalize European companies involved in the construction of Nord Stream 2.

While the bill is far from becoming law, the lopsided vote illustrates the bipartisan anti-Russian sentiment in Congress—even if it targets the economies and companies of long-time allies in the process.

Another problem with imposing sanctions on Russia is that is doesn’t actually prevent the country from advancing their needs, it just forces them to look to other countries for business partners. In fact, the most disappointing outcome of these sanctions may be a closer alliance between China and Russia.

The legacy of U.S. sanctions against Russia may well turn out to be a strengthened Russia-China relationship with long-lasting repercussions for American hegemony around the world.

While not inevitable—the Kremlin remains wary of Beijing—such an outcome would be especially disappointing given the historical efficacy of sanctions. Past U.S. attempts to interfere in Russian-E.U. trade failed to deter Kremlin adventurism, nor did it dissuade members of the European market from pursuing their economic interests.

While sanctions and a bipartisan anti-Russian sentiment unites both houses of Congress, Dillon says that lawmakers should be wary of continuing to attempt to interfere with Russian energy innovation.

Read the article here: U.S. Opposition to Nord Stream 2 May Have Unintended Consequences

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