Vice President Joe Biden on Friday announced a broad range of sanctions against Russia over the crisis in Ukraine, aimed at freezing investment there and boosting American support for Ukraine’s embattled government.
The plan, which would affect some of the world’s largest oil and gas companies, follows the earlier sanctioned actions of President Trump’s administration. It represents an unusual escalation in US efforts to get Europe to shoulder more of the costs of the intervention in Ukraine, where fighting between Russia-backed separatists and government forces has cost more than 10,000 lives since 2014.
The sanctions on Russia’s state-owned gas monopoly OAO Gazprom would freeze the company’s ability to participate in construction of the Nord Stream 2 pipeline in which the US plays no role. They also would block the transfer of any natural gas from Russia via Nord Stream 2 to other EU nations. Other sanctions include freezing any funds Washington believes are coming into Russia through sanctioned entities; canceling senior meetings between energy officials and their Russian counterparts; cutting funds going to the International Monetary Fund and the World Bank; and freezing most high-ranking government salaries in the country.
In addition, energy companies with major stakes in projects aimed at exporting natural gas to Europe would be targeted with a freeze on their involvement in Russia-based investments, as well as termination of or reductions in their investments in their Russian venture projects. By 2025, US companies such as Chevron, ConocoPhillips, Exxon Mobil, and BP would be prohibited from transferring any revenue from those venture projects to their own Russian entities.
Also targeted would be the Gazprom holding company. Most Gazprom subsidiaries would be barred from receiving any new loans, loan guarantees, investments, grants, contracts, or other assistance from the US government or any US-affiliated financial institutions. In October 2017, the Trump administration took steps against Gazprom in general, but not as severely as Friday’s plan.
“We have come here today with a message: Europe has reached a pivotal moment. As America’s oldest ally, our European partners stand ready to stand with Ukraine and deliver on their commitments,” Biden said at the State Department, where the sanctioning was announced. “Europe has no interest in further escalation. Europe can withstand further pressure. And Europe’s economy is too important for that to happen. And we can build on our relationship with Russia to make better choices.”
EU foreign ministers meet today to discuss the sanctions plan.
The sanctions could be repealed by Congress under a process known as the “corking process.” Pence, if elected president in 2020, could override Obama’s authority over the plan, which could weaken European resolve. But any attempt to do so would likely face fierce opposition from Democrats and domestic gas producers, said James Gallo, the president of the industry lobby American Gas Association.
“The crude oil and gas industry will fight to the death to make sure these sanctions do not ever materialize,” Gallo said.