EU to Reconsider Russia Relations as US Steel Tariffs, Cold Winter Seriously Impact Attitudes

The Russian winter defeated Napoleon and the Nazis. It may defeat EU sanctions too.

Two major recent events have begun to impact EU attitudes towards Russia as the reality of unpredictable weather together with an increasing trade unreliability with the United States has jolted European nations out of the rut of anti-Russian views. The US has damaged its credibility with the EU and its other trade partners, as President Trump, reacting to protect a declining industry (as he did with coal) to “make America great again”, has raised import tariffs for steel and aluminium – in an attempt to bring back jobs and to protect his ratings. Yet, even as he insists that these are necessary measures to protect against what he calls Chinese dumping on US markets, the latest data from the US Department of Commerce actually shows that Canada and the EU are the largest suppliers of steel to the US, and not China.

While China is used as a bogey man for US domestic political and media purposes, this action is seriously damaging the US trade relations with the EU, which has hit back and is now considering imposing tariffs on US imports. Likely to be hit first are an initial US$3.5 billion of goods from the US, including fabrics, American whiskey, motorcycles, and household goods. There are fears this could lead to a trade war. Repercussions are already being felt in Washington, where Gary Cohn, Donald Trump’s top economic adviser, has resigned after losing the White House battle over the tariff debate. It raises questions about the direction of US economic policy now that Cohn – a pro-trade, pro-market former Goldman Sachs banker is no longer heading the National Economic Council.

With the United States a primary mover behind the Western sanctions on Russia, Brussels is running out of friends to do business with. The Russia sanctions have already cost EU businesses an estimated €30 billion, and the recent cold weather across the EU and North America have perversely meant both the United States and numerous European Union members, including the UK going cap in hand to Moscow to request oil and gas supplies. The EU’s imports of Russian gas are now at a record high.

Clearly, this places the EU in a quandary viz-a-viz Russia. It has become the Eurasian State that they love to hate, yet cannot live without. It also brings home to the United States that maybe it, too, cannot live without Russia. While the sanctions are man-made, the weather (global discrepancies aside) is not, and it is interesting to note that in Russian media, there has been little gloating over the fact that both the EU and US are having to deal with Moscow over much needed energy requirements.

It is also interesting to note that the sanctions placed on Russia were imposed by the US, who then had the EU do its bidding. That was considered a disingenuous move by many, firstly as in doing so, the US had little to lose as their trade volumes with Russia were relatively small, while at the same time many of the sanctions seemed aimed at Russia’s energy sector. Shortly after they were imposed, the US began selling gas to the EU on the basis that Russian supplies could not be guaranteed.

The last part of that equation has know been shown to be false, while the EU’s own relationship with the United States is now also under considerable strain. The raising of tariffs on steel and aluminium against the EU is a form of sanctions, an irony that will not be lost on many EU foreign ministers.
Moscow meanwhile will be playing it cool; it has shipped the required supplies without fuss, and is currently enabling 40 percent of EU homes to remain warm this winter.

As Napoleon and then the Nazis found out, the winter can be Russia’s greatest ally. I do not expect the sanctions to be lifted anytime soon, and especially now as we move into spring. But with another year ahead of a Trump administration placing the desire to keep flagging, old technology industries alive at the expense of trade relations with the EU, another cold winter in 2019 and Russia riding to the rescue once again to keep Europe warm may result in a shift towards better relations with Moscow. You can bet that during the course of 2018, development plans between European nations and Russia for a potential relaxing of sanctions will go hand in hand with the provision of future energy supplies – and will be discussed behind closed doors. The Russian winter may, as history has shown us before, once again prove to be the beast from the east that ultimately defeats EU sanctions.

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