[Premium] US Miller Sanctions 'Won't Affect Trade'
US sanctions imposed on Gazprom’s CEO and several Putin allies April 6 are already old news, following a chemical weapon attack April 7 on the Syrian town of Douma, in which at least 70 were reported killed, which was blamed in the West on the Syrian government.
Syria and its key ally Russia have denied a chemicals attack took place and have blamed Israel for a counter-attack on a Syrian air base near Homs April 9 which reportedly killed 14, while US president Donald Trump warned Syria and Russia would “have a big price to pay” for the chemicals attack. The issue is expected to be discussed by the UN Security Council late April 9.
In the maelstrom of events, Gazprom’s trading and investment partners face a judgement call.
US sanctions were not imposed on Gazprom as a corporate entity on April 6, and European and other governments have been even more reluctant to target Gazprom as a company.
One UK-based academic, who himself said he is not a legal expert, told NGW: “As the company is not sanctioned, although Miller will certainly find it more difficult to conduct personal business in US dollars and with US institutions, any companies dealing with Gazprom as a corporate entity should have no problems.”
He added: “The fact that Miller is on the list does mark another step towards Gazprom or some of its projects being specifically sanctioned in future, but at present the fact that it is an individual rather than a corporate sanction makes it rather more symbolic than practical for Gazprom's customers. It certainly increases the tension and makes things more difficult for Miller, but that is all at the moment.”
Two law firms contacted by NGW declined to comment, one admitting it was ‘conflicted.’
One litmus test may be how many western and Japanese firms wish to be seen associating with Gazprom’s Miller at next month’s St Petersburg International Economic Forum (Spief) on May 24-26. The same event in 2017 included well-publicised meetings between the Gazprom CEO and top European, Japanese and other Asian companies – including Shell CEO Ben van Beurden (see banner photo, courtesy of Gazprom). As such, it may be expected that the five western companies co-financing the Nord Stream 2 pipeline project would play a prominent role at this year's Spief.
Miller in recent months too has had face-to-face meetings with CEOs from German engineering firms Siemens and Linde, Italian gas grid Snam, Japanese trading companies, and Shell's integrated gas chief.
Firms may 'think twice'
Stefan Meister, a top Russia/eastern Europe expert at the German Council on Foreign Relations (DGAP), a think tank, told NGW that US sanctioning of Gazprom’s CEO initially will not mean much: “Business will go on and you can talk also on other places with each other. But it is a further step to worsen Russian relations with the West which will have impact on EU's (gas) business with Russia. To do business with Russia becomes more and more sanctioned and challenged. Every company will think twice, if it wants to invest and do business with companies being under sanctions. At the same time, it will worsen EU-US relations, because here is a growing impression, that US is increasingly impacting our business relations with Russia.”
Meister’s analysis seems borne out by the results, released March 1, of a joint Business Climate Survey 2018 by the German-Russian Chamber of Commerce (AHK) together with the German Committee on Eastern European Economic Relations (Ost-Ausschuss, or OA). Both organisations argue against extending US sanctions to German and European firms. Members are from all industries, including the gas sector. Germany is Gazprom's third largest market for gas, in terms of volumes sold.
Only 23% of AHK-OA member companies said they are not affected by sanctions against Russia in their Russia business, with 94% of those surveyed urging a reduction in sanctions. AHK CEO Matthias Schepp argued March 1 that sanctions “are strengthening those in Russia who are looking for an even harder confrontation with the West.”