Czech Republic as a victim of us sanctions against Russia

The government can use sanctions to conduct trade policy and their assistance to support private firms in the fight against competitors. It is this intention may be hiding behind recent us sanctions against Russia.

These sanctions are extraterritorial, that is, affect not only Russia, but also firms from “third countries” that trade with Russia. To suffer from these sanctions can and Czech Republic.

Gas under the Baltic sea

The us Congress approved, and Donald trump have signed a new package of sanctions against Russia. Sanctions law (Countering America’s Adversaries Through Sanctions Act) covering key sectors of the Russian economy, primarily energy. This is a response to Russian attempts to influence American elections.

As for the Czech Republic, the most important for us that section of the law that allows the us President to punish firms who cooperate with the Russian Gazprom in the framework of the project “Northern stream — 2”.

Its track is laid in parallel with the already existing gas pipeline “Nord stream — 1” at the bottom of the Baltic sea. The gas in this pipeline will come from the Leningrad region and delivered to the land in the district of the German city of Greifswald.

The new pipeline twice will increase volumes of gas delivered from Russia to Europe under the Baltic sea. The aim of the project is to bypass Ukraine, thereby increasing the security of regular supply of gas, that is, in other words, to increase the energy security of Europe.

Now a significant part of Russian gas supplied to Europe through Ukraine, and disputes over the prices of energy and payments between Moscow and Kiev have repeatedly led to the suspension of supplies.

Hands off Russia

The pipeline is scheduled to open in late 2019. Its length is 1,225 kilometers, and the annual volume of incoming gas on it will reach 55 billion cubic meters. One half of the cost of the project took over Gazprom, which has the largest gas reserves in the world, and the other half will pay for the Western consortium of private companies: Engie, ÖMV, Uniper and Wintershall.

But now these companies can suffer from us sanctions. May, but need not.

The law stipulates two types of sanctions: those that are already provided by law, and those who enter the law entitles the government (President). The government (President) can enter, but can not enter.

The second category of sanctions applicable to companies that invest in gas and oil pipelines on Russian territory or in energy networks, which will lead from Russia to other countries, that is, including the project “Northern stream-2”. According to the law, detention could also be those firms who build these objects, or only operate and repair.

Czech Republic will lose income?

Czech companies do not invest in the planned pipeline. Nevertheless, the sanctions — the U.S. government if they were to impose — could hurt the Czech Republic.

Sanctions against investors likely would have forced many companies to abandon the project, because otherwise they could block access to the U.S. market. The construction of the pipeline, thus, would have been under question, and this may affect the regularity of supply of gas in case of Russian-Ukrainian differences.

In addition, the Czech Republic may lose the chance that in the future will become an important energy crossroads, through which gas will be supplied not only from East to West, but, most importantly, from North to South.

The growth of gas supplies would, first of all, the company Net4Gas, which has a monopoly on gas transportation across the Czech Republic. The firm, which stands for the consortium led by German Fund Allianz insurance company, was supposed to be large transit fees amounting to several billion crowns.

The state would have received 19% of them. In addition, the Czech Republic could do the investment in new gas storage facilities and new pipelines.

All this may prevent the sanctions against a gas pipeline under the Baltic sea.

As a clever woman

The project “Northern stream” number two most of all defends Germany. And it is clear. After the Germans shut down nuclear power plants, gas is the basic energy source in the transition to renewable energy. And this energy can become cheaper for the Germans by 40%.

Prices fell not only for Germans but also for residents of other Western European countries, which no longer would have to pay fees for transporting gas through Ukraine, Slovakia or Poland. These three countries are the most ardent opponents of the planned gas pipeline, in fact, russisa “Nord stream — 2”, they will lose transit fees.

In the debate around Nord stream Czech Republic took a two-pronged approach, supporting both the Germans and the Visegrad side. The Prime Minister of the Czech Republic opposed the expansion of the “Nord stream — 2”. On TV channel ČT Bohuslav Sobotka complained: “the Company agreed to reduce the strategic importance of Ukraine and will reduce revenues to the Ukrainian budget from the transit of gas, and will bypass Slovakia”.

But the Czech government, which is headed by Sobotka, still not joined the protest of the countries of Central and Eastern Europe against the expansion of the “Nord stream”, initiated by the Ministry of economy of the Slovak Republic.

So the Czechs are on national traditions and move forward as an intelligent peasant of the tale, neither on foot nor on a cart. Everyone can make their choice.

And what of Captain America?

Key question: how to go blonde Captain America? Will spin if trump nuts around the gas pipeline “Nord stream”?

Who knows. On the one hand, the President is not a supporter of anti-Russian sanctions. He called them “harmful”. He signed the sanctions law because he could not afford to defend Russia at a time when members of his team suspected of contacts with the Russian government. Trump could not do otherwise because Congress approved sanctions almost unanimously, and thus, easily would overcome his veto.

By the way, trump is not required to apply the sanctions that the law “optional.”

On the other hand, the U.S. President is still interested in the fact that Europeans bought American shale gas. And Russian gas is a serious competitor. It is cheaper, and the new pipeline would only increase the gap in prices.

In addition, the “sabotage” of the “Nord stream — 2” trump can also push the desire to punish Germany to trade with America shows a big surplus, that is, in other words, bypass the USA in this area.

The Union of independent States

The Americans warn Europe from dependence on Russian gas. They are supported by mostly poles. “Nord stream makes us a Union of dependent States by Russia,” — said at a press conference by the press Secretary of the Polish government Rafal Bochenek.

Some truth in this. Is it possible to allow a high degree of dependence on supplies of strategic energy resources from countries that isn’t an ally?

Many might remember the Champions League is Gazprom with blazing blue fire music piano concert by Tchaikovsky. The advertising slogan “With us soccer is brighter” not such an exaggeration. You could even say that today and Europe with Gazprom brighter.

This giant increasing its share of the European gas market. If in 2012 it was 25%, now — already more than a third.

With Gazprom forever?

Europe does not trust Russia, in particular, due to the Russian actions in Ukraine. However, the supply of oil and gas Russia is a reliable partner.

The reason is obvious: Russia depends on gas exports to Europe just as Europe imports from Russia. If the proceeds from the sale of gas will stop Russia is affected.

If the Russians wanted to use gas to blackmail Europe is already faced with this. But it can easily shift to supplies from other regions. Over the last 20 years European countries have built gas pipelines and storage. Today the old continent is shrouded in pipelines which pervades it inside and out. Were built or are presently under construction terminals for LNG transported by tankers.

If the Russians had lost its reputation as a solid trading partner, it is unlikely that they would be able to get back on the gas market of Europe. In addition, if Russia permanently suspended deliveries, putting political conditions for their resumption, or significantly increased rates, it thus would open the American gas way to Europe. And that’s the last thing I would like Russian.