EU Pushes Back Against US Sanctions on Russia

Trump's new sanctions cut off Europeans from their main source of aluminium

The US has very little exposure to the Russian market, but many leading European companies are heavily invested there or have significant trade with Russia. Russia’s agricultural counter-sanctions are already estimated to have cost European food producers up to €100bn in lost sales.

A Europe-wide diplomatic push is under way to persuade the Trump administration to ease US sanctions targeting Russia, as fears mount that the restrictions are so severe they risk hitting manufacturing activity across the continent.

Paris, which is marshalling the efforts after sanctions on Russian metals companies caused aluminium prices to soar, is pushing allies including Berlin, London and Rome to make a joint representation in Washington.

The French-led initiative underscores the widening concern in Europe about the consequences that sanctions could have on key EU industries from cars to aerospace.

A French official warned that the sanctions, which have crippled Russian aluminium producer Rusal, would have a “direct and major impact on the provisioning of key products” and that a number of industrial plants in Europe were threatened with closure.

“They are not the kind which can be reopened overnight. So a solution is needed, and fast,” the official said. “Constructive engagement with the US is taking place.”

The push comes ahead of separate visits to Washington next week by both Angela Merkel, German chancellor, and President Emmanuel Macron of France. They are due to meet President Donald Trump as part of broader diplomatic efforts to soothe transatlantic relations, already strained by tension over planned US tariffs on steel and aluminium.

Unlike previous US sanctions against Russia, introduced in response to Moscow’s interference in Ukraine in 2014, the new penalties — contained in the Countering America’s Adversaries Through Sanctions Act — in effect bar Europeans from doing business with targeted companies and their oligarch owners.

Rusal is the world’s largest producer of aluminium outside China and most of its output is exported, leading prices to jump by as much as 30 per cent in the past fortnight. It is also a major supplier of alumina, the refined white powder used by smelters to make the metal, where prices have hit record levels this week.

From a giant Rusal alumina factory outside Limerick in Ireland, the company supplied the majority of Europe’s leading aluminium producers. The plant is now under threat.

Metal industry executives said that if they could not secure alumina supplies they would be forced to curtail production, a move that would quickly have a knock-on effect for large consumers of the metal such Airbus, BMW and Volkswagen.

German business leaders have also been raising their concerns with government officials, said people familiar with the matter, with a gathering held Thursday at the Berlin offices of the German committee on eastern European Economic Relations, an influential lobby group.

“This affects the whole production chain, all the way to car producers and the aerospace industry,” said one person briefed on the concerns raised at the talks.

A big German metal industry lobby, WVMetalle, warned this week that the sanctions would “result in significant shifts in the market in Germany which could extend through the whole supply chain”.

“There is a threat of supply bottlenecks in raw aluminium and aluminium oxide, and of price increases,” it said, demanding “a rapid political solution and exemptions for European importers”.

Ms Merkel’s spokesman said the German government, “at all working levels”, would “point out where the interests of German companies have been affected and make it clear where there are concerns and where we see undesirable consequences”.

French officials said the US’s commercial relationship with Europe would be a key topic when Mr Macron visited Washington and that he would address the US’s planned steel and aluminium tariffs during his visit with Mr Trump.

Source: Financial Times

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