Hidden Targets of the New US anti-Russian Sanctions

Not the last of them – Germany’s economic growth and political ambitions undermine

It is obviously that new sanctions against Russia will be adopted soon, and most experts believe that the American establishment pursues primarily two groups of objectives:

-political – to punish recalcitrant Russia, which questioned the right of Washington to extend American understanding of freedom, human rights, and democracy all over the world, worsen financial position of wide layers of the Russian population, stimulate protest moods in Russian society in the hope to change the current regime and to eliminate from the political scene a Russian leader;

-economic – to displace our country from the European gas market in order to take its place and reduce the trade deficit by increasing exports of energy products.

There are also some hidden targets of the new US anti-Russian sanctions. Not the last of them – undermine of Germany’s economic growth and political ambitions, which became especially noticeable against the background of progressive weakness of the U.S. economy.

Globalization for the United States has resulted in a growing atrophy of the industry, deindustrialization of many states, and the growing of financial imbalances. Germany, unlike the USA, which have a chronic trade deficit (502 billion dollars in 2016), the balance of payments on current account (469 billion dollars), budget ( 4.4 % of GDP), has been maintaining surpluses for many years (respectively 295 billion dollars, 294,3 billion dollars, 0.8 % of GDP).

Structure of mutual trade shows the superiority of the German industry, as well as the direction of investment flows. Germany’s direct production investment to the United States in 2016 (255,5 billion dollars) is higher than the U.S. investments in Germany (108,1 billion dollars), and the turnover of German affiliates in the United States (466,4 billion dollars) is higher than the turnover of subsidiaries of the U.S. companies in Germany(365,5 billion dollars).

The growing economic superiority of Germany is the basis of obvious controversies between Trump and Merkel, which are eroding the so-called transatlantic solidarity. D. Trump’s statement at the NATO summit that Germany is not fulfilling its financial obligations to the Alliance, owes him “a huge sum of money,” his requirement to increase defense spending to 2 % of GDP, withdrawal from the Paris Climate agreement, debate about the principles of free trade and protectionism – here is a partial list of controversies between Washington and Berlin. Mass media widely quoted the words of A. Merkel that Europe can no longer rely on the United States and it should “take its destiny in its own hands,” although A. Merkel denies these statements.

D. Trump sharply criticizes Germany for “aggressive” trade policies, a huge surplus in bilateral trade, which in 2016 amounted to 67 billion dollars, unfair methods of competition, deliberate undervaluation of the euro. He openly threatens to impose prohibitive duties on the import of German cars and steel.

But protectionism is not the only weapon of the United States in the fight against the growing German power. One of the competitive advantages of the American industry is the cheap energy. The most important reason of prolonged government ban on oil and gas exports from the United States was not only the intention to ensure energy security, but also the desire to maintain low prices for hydrocarbon fuels and electricity in the country. Hydrocarbons’ low cost in the United States gives substantial competitive advantages for energy-intensive sectors of American industry: petrochemicals, nonferrous and ferrous metallurgy.

D. Trump has set the goal of using the “shale revolution” to transform the USA into “a great energy empire” and the leading exporter of hydrocarbons. Gas production over the past 10 years has increased by 40 %, and the United States in 2013 came from third to first place in the world, overtaking Russia. The displacement of cheap Russian gas from the German market (in 2016, Gazprom supplied Germany with almost 50 billion cubic meters) and replacement it with expensive American LNG would lead to the imbalance reduction in the U.S. trade with Germany and the loss of competitiveness in German industry.

In addition, gradually achieving a dominant position in the oil and gas market in Germany will strengthen the ability of Americans to control foreign and defense policy of the “best friend.” There is no doubt that if it is necessary, Washington will not hesitate to reduce or completely stop the export of gas and oil in this country. The energy boom will not only strengthen the American economy, but will give Washington new tools for conducting foreign policy. The United States will gain a lever that can be used not only against Russia or Germany, but also against other “unfriendly” regimes, in particular Iran and Venezuela (sanctions against these countries are developing now).

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