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Merkel pushes business leaders on free-trade pact

May 2, 2014

WASHINGTON (AP) — German Chancellor Angela Merkel said Friday that it was critical to complete a free-trade agreement deal between the United States and Europe, urging the American business community to realize that the agreement could open the way for shipping abundant American natural gas supplies to Europe.

After a meeting President Barack Obama that focused on the crisis in Ukraine, Merkel told the U.S. Chamber of Commerce that most of the European Union was eager to broaden their energy sources, one third of which come from Russia. A majority of that supply passes through Ukraine. Russia has in the past cut supplies reaching Europe when it shutdown pipeline flows in disputes with Ukraine over payment.

“On energy,” she said of the Ukraine crisis, “could have a very positive effect” on free-trade negotiations. Current U.S. regulations prohibit oil and gas exports to countries with which the U.S. does not have free-trade deals. And the U.S. has just a few seaport terminals that are capable of liquefying natural gas to make it possible to ship in tanker vessels.

“It’s not for the first time we are working on energy security in the context of Ukraine,” she said. She said Europeans were looking into reversing the flow in the pipelines coming through Ukraine to allow European countries with sufficient supplies to send gas to countries in need. She also said Europeans were considering pooling gas purchases to give the continent “more clout” with Russian over price and supplies.

Merkel said business leaders in Europe were already easing their opposition to further sanctions against Russia. Many European countries have been hesitant to impose further punishment because of deeply rooted trade and investment in Russia. Germany is Russia’s number one trading partner.

“The question of whether a company today would actually invest in Russia into the future, I think that’s something that now they would have second thoughts about,” Merkel said.

“Territorial integrity is very important to the business community,” Merkel said, down-playing hesitation among business leaders in Germany.

The United States and European Union have imposed sanctions on some business organizations and individuals close to Russian President Vladimir Putin as punishment for the Kremlin takeover of Ukraine’s Crimean Peninsula and threats to eastern and southern regions of the country that are heavily populated by Russian speakers.

She said she and Obama were of one mind on the need to broaden the sanctions should the Russians interfere to stop planned May 25 elections. The vote will be for new Ukrainian leaders comes in the aftermath of former President Viktor Yanukovych having fled to Russia after months of huge demonstrations in Kiev against his rule and attempts to tie the country closer to the Kremlin.

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