The US government wants to prevent Nord Stream 2 shortly before completion. European companies are currently being warned of impending sanctions. Little should change under Joe Biden either.
The US government sees the German-Russian Baltic Sea pipeline Nord Stream 2 in the last meters before the end and increases the sanction pressure on European companies involved. “This pipeline will not take place,” said a high-ranking US government representative of the dpa news agency in Washington. “This is what a dying pipeline looks like.” The government has identified a number of companies and people who face initial sanctions under the Nord Stream 2 Sanctions Act.
Those affected are currently being contacted and informed about the impending sanctions. “The US does not want to have to impose sanctions on European companies. We are making these calls to warn them and to give them time to get out,” said the government official. The handling of activities in connection with Nord Stream 2 is not subject to sanctions.
“Undo participation in Nord Stream 2”
“Instead of investing more money in the Nord Stream 2 pipeline and related activities, companies would be better off using force majeure clauses to reverse their stake in Nord Stream 2,” said the government official. He did not provide any information on which companies would specifically be contacted. He called Nord Stream 2 “a geopolitical project that Russia will use to blackmail European countries”.
The US argues that Germany would be dependent on Moscow with the pipeline. The US Congress passed the “Law to Protect Europe’s Energy Security” (Peesa) with bipartisan support last December. Despite sharp criticism from Germany and Russia, US President Donald Trump put the law into effect on December 20. The sanctions were aimed at the operating companies of the special ships that laid the pipes for the pipeline.
Donald Trump, acting President of the USA: His administration has announced sanctions against European companies for Nord Stream 2. (Source: dpa)
Construction was initially stopped by Peesa. The Swiss company Allseas, which had laid pipes in the Baltic Sea with special ships, stopped work at the end of last year because of the impending US sanctions. According to the Nord Stream 2 operator consortium, 2,300 of the 2,460-kilometer gas pipeline had already been laid from Russia to Germany.
Intervention in European sovereignty?
The US government official said the cost of the delay meant that the consortium of operators was faced with a choice “either to go to Moscow for a bailout or to ask for additional money from creditors, and in the past few months we have had commitments from current creditors received that there will be no additional or new funding “. A spokesman for Nord Stream 2 said the shareholders and the five financial investors as well as the suppliers are on the project. The costs of delays and threats of sanctions are currently not quantifiable.
In Nord Stream 2 AG, based in Zug, Switzerland, the Russian company Gazprom is formally the sole shareholder. In addition, the German groups Wintershall Dea – a joint venture between BASF and LetterOne – and Uniper (a spin-off from Eon) as well as the Dutch-British Shell, Engie (formerly GDF Suez) from France and OMV from Austria are added as “supporters”. Nord Stream supervisory board chairman is former chancellor Gerhard Schröder (SPD), at Nord Stream 2 he is chairman of the board of directors.
Uniper noted “with regret that the US is still trying to undermine an important infrastructure project with Nord Stream 2 that we believe is necessary for Europe’s energy security”. This is a clear interference with European sovereignty. “Germany has reaffirmed its political support for Nord Stream 2 in view of its role in the security of supply,” said Uniper in a statement.
Putin wants to finish the project
Wintershall Dea said on request: “We have not received any warning from the US government.” The four European partners have pledged to finance half of the total costs estimated at 9.5 billion euros in the long term. For each company that is up to 950 million euros. “Wintershall Dea had paid out 730 million euros by April 2020,” it said.
Vladimir Putin: The Russian President wants to finish the work on Nord Stream 2 on his own. (Source: dpa)
After the US sanctions were imposed, Russian President Vladimir Putin announced that he would complete the work independently – independently of foreign partners. The operator consortium had also emphasized that they wanted to complete the pipeline. The Russian laying ship “Akademik Tscherski” was supposed to complete the project.
In October, the US State Department published new guidelines, according to which the provision of certain services and facilities for the laying vessels could also be penalized. The US government official said a first government report would be presented to Congress in the next few days or weeks. It would name people and companies who potentially violate the law.
Confrontation between Berlin and Washington
So far, no sanctions have been imposed under Peesa. Several US senators wrote in a letter in August threatening the German Baltic port of Sassnitz-Mukran with sanctions. According to the website marinetraffic.com, the “Akademik Tscherski” is located there.
As part of the 2021 Defense Budget (NDAA) package, a law is to be passed to tighten sanctions. According to this law (Peesca), companies that provide ships for other activities related to laying work are also to be penalized. This could include digging trenches for the pipeline.
Companies that insure affected ships or make their port facilities available to them are also threatened with sanctions. The same goes for companies that certify the pipeline so that it can go live.
After the sanctions that have already been imposed, but also after the planned sanctions, persons concerned may be banned from entering the USA. Any data subject or company property in the United States can be frozen.
The US government official emphasized that supporters of Nord Stream 2 should not have hopes of a change of government in Washington. He pointed out that both Peesa and Peesca receive bipartisan support and provide for mandatory sanctions. “That means that the sanctions will be implemented regardless of who sits in the Oval Office.”
Sassnitz-Mukran: Pipes for the Nord Stream 2 Baltic Sea gas pipeline are stored on the port’s premises. (Source: dpa)
There is a headwind to the action in Washington from German politics. “The tough work and threats of sanctions from US government representatives are completely inappropriate in tone and in the matter,” said the deputy chairman of the SPD parliamentary group, Achim Post. “Germany and Europe’s energy supply is not decided in Washington or Moscow, but in Berlin and Brussels.” It is now important to seek an exchange with the new US administration as early as possible in order to avert further escalation.
Biden sees bad deal for Europe
The new US President will be sworn in on January 20th. After the November 3rd election, Democrat Joe Biden was declared the winner. Trump has so far refused to admit defeat. Trump is a bitter opponent of Nord Stream 2. Biden is also critical of the project. In his earlier role as US Vice President under Barack Obama, Biden had called the pipeline “a fundamentally bad deal for Europe”.
Independently of Congress, the US government extended the Caatsa sanctions law (“Countering America’s Adversaries through Sanctions”) to Nord Stream 2 last July. It enables the US President “in coordination with allies of the United States” to impose sanctions on persons or companies that invest in Russian pipelines or contribute to their construction, modernization or repair. US Secretary of State Mike Pompeo spoke at the time of a clear warning to companies that aided in projects that expanded Russia’s “malicious influence”.