The Biden Administration has imposed sanctions against an array of vessels and entities involved in the construction of the Kremlin-backed Nord Stream 2 pipeline. But it pulled back from a broader effort against the Kremlin-owned company behind the $11bn project and its owner, a decision which provoked confusion and anger from Congressional Democrats, Republicans, and European allies.
The rationale for opposing Nord Stream 2 is sound, which explains why for nearly seven years, three consecutive U.S. Administrations have opposed the implementation of the project, as have both chambers of Congress on a bipartisan basis. If completed, the project would threaten Europe’s energy and national security interests, Ukraine’s economic and strategic stability and Baltic Sea security dynamics. Moreover, the project has become the embodiment of broader concerns about the way in which President Vladimir Putin’s Russia continues to use critical energy infrastructure investments abroad to advance strategic corruption and elite capture, which are thereby used to erode Western resolve against resurgent authoritarianism worldwide.
The measures announced by the U.S. Department of State derived from the 2020 and 2021 National Defense Authorization Act mandatory Nord Stream 2 sanctions laws (PEESA and PEESCA). According to the department’s press release, it has sanctioned “four vessels, five entities, and one individual involved in the construction of the Nord Stream 2 pipeline.” Sanctioned Russian entities include Koksokhimtrans, Mortransservice, the Samara Heat and Power Property Fund and the Russian Marine Rescue Service. including nine of its vessels.
Taken alone, these could be (and ought to have been) read as significant next steps taken by Biden Administration officials to make good on Secretary Antony Blinken’s vow during his confirmation hearing that he is “determined to do whatever we can to prevent that [Nord Stream 2] completion.”
Alarmingly, the State Department took the elective additional step of acknowledging that while the Russian-owned parent company Nord Stream 2 AG (owned by Kremlin-controlled Gazprom) as well as its chief executive, former East German Stasi officer and Putin crony Matthias Warnig, are engaging in sanctionable behavior, they would not face sanctions at this time. Specifically, the Administration issued a national interest waiver for Kremlin-controlled Nord Stream 2 AG and Warnig, claiming that it is “in the national interest of the United States to waive the application of sanctions” on both entities.
Really? What makes this waiver so puzzling is that there was little expectation in the expert community or press ahead of last week’s Congressional sanctions report deadline that Nord Stream 2 AG or Warnig actually would be sanctioned. In fact, it would have been a surprise if they were designated in this round, given a longstanding U.S. sanctions approach of reserving the right of escalation up a sanctions ladder depending on foreign policy outcomes; in this case, whether the pipeline construction came to a quick halt.
As a result of the waiver action itself, a few immediate and strategic issues have become manifest. First, by arbitrarily taking a dual pillar approach and rolling out sanctions and waivers simultaneously, the credibility of the tangible, technology-calibrated sanctions designations against Russian vessels and entities that were ultimately announced is severely undercut. The Russian sanctions designees may decide that the message from the latest U.S. move indicates an unwillingness to increase sanctions pressure, and may decide to proceed with the project work given the removal of strategic uncertainty.
While the Administration can remove those waivers, none of the messaging from the Administration yet suggests that is the plan. Instead, the Department press release describes the move as “consistent with the President’s pledge to rebuild relationships with our allies and partners in Europe.”
To outsiders, it seems reasonable to read this invocation of “allies and partners” as a statement of realpolitik solely focused on ensuring the revitalization of the U.S.-German relationship, full stop. After all, the project has far more European enemies than friends. Aside from some policymakers and industry leaders in (mostly) Germany (and Austria), a broad majority of nations in the Transatlantic community have expressed opposition or concerns about the project since 2015. And not just the likes of Poland, Ukraine, the Baltic States, and others along NATO’s Eastern Flank, but also the United Kingdom, Denmark, Sweden, Canada, and of course the European Parliament, which has passed resolutions by overwhelming majorities at least three times in the past few years calling for the immediate cancellation of the pipeline.
As I have previously written, the U.S.-German relationship is indeed fundamentally important for Transatlantic security and addressing shared global challenges. I have seen this first hand. I both worked on Transatlantic energy and national security issues in government starting under the Obama Administration in 2015, as well as through my physics research as a U.S.-German Fulbright program fellow. It is clear the Biden Administration has grasped this point, through a series of well-judged measures designed to undo damage sustained during the Trump Administration. From reversing Trump’s calls to remove U.S. troops stationed in Germany (condemned on a broad, bipartisan basis in Washington, as well as in Germany), to ending talk of trade wars, reentering the Paris climate accords, and ending generally bellicose rhetoric toward Angela Merkel’s government, the Administration has done much to re-establish the essential friendship between governments.
Yet the ball was squarely in Berlin’s court to reverse this strategically disastrous pipeline, and it was therefore not the time for the Biden Administration to preemptively remove strategic leverage on the issue, especially with little in return aside from short-term praise from some German officials. After all, German Foreign Minister Heiko Maas responded to the news by stating that Nord Stream 2 “was the only issue that [Germany and the US] have fundamental differences about,” which implicitly acknowledges how much the Biden Administration has already done. But Maas’ tenure has seen no real desire to change course on the project or link its completion to real, verifiable behavior changes by the Kremlin. And this has been the case no matter the level of malign activity from Putin’s Kremlin: especially notable when Maas walked back his own vows to reassess support for Nord Stream 2 following the poisoning of Russian opposition leader Alexei Navalny last September. This trend follows a long tradition of Maas’ SPD party, which has strongly advocated for the Kremlin project since its most recent Chancellor, Gerhard Schröder, approved the Nord Stream 1 project while in office, and took a senior Nord Stream AG position thereafter. In fact, this inspired the term “Schröderization” to describe Putin’s push for elite capture in Europe.
The U.S. decision also looks maladroit in terms of the U.S.-German relationship. Germany is changing. Merkel is departing, polls show the Greens well ahead only four months before Bundestag elections and its leader, Annalena Baerbock, has vowed not to allow the finalization of Nord Stream 2. During an election debate last week, Baerbock declared that “this German government is completely against all other Europeans with this (pipeline) project.” Her statements followed reports of a Russian-led cyberattack on Baerbock herself. This ominous development — thus far largely overlooked — once again severely undercuts claims by project supporters (including those in the current German government) that Nord Stream 2 is “just a commercial deal.” No pipeline project is more important than confronting Russian meddling in the German democratic process, and its government needs to immediately make this clear to Moscow.
Moreover, the reversal of the waiver move is even more pressing on a broader strategic level. By taking the step to list Warnig and then state that it is “in the national interest” to waive those sanctions, President Biden’s own laudable goals to combat Russian malign influence, strategic corruption, and global kleptocracy will be severely undermined. Unless the move is subsequently reversed or clarified, the lesson that authoritarian nations like Russia and China will take is that their recent strategy of targeting former Western officials in nations allied with the United States for elite capture is a sound one.
Whether the Administration’s goal is to stop Nord Stream 2, as it suggested when it stated it would “continue to oppose the completion of the project,” or reach some kind of compromise, this cannot credibly happen without securing real, verifiable behavior changes from Putin’s Kremlin. The Administration now needs to retake its strategic leverage by stating unequivocally that if the project is not stopped soon, waivers on Nord Stream 2 AG and Warnig will be lifted.
The hostile response to the sanctions announcement from Congress, notably from influential Democratic and Republican senators, and from many of the eastern members of NATO, will hopefully make the Biden Administration give greater weight to the bigger issues at play. As the Polish government said, it will, “continue to count on the United States to take decisive action to stop the construction of Nord Stream 2; it is still not too late.”