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U.S. and Germany End Energy Rift With Nord Stream 2 Accord

By David Wainer (Bloomberg) —

The U.S. and Germany have completed a deal approving completion of the Nord Stream 2 pipeline, effectively ending a longstanding rift over German gas purchases from Russia, the allies confirmed Wednesday.

Under the agreement, Germany commits to taking action if Russia tries to use energy as a weapon against Ukraine, a decision that may mark a concession from Chancellor Angela Merkel, who had previously balked at making independent moves against the Kremlin over the gas pipeline that will run from Russia to Germany and could allow Moscow to bypass Ukraine.

“The United States and Germany are steadfast in their support for Ukraine’s sovereignty, territorial integrity, independence and chosen European path,” the allies said in a joint statement. “We recommit ourselves today to push back against Russian aggression and malign activities in Ukraine and beyond.”

The U.S. and Germany will also seek to promote investments of at least $1 billion in a socalled Green Fund to help Ukraine’s transition to cleaner sources of energy. Germany commits to an initial $175 million investment in the fund. Germany would also appoint a special envoy — with $70 million in funding — to support bilateral energy projects with Ukraine.

The deal puts an end to a decadelong U.S.-German feud over the project, which critics have argued would give Moscow too much leverage over European national security. Biden’s administration initially suggested it would try to halt construction but later shifted its approach, saying doing so would be a long shot and only sour relations with the German government.

If Russia attempted to use energy as a weapon or commit aggression against Ukraine, Germany would take action itself while also pressing for measures at the European level, including sanctions to limit Russia’s energy exports, according to the accord.

“This is a bad situation and a bad pipeline, but we need to protect Ukraine,” Victoria Nuland, undersecretary of state for political affairs, told a Senate Foreign Relations Committee hearing on Wednesday. Ukraine’s President Volodymyr Zelenskiy has been invited to visit the White House on Aug. 30, White House Press Secretary Jen Psaki said Wednesday.

While the accord raises the possibility of limiting Russian gas flows, the language is disappointing critics — including many U.S. lawmakers — who say that the administration hasn’t done enough to stop the pipeline, which was more than 90% complete when President Joe Biden came into office.

Senator John Barrasso, a Wyoming Republican, told Nuland that the pipeline puts a “stranglehold” on Europe. “Protecting this Russian trap is not in our national security interest,” he said.

Read more: Text of U.S.-Germany joint statement on Nord Stream 2

Republican Senator Ted Cruz of Texas called the accord with Germany a “complete and total capitulation by President Biden to Putin.”

In an initial reaction to the announcement of the accord, the foreign ministers of Ukraine and Poland, which also has depended on Russian energy supplies, said the U.S.-German agreement “cannot be considered sufficient to effectively limit the threats created by NS2.”

Critics had been looking for specific language under which Germany would vow to shut off the flow of gas through Nord Stream 2 in the event that Russia sought to exert undue influence on Ukraine. But Germany has long resisted such a threat, saying it would only further politicize a project that Merkel insists is purely businessrelated.

The agreement would commit Germany to use leverage to extend Ukraine’s gas transit agreement with Russia after it expires in 2024.

State Department spokesman Ned Price told reporters in Washington Tuesday that “the Germans have put forward useful proposals, and we have been able to make progress on steps to achieve that shared goal, that shared goal being to ensure that Russia cannot weaponize energy.”

Kremlin spokesman Dmitry Peskov didn’t respond Tuesday to a request for comment on the emerging U.S.-German accord. The Kremlin has long rejected allegations that it uses energy supplies as a political weapon and has defended Nord Stream 2 as a purely commercial project. Russia has said it would consider using Ukraine to supply gas to Europe after the current transit contract expires but only if Kyiv offers attractive terms.

The progress comes after months of negotiations and a visit by Merkel to the White House last week. In a joint news conference, the two leaders said they are in agreement on deterring Russian President Vladimir Putin from abusing the pipeline for political gains, even as their assessments differ on the pipeline’s intent.

“Chancellor Merkel and I are absolutely united in our conviction that Russia must not be allowed to use energy as a weapon to coerce or threaten its neighbors,” Biden said. “We will be actively acting should Russia not respect this right of Ukraine that it has as a transit country.”

In her remarks, Merkel said, “We have a number of instruments, which for the most part are not on the German but on the European level, that we can implement” and that Germany was “in talks with our European friends.”

Earlier this year, the Biden administration imposed but immediately waived sanctions on Nord Stream 2 AG, the Switzerlandbased parent company that’s building the pipeline. U.S. officials said waiving the sanctions gave them room for diplomatic discussions as they’re continuing negotiations with Berlin.

“Can we make something out of a very bad hand that we inherited?” Secretary of State Antony Blinken said last month in an interview with the German publication Der Spiegel. “Because yes, President Biden has long said that the pipeline is a bad idea, that it will potentially be a tool of Russian economic coercion and strategic coercion, a tool that can be used not only against Ukraine but indeed Europe as a whole to the extent it increases dependence on Russian gas.”(Updates with UkrainePoland statement in 11th paragraph)

–With assistance from Daniel Flatley, Nick Wadhams, Jenny Leonard and Daryna Krasnolutska.

© 2021 Bloomberg L.P.

The opinions expressed herein are the author’s and not necessarily those of News2Sea.



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