The Nord Stream 2 gas pipeline is quickly becoming a “weapon” upsetting relations between the United States and its European allies. Germany has sent out a clear message at the highest level about its readiness to impose sanctions against Washington and that it could even persuade its EU and NATO partners to act in a cohesive way against the US. This was caused by burning desire of the US Congress to apply punitive sanctions to the European participants in the Nord Stream 2 project, including both private companies and government agencies in Germany and other countries, as reported by moderndipomacy.
The US news agency Bloomberg recently reported, citing two German officials that Germany is preparing to retaliate against in case of the US additional sanctions against the Nord Stream 2 project.
According to the agency, the government of Chancellor Angela Merkel is hatching the possibility of calling for coordinated actions by the EU if Washington keeps pushing its sanctions. Taking into account a statement by the German Ministry of Economics, Bloomberg also pointed out that new US sanctions would have negative consequences not only for German, but for European companies, banks, and government agencies.
German chancellor Angela Merkel has stiffened her rhetoric. In her July 2 address to parliament, she stated that Berlin considers it necessary to complete the Nord Sream 2 and in spite of the possible US sanctions, Germany will be for the completion of the project. According to the German chancellor, the new Washington’s sanctions are extraterritorial, and are not consistent with her understanding of the law.
She emphasized: “We still believe that it’s right to get the project done.”
A few hours before the Chancellor’s speech in the Bundestag, Minister of State at the Federal Foreign Office Niels Annen told a meeting of the parliamentary committee on economics and energy that Washington’s new sanctions on Nord Stream 2 are unacceptable: “The fact that the US Congress acts as a regulator in European affairs is absurd. Just imagine, if we adopted a resolution on US energy security in the Bundestag,” Annen stressed. German minister holds the view that sanctions is not the right track because in this particular case it is about relations between Germany and the US, but about European sovereignty.
However, Angela Merkel still views US-German relations in a wider context of European and global security. In an interview published recently in several European outlets, she admitted the possibility of a new geopolitical reality where the United States would not have a leading role: “We grew up in the certain knowledge that the United States wanted to be a world power. Should the US now wish to withdraw from that role of its own free will, we would have to reflect on that very deeply.”
There are some differences on the issue of sanctions in the United States. Congress is currently considering two options for sanctions, with the most recent one being the mildest of the two. Both bills envision additional restrictions on the use of ships, including for preparing the sites the pipeline will run along, and may also prohibit foreign companies from providing insurance risk assessment services to the Nord Stream 2 project. The main disagreement is about US sanctions against foreign organizations that conduct testing and certification of the pipeline. In a nutshell, it comes down to the fact that a gas pipeline cannot be launched without a final certificate of compliance with all required international standards.
Some experts consider that there is a high probability that most US senators will chose milder resolution. Their decision is under pressure of many factor: they are trying to prevent further aggravating controversies between Washington and Berlin, as well as within NATO as a whole, and also they do not want to play up to President Donald Trump, who has recently toughened his stance on Berlin. At the same time, in late June, a group of US senators, including Ted Cruise, Jeanne Shaheen, John Barrasso, Ron Johnson and Tom Cotton, proposed including sanctions on the Nord Stream 2 project in the US defense budget for fiscal year 2020-2021. The authors of the initiative believe that it would fast-track the possible introduction of sanctions, because, unlike a regular bill that can be subject to lengthy discussion, the defense budget is invariably approved each fall.
The further development of the situation will depend on the stance of Germany and other European countries having the desire to keep their cooperation in the energy field with Russia. A Russian expert from the Russian National Energy Security Fund and the Financial University Stanislav Mitrakhovich has a standpoint that new US sanctions can delay the project, but without resistance from Europe Washington may to go beyond.
“If the United States feels that Germany is ready to back off and dance to Washington’s tune, it can still go ahead and introduce tough measures, including against German businesses. If so, the construction might be put on ice simply because the pipes are in Germany.”
Meanwhile, in Germany itself the media has been quit around the Nord Stream 2 project situation. The newspaper Die Welt believes that the project operator has all the possibilities to complete the project without fear of new US sanctions. This may be reached by changing the ownership of the Akademik Chersky pipe-laying ship, which has been commissioned to complete the job. The Gazprom Fleet Company could re-register the Akademik Chgersky, which is its only pipe-laying vessel, to the Samara Thermal Energy Property Fund (STIF), not covered by possible sanctions.
The whole situation warrants a further toughening of rhetoric on both sides of the Atlantic. In a statement, carried by the business newspaper Handelsblatt, two Bundestag deputies – Timon Gremmels (SPD faction’s speaker on gas policy) and Markus Töns (SPD faction’s speaker on trade policy) slammed the US sanctions as “an encroachment on the principle of legality and protection of investments in Europe.” They emphasized that “the threat of tougher extraterritorial sanctions has consolidated the ranks of the German Bundestag. Even the parliamentary factions generally critical of the gas pipeline project see the proposed restrictions as a violation of international law and an attempt to undermine the sovereignty of Europe.”
“We are convinced that the time of diplomatic restraint is now over. To protect European interests, the German government and the European Union should introduce countermeasures and consider the use of retaliatory sanctions, for example, against US shale gas. The real threat of serious retaliatory sanctions is the only way we can possibly resolve the conflict. This is the only language Donald Trump understands,” the MPs stressed.
For Russia, this is creating opportunities for closer trade, economic and political cooperation with Germany and other European countries. Taking into account the scope of German business participation in the Nord Stream 2 project and the personal position of Chancellor Angela Merkel, the chances are high that the gas pipeline will be completed and Moscow will be able to benefit from the growing contradictions between the US and Europe. So we may observe an excellent example of how an economic project has turned into a powerful instrument of political pressure and even a factor capable of creating disagreements among key members of a strong international ogranisation.