In Deal With Germany, U.S. Drops Risk to Block Russian Gasoline Pipelines

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In Deal With Germany, U.S. Drops Threat to Block Russian Gas Pipelines

WASHINGTON – The United States has given up its threat to block the Nord Stream 2 natural gas pipelines from Russia to Germany, officials said Wednesday, officially putting aside a year-long disagreement with Berlin over an energy deal that critics have warned Moscow would allow Ukraine to starve out of transit fees, which are vital to Kiev’s economy.

The Biden government’s decision was practically an acknowledgment that the pipeline project was too advanced to stop and that relations with Germany, a crucial ally, were too important to jeopardize the dispute.

But it enraged Republicans and Democrats in Congress who called for the use of economic fines to stop the pipelines, and on Wednesday accused the government of being compliant with Russia.

The pipelines, each about 750 miles long, run from Russia directly under the Baltic Sea to Germany, bypassing Poland and Ukraine, and denying these countries some transit fees. They are being built by a subsidiary of the Kremlin-controlled Russian company Gazprom and will roughly double the amount of gas Russia can deliver directly to Germany.

The $ 11 billion project is slated to be operational by the end of the year despite construction delays as investors became more cautious about targeting US sanctions.

The new deal seems like a way for President Biden to spin the inevitable completion of the pipelines as some sort of diplomatic victory and as a defense of the interests of Poland and Ukraine that could suffer financially. It calls on Germany to impose sanctions on Russia if it uses its control over energy supplies to harm or endanger the Ukraine, Poland, the Baltic states or any other US ally.

Foreign ministry officials who briefed reporters on Wednesday of the anonymity condition said the Biden government continued to have “profound differences” with Germany over the project. But officials also pointed to a $ 1 billion investment fund administered by Germany to help Ukraine reduce its reliance on Moscow’s gas exports.

Germany will initially add $ 175 million to the fund as Berlin and Washington each seek private investors to help Ukraine improve its energy efficiency and energy security, officials said.

The announcement followed Chancellor Angela Merkel’s meeting in Washington last week with Mr Biden, who said the two heads of state and government agreed that they “are united in our belief that Russia must not use energy as a weapon”.

White House officials said Wednesday that Ukrainian President Volodymyr Zelensky, who has urged Congress to try to stop the project with sanctions, would visit in August.

Updated

July 21, 2021, 10:02 p.m. ET

Senator Ted Cruz, Republican of Texas, called the agreement with Germany “a geopolitical generational gain” for Russian President Vladimir V. Putin and “a disaster for the United States and our allies”.

Mr Cruz, whose constituency in Texas includes major energy exporters, has for the past few months withheld confirmation from several Biden government officials insisting that the United States stop completing the pipelines. “President Biden defies US law and has completely surrendered to Putin,” he said in a statement. “In decades to come, Russian dictators will still reap billions of Biden’s gifts, and Europe will still face Russian energy blackmail.”

New Hampshire Democrat Senator Jeanne Shaheen said she welcomed diplomatic efforts with key European allies. But she said, “I have long argued that the Nord Stream 2 pipeline should not be completed because it enables the Kremlin to expand its malevolent influence across Eastern Europe, threatens the economic security of our European partners and threatens our global stability.” . “

“I still think so,” she said.

State Department officials were reluctant to hear that the Biden administration had surrendered, noting that since Mr. Biden took office, 19 companies have had American sanctions related to the project, compared to two during the President’s tenure Donald J. Trump.

State Department advisor Derek Chollet described the deal to senior Ukrainian officials in Kiev on Tuesday and Wednesday and continued to pledge American support. He also urged the Ukrainian government not to sway Congress for additional sanctions related to the project.

Germany and Russia previously agreed to keep the transit fees for natural gas to Ukraine until 2024, which are expected to be extended for another year.

“For the federal government, it remains crucial that Ukraine should remain a transit country after Nord Stream 2,” said government spokesman Steffen Seibert.

The pipelines have enabled Russia to separate Germany from its European allies and from the United States. But Mr Biden, who says he is still against the project, has made it clear that his priority is China and that it is of central importance to get German and European support for a common policy to contain China and its economic and political Limit influence.

Matthias Warnig, the managing director of Nord Stream AG, the company that will build and operate the pipelines, said the American sanctions and sanction threats had been extended by at least 18 months and cost “well several hundred million euros”.

“The US sanctions threats have made our work more difficult in every respect, this also applies to certification,” said Warnig in an interview on July 11 in the Handelsblatt. “But we are working on solutions and are sure that we will find a way.”

Lara Jakes reported from Washington and Steven Erlanger from Brussels.