US Concedes Defeat On Russia’s Nord Stream 2 Pipeline Even As Sanctions Passed

A new Bloomberg headline reads “U.S. Concedes Defeat on Gas Pipeline It Sees as Russian Threat” just following new sanctions included in the House and Senate passed 2020 National Defense Authorization Act (NDAA) this week.

But two administration officials tell Bloomberg it’s too little too late, despite Trump’s heightened rhetoric of calling Germany “a captive to Russia” and charging Berlin with essentially giving “billions” of dollars to Russia:

Senior U.S. administration officials, who asked not to be identified discussing the administration’s take on the project, said sanctions that passed Congress on Tuesday as part of a defense bill are too late to have any effect. The U.S. instead will try to impose costs on other Russian energy projects, one of the officials added.

The Bloomberg report sees this as a rare admission of defeat:

The admission is a rare concession on what had been a top foreign-policy priority for the Trump administration and highlights how European allies such as Germany have been impervious to American pressure to abandon the pipeline. It also shows how the U.S. has struggled to deter Russia from flexing its muscles on issues ranging from energy to Ukraine to election interference.

The resolution contained in the defense spending bill, expected to be immediately signed into law by Trump, are measures which specifically target companies assembling the pipeline — a last ditch US effort to block the controversial 760-mile, $10.2BN project that would allow Russia to export natural gas directly to Germany, depriving Ukraine of badly needed gas transit fees along the current route for Russian supplies.

Washington’s position has long been that it weakens European energy security, while Merkel’s Germany has rejected Trump’s “meddling” in European energy affairs, which the Europeans have lately sought to diversify. 

Secretary of State Mike Pompeo during a February visit to Poland said Nord Stream 2 ultimately “funnels money to Russians in ways that undermine European national security.”

It’s expected to double Russian gas shipments to the EU’s biggest economy Germany, while others fear — including dissenters within Merkel’s own ruling coalition — it will give Moscow significant geopolitical leverage over Europe while also punishing Ukraine.

The new US sanctions measures will target executives of companies operating vessels laying the pipeline, and will further seek to hinder those companies’ ability to operate on the project. It’s been spearheaded by Russian giant Gazprom and five European energy companies, including French electricity and gas firm Engie SA and Royal Dutch, and the Swiss company Allseas Group SA, among others, and is nearing completion, expected soon this coming year. 

Bloomberg reports further, “Trump has indicated that he’ll sign the legislation passed Tuesday. The penalties on companies building the project, led by Russian energy company Gazprom PJSC, would be effective immediately, according to a Senate Republican aide.”

In total, continues Bloomberg, “Some 350 companies are involved in building the undersea link, most notably the Swiss company Allseas Group SA, whose ships are laying the last section of pipe in Danish waters.”

Regardless, Gazprom head Alexei Miller has for months said it’s “past the point of no return” and that nothing would derail it. “We are working from the idea that Nord Stream 2 will be realized strictly in accordance with the planned timetable,” he previously told shareholders.