Controversial Baltic Sea pipeline: Green light for Nord Stream 2

Germany and the US have achieved a breakthrough in the dispute over Nord Stream 2. With the agreement that has now been concluded, sanctions against Russia are possible, among other things. In addition, the Ukraine is to receive financial support.

The controversial Baltic Sea pipeline Nord Stream 2 can be completed without the threat of sanctions from the USA. The United States and Germany have agreed on this. After US State Secretary Victoria Nuland had announced the agreement in the Congressional Foreign Affairs Committee, confirmation from Berlin followed in the evening.

Sanctions against Russia possible

According to the joint declaration of the two states, the agreement provides for sanctions against Russia if Moscow “uses energy as a weapon”. This also applies in general to “aggressive actions against Ukraine”. “As part of the newly established high-level dialogue between the US and the EU on Russia and via bilateral channels”, “suitable instruments and mechanisms” are to be provided “in order to jointly react to Russian aggression and destructive activities”. Germany will then take measures against Moscow and also press for sanctions at EU level.

Nuland had stated that the American side had been in close consultation with Ukraine in negotiations with representatives of the German government. In Washington, politicians from both parties fear that Nord Stream 2 could cut off natural gas supplies to Poland and Ukraine and give Moscow too much power over European gas supplies. Poland also rejects the pipeline.

“Green Fund” planned for Ukraine

In order to promote the energy transition and energy security in Ukraine, “Germany is committed to setting up a Green Fund for Ukraine,” the statement said. Berlin will initially pay 175 million US dollars (around 148 million euros). Investments of one billion dollars are also planned from the private sector.

Among other things, these funds are intended to promote the use of renewable energies, facilitate the development of hydrogen as an energy carrier and accelerate the phase-out of coal. The federal government will “work towards an increase in commitments in the coming budget years” for the fund, it said.

In addition, Berlin intends to fund bilateral energy projects in Ukraine with around 70 million euros, particularly in the field of renewable energies and energy efficiency. Germany is also committed to ensuring that the EU budget will support projects in the Ukrainian energy sector of up to 1.77 billion US dollars in the period from 2021 to 2027.

According to the declaration, gas transit through Ukraine is to be extended “by up to ten years” beyond 2024. Negotiations on this point should start before September 1st.

Maas is relieved

Foreign Minister Heiko Maas said on Twitter about the breakthrough “relieved that we have found a constructive solution with the USA in the matter of Nord Stream 2”. The Federal Foreign Office wrote: “As transatlantic partners we stand firmly on the side of Ukraine.”

Mecklenburg-Western Pomerania’s Prime Minister Manuela Schwesig also welcomed the agreement. The Baltic Sea pipeline must be completed, so it is good that there is now an agreement. “The state government has supported Nord Stream 2 from the start and always showed attitude, no matter how difficult it was,” she said NDR. “The pipeline is important for the energy supply throughout Germany and also important for Mecklenburg-Western Pomerania and our jobs.” Natural gas is an important interim solution until the supply from renewable energies is 100 percent guaranteed.

The controversial pipeline through the Baltic Sea is said to bring more Russian gas to Western Europe. The billion-dollar project is 98 percent complete and, according to Nord Stream 2, will be put into operation this year.

Repeated criticism of Pipeline

With the agreement, the resumption of the sanctions imposed by the US Congress against Nord Stream 2 AG and its managing director will be averted for the time being. US President Joe Biden had lifted the measures in May to August to give both sides time for negotiations.

Nuland stressed that the US government continues to believe that Nord Stream 2 is “a bad deal” that will increase Europe’s dependence on Russian energy. “This is a bad situation and a bad pipeline, but we have to help protect Ukraine and I feel that with this agreement we have taken some important steps in that direction.” The German government rejects the warning that it is too dependent on Russian gas. The US also wants to sell its own gas in Europe.

There was criticism of the possible agreement from Ukraine. From the office of President Volodymyr Zelenskyi it was said on Wednesday that the decision on Nord Stream 2 could not be made “behind the back of all those who really threaten the project”. That could only be clarified at a personal meeting between Zelensky and Biden. The White House announced that Biden and Zelenskyi were scheduled to meet at the end of August.

Cautious praise from Moscow

According to government information, Chancellor Angela Merkel called Russian President Vladimir Putin in the afternoon. As the deputy spokeswoman for the federal government, Ulrike Demmer, announced, the phone call was about the implementation of the Minsk agreements to resolve the conflict in eastern Ukraine. “Energy issues such as gas transit through Ukraine and the Nord Stream 2 pipeline were also discussed.”

In a message after the phone call, the Kremlin praised “the consistent commitment of the German side” in the implementation of the “exclusively economic project”. The aim is to strengthen the energy security of Germany and the EU. A possible extension of the gas transit contract through Ukraine, which expires in 2024, has also been discussed.