Controversial Baltic Sea pipeline: settlement in dispute over Nord Stream 2

For years Germany and the USA argued over Nord Stream 2. Now top US diplomat Nuland has announced a breakthrough. The agreement includes sanctions should Russia use the pipeline as a political weapon.

The USA and Germany have reached an agreement that allows the controversial Baltic Sea pipeline Nord Stream 2 to be completed without the imposition of new US sanctions. State Secretary of State Victoria Nuland told the Foreign Affairs Committee of Congress. Both governments would announce details of the deal later that evening, Nuland said.

Sanctions against Russia possible

The agreement between Germany and the USA provides for sanctions against Russia in the event that Moscow “uses energy as a weapon,” said Nuland at a hearing in the Senate. This also applies in general to “aggressive behavior towards Ukraine”. Berlin has undertaken to take measures against Moscow in such cases and also to work towards sanctions at EU level. During the negotiations with representatives of the German government, the American side was in close consultations with Ukraine.

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 and Ukraine also vehemently oppose the pipeline bypassing their countries.

Aid planned for Ukraine

In addition, the agreement consists, among other things, of extending the transport of Russian gas through Ukraine by ten years parallel to Nord Stream 2, said Nuland. The previous contracts expire in 2024. Federal Foreign Minister Heiko Maas had previously announced a possible extension.

Work will also be done to reduce Ukraine’s dependence on Russian gas and transit revenues, Nuland said. It is expected that the German-American agreement on Nord Stream 2 will additionally stipulate that Ukraine will receive a loan of 50 million dollars (42.4 million euros) for “green technology” and a guarantee for the replacement of transit income for Russian technology Gets natural gas by 2024.

Nuland stressed that the administration of US President Joe Biden 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.

The federal government did not want to comment on the content of the talks and timetables. Vice-government spokeswoman Martina Fietz said: “We are confident that we will be able to report more here soon.”

Repeated criticism of Pipeline

The pipeline was also an issue during Chancellor Angela Merkel’s visit to Washington last week. Merkel is for the pipeline, Biden has indicated that punishing Germany for this could be counterproductive for broader US interests.

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. Biden had lifted the measures in May to August to give both sides time to negotiate.

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.

Schwesig: “Important for all of Germany”

Mecklenburg-Western Pomerania’s Prime Minister Manuela Schwesig 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.

Criticism from Kiev, careful praise from Moscow

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.

Praise came from Moscow: “This agreement gives us the opportunity to finish the construction of Nord Stream 2 in peace and to start operations completely,” said Vladimir Jabarow of the Federation Council, the upper house of the Russian parliament, of the Interfax agency. At the same time, he set conditions for a possible extension of the transit agreement through Ukraine: Ukraine should prove itself as a “constructive partner”. Under “normal conditions” nobody would put pressure on Ukraine.

Russian Foreign Minister Sergei Lavrov said that any threat of sanctions was “unacceptable”. Russia will wait for the official explanation, he told the Interfax agency. According to the government, Merkel phoned Russian President Vladimir Putin in the afternoon – the topic was Nord Stream 2. Merkel is likely to have explained the breakthrough in the dispute with the USA to Putin.