The U.S. Should Press Harder on Nord Stream 2
(Bloomberg Opinion) -- The Biden administration has opted for now not to impose new sanctions on Nord Stream 2, the pipeline that will double the amount of natural gas Russia transports directly to Europe. For the time being, the decision allows the U.S. to avoid a confrontation with Germany, the project’s main supporter. It also risks inflaming Congress and handing a geopolitical victory to Vladimir Putin.
The administration can still salvage an acceptable outcome, but it needs to start now. In exchange for withholding new sanctions, the U.S. should press Germany to accept greater responsibility for defending Europe against Putin’s aggression.
Once completed, the $11 billion pipeline will allow Gazprom, Russia’s state-owned gas company, to deliver 110 billion cubic meters of gas a year under the Baltic Sea to hubs in Germany. As a result, Gazprom may be able to stop sending gas through Ukraine and Poland — depriving those countries of transit fees on supply that passes through their territories and making them more vulnerable to Russian gas cutoffs, and thus political pressure. Nord Stream 2 will increase Europe’s supply of cheap natural gas, but at the cost of increased dependence on Russia and slower adoption of clean energy.
Two U.S. administrations, most NATO allies, and Germany’s Greens —by one measure the country’s second most popular party — have opposed the project, but Chancellor Angela Merkel has refused to abandon it. Her intransigence led the U.S. Congress to pass bipartisan legislation in 2019 requiring sanctions on companies involved in constructing the pipeline. Lawmakers have subsequently targeted Nord Stream 2’s prospective insurers and certifiers as well. The threat of U.S. sanctions convinced several Western companies to back out, bringing construction to a virtual stop for about a year. In December, Gazprom resumed work on the pipeline, which is now 94% complete; barring further disruption, all necessary pipe-laying could be finished later this year.
Biden and his secretary of state, Antony J. Blinken, have publicly reiterated their desire to see Nord Stream 2 scrapped. They face mounting pressure from both parties in Congress to move more decisively against the pipeline. But the administration also wants to reverse the deterioration in U.S.-German relations that took place under Donald Trump. On balance, Biden is right to hold off on imposing unilateral new sanctions, which would provoke anger from members of Merkel’s coalition who support completing the pipeline and bristle at U.S. interference. That in turn could compromise Germany’s willingness to cooperate on the administration’s other foreign-policy priorities.
A solution that respects German sovereignty while bolstering Europe’s defenses is possible and in the interests of both sides. The U.S. and EU should insist that even if Nord Stream 2 is finished, Russia must keep gas flowing through Ukraine past 2024, with provisions for sanctioning Russian gas exports to the EU otherwise. Non-Russian suppliers should be given access to the new pipeline, reducing Gazprom’s control of the European market. And Germany should help Ukraine and other frontline states modernize their energy infrastructure and build new facilities for importing liquefied natural gas, including from the U.S.
As part of such an understanding, Biden should also seek a German commitment to increase defense spending and help push back against Russia’s destabilizing behavior in Europe. Respect for German sovereignty should not obscure the fact that the U.S. is a partner in defense of Europe against Russian aggression. That gives the U.S. a legitimate interest — and Biden should make clear that U.S. patience has limits. If negotiations with Berlin fail to make progress, the administration should move forward with congressionally-mandated sanctions against parties involved in completing the pipeline, including public-private German entities that have received backing from Gazprom.
In Biden’s words, the pipeline is “a bad deal for Europe.” He’s right. It’s also a bad deal for the U.S. To improve it, Biden should be constructive — and firm.
Editorials are written by the Bloomberg Opinion editorial board.
©2021 Bloomberg L.P.