Merkel, Biden Differ on Pipeline, Agree to Limit Russian Clout

(Bloomberg) -- U.S. President Joe Biden said he and German Chancellor Angela Merkel agreed they wouldn’t allow Russia to use the contentious Nord Stream 2 pipeline to threaten its neighbors amid a push to limit the Kremlin’s geopolitical clout.

But the leaders acknowledged that differences remain over the project, which critics say could burnish Russian leverage and hurt Ukraine by reducing transit fees it collects on gas flowing to Europe.

“We’ve come to different assessments as to what this project entails,” Merkel said Thursday. “But let me say very clearly: Our idea is and remains that Ukraine remains a transit country for natural gas, that Ukraine remains -- just as any other country in the world -- has a right to territorial sovereignty, which is why we’ve become engaged.”

The U.S. tried but failed to stop the controversial gas pipeline. The U.S. has long opposed Nord Stream 2, which it deems a threat to European energy independence and has imposed multiple sanctions on those involved in the project. Germany continues to support the pipeline, which it says bolsters its range of fuel supplies.

“While I reiterated my concerns about the Nord Stream 2, Chancellor Merkel and I are absolutely united in our conviction that Russia must not be allowed to use energy as a weapon to coerce or threaten its neighbors,” Biden said.

White House officials indicated earlier that Biden was expected to again raise concerns over the $11 billion pipeline, whose operator expects to complete the project by the end of next month.

The Biden administration in May waived sanctions that would hit the company and its chief executive, which the U.S. said would provide time to negotiate a diplomatic solution to offset what officials described as the negative impacts of the project.

“My view on Nord Stream 2 has been known for some time,” Biden said. “Good friends can disagree. By the time I became president, it was 90% completed and imposing sanctions did not seem to make any sense.”

Republican lawmakers criticized the White House over the waivers, saying the project provides the Kremlin with leverage in Europe. Critics say that the pipeline could enable Moscow to cut off natural gas flows through Ukraine, following a series of actions -- including the annexation of Crimea -- that have destabilized Russia’s neighbor.

The administration’s next report to Congress on the pipeline is due in mid-August, though there does not appear to be enough support among lawmakers to override Biden’s decision on sanctions.

©2021 Bloomberg L.P.