A year ago, completion of the controversial $11 billion Nord Stream 2 pipeline looked dead in the water. The Russian-owned 759-mile conduit built to pump natural gas from Russia directly to Germany appeared mortally wounded after Capitol Hill passed a sanctions package that effectively halted construction through 2020. In December, Sen. Ted Cruz, R-Texas, was so confident that the pipeline was kaput that he declared that Nord Stream 2 “will never deliver gas.”
But in May, the Biden administration served up good news for the project when Secretary of State Antony Blinken, minutes before his first meeting with Russian Foreign Minister Sergey Lavrov, announced the U.S. was waiving two key congressionally mandated sanctions on Nord Stream AG, which oversees the pipeline. The decision left critics fuming, all the more when the pipeline was completed last month.
Those were “the sanctions that could have stopped it,” former U.S. Ambassador John Herbst, now director of the Eurasia Center of the Atlantic Council, told Yahoo News. “And they lifted those sanctions. For zip.”
When pressed on why he was backing off from blocking the project that gives Russia more geopolitical clout in Europe, Biden replied, “Because it’s almost completely finished,” adding, “It’s not like I can allow Germany to do something or not.” In the eyes of Nord Stream 2 opponents, however, Biden rolled over for Berlin — where outgoing Chancellor Angela Merkel has championed the pipeline, which will turn Germany into a gas hub for nearby European countries — and emboldened Russia in the process.
“It was a bad signal from the Biden administration — that gave the pipeline a green light,” Russia expert Agnieszka Legucka, senior research fellow at the Polish Institute of International Affairs, told Yahoo News, adding that the decision underscores that the current U.S. administration is far more worried about Beijing than Moscow.
“The Biden administration’s sanctions waiver for Nord Stream 2 signaled to Germany that the U.S. had accepted that the pipeline would get built and become operational,” said Katja Yafimava, senior research fellow at the Oxford Institute for Energy Studies. “Should the U.S. try to impose further sanctions,” she said — or should Congress try to prevent the Biden administration from waiving sanctions, as has been recently proposed — “it would amount to the U.S. reneging on part of its agreement with Germany.”
Herbst and others are also distressed that when Merkel visited D.C. in July, Biden extracted only vague promises that Germany would respond forcefully, even impose sanctions, if the Kremlin tried to weaponize its energy resources by manipulating supplies, a well-known Russian tactic. Analysts say that Moscow may already be doing precisely that.
Russia’s state-owned gas giant Gazprom “has been trying to squeeze the European energy markets,” energy analyst Agnia Grigas, author of “The New Geopolitics of Natural Gas,” told Yahoo News. “They’ve decreased the gas transit to Europe. They’ve decreased the flows through Ukraine, which is currently the main pipeline system from Russia to Europe, and they’ve increased gas prices.” With the project now facing certification hurdles before it can be used, she believes Russia’s actions are “part of an effort to show Europe it needs Nord Stream 2 to operate” — and before winter sets in.
This summer, which was Europe’s hottest on record, wind power didn’t provide as much electricity as projected. European gas reserves, typically at least 90 percent full this time of year, and topped up for winter, are now down to 75 percent, according to Thomas Pellerin-Carlin, director of the Jacques Delors Energy Centre in Paris. And while fulfilling its long-term contracts, Gazprom, which provides over 40 percent of natural gas in the European Union, has turned down requests for additional gas, claiming that it needs to address its domestic demands. That scarcity, coupled with high demand, helped drive up electricity and natural gas prices in Europe to all-time highs; in Spain, for instance, the price of electricity per megawatt has tripled from last year, and the price of natural gas in Europe is currently 10 times higher than last year.
Kremlin spokesman Dmitry Peskov, when recently asked about the price surge and if Russia planned to sell more gas to Europe, coyly told reporters, “Undoubtedly, the quickest launch of Nord Stream 2 would significantly balance out the pricing parameters of natural gas in Europe, including on the spot market.”
On Thursday, Russian President Vladimir Putin threw the EU a bone, announcing he would “think over a possible increase in supply.”
Gazprom’s recent behavior led a group of legislators in the EU’s European Parliament to demand an investigation and has people like Herbst in disbelief that the U.S. and Germany aren’t calling out Russia. “Moscow has been weaponizing its energy since May,” Herbst said, explaining that Gazprom began squeezing gas supplies just after the sanctions were waived. “We haven’t heard a word about this from Germany. We’ve heard nary a word from Washington. They should have called Russia on it in May or early June, and by now they should have reimposed sanctions.”
Permitting the Nord Stream 2 pipeline to become functional “is a mistake from so many angles,” said Herbst. “I understand that Biden wants to be the anti-Trump. Trump was mean to Merkel. Biden wants to make up with Merkel. That’s a good idea in principle, but not by giving Germany something that is bad for the U.S., bad for Germany and bad for Europe. It’s a strategic mistake of the first order.”
Herbst worries that with Russia bypassing the Ukrainian pipeline, which has been the main supplier of gas to Europe for decades, Moscow will flex more military muscle in Ukraine, where it’s already fighting a proxy war in the east after seizing Crimea in 2014. If Ukraine fell to Russia, Herbst fears Moscow’s territorial yearning could spill into the former Soviet republics of Estonia, Latvia and Lithuania, all of which are now NATO members. And should Russia strike there or in Poland, the U.S. and European allies would be compelled to react under NATO’s Article 5.
“We have a great interest in the strength of Europe against the Kremlin, which wants to conduct war to change borders and to impose its will on its neighbors,” Herbst added. “What Nord Stream 2 does is it gives Moscow a weapon against the states between Germany and Russia. It also increases malign Kremlin influence in Germany. And why do we want to give the Kremlin a bigger influence in the politics of Western Europe’s greatest power?”
Swedish economist Anders Åslund, author of “Russia’s Crony Capitalism,” is likewise deeply concerned about Berlin’s growing political-commercial bond with Moscow. He cites the involvement of former Chancellor Gerhard Schröder in the Nord Stream 1 deal, noting that he first approved the pipeline in 2005, in the waning days of his final term. “And a few weeks afterwards, he became chairman of the Nord Stream 1 shareholders’ committee,” Åslund said.
Now Schröder is chairman of the board of Russia’s state-owned oil company Rosneft as well as chairman of the shareholders’ committee of Nord Stream 2, Åslund added. And Schröder, he said, is only one of a number of German, Austrian and other European officials who still exert considerable political power in their countries and end up in handsomely paid positions on Russia’s corporate boards — an entirely legal practice, but one that he believes co-opts European unity and strength.
For his part, energy analyst Pellerin-Carlin is saddened that Europe is still dealing with the power politics stemming from fossil fuel use — depending on “Gazprom and the Kremlin, and Putin’s choice on whether or not we can have more or less natural gas.”
Russia expert Legucka is disappointed with the U.S. By prioritizing its relationship with Berlin, she said, Biden has helped Putin gain more power in Europe, even while acknowledging that Nord Stream 2 is “a bad project and a threat that undermines European security.” The imminent opening of the pipeline marks “a huge success for Russia, and one that came with a wink from Joe Biden, who doesn’t want to destroy America’s good relations with Germany.”
