WASHINGTON — The Biden administration has decided to waive sanctions on the company overseeing the construction of Russia’s Nord Stream 2 gas pipeline to Germany, despite bipartisan opposition in Congress and appeals from Eastern European governments.
Republican lawmakers immediately accused the administration of handing Russian President Vladimir Putin a major political victory. Democrats urged the White House to reconsider and the Kremlin called the news a “positive signal.”
The State Department announced the decision in a report to Congress. The move was first reported by Axios.
Secretary of State Antony Blinken opted to waive sanctions on the Russian-owned company behind the pipeline, Nord Stream 2 AG, as well as its German CEO, Matthias Warnig, and other corporate officers because sanctions “would negatively impact U.S. relations with Germany, the EU and other European allies and partners,” said the State Department report, obtained by NBC News.
Warnig is a longtime ally of Vladimir Putin and a former East German Stasi intelligence officer, who has served on the supervisory boards of major Russian companies.
Justifying the decision, the State Department report said “close cooperation” with Germany, the European Union and other European countries will be critical for U.S. efforts to tackle the Covid-19 pandemic, promote a global economic recovery, fight climate change and address other challenges, including countering “malign behavior by Russia and China,” the report said.
Democratic Sen. Bob Menendez of New Jersey, chairman of the Senate Foreign Relations Committee, blasted the decision in scathing language.
“I am opposed to the decision by the Biden administration to waive sanctions on NS2 AG and Matthias Warnig. I urge the administration to rip off the Band-Aid, lift these waivers and move forward with the congressionally mandated sanctions,” Menendez said.
“The administration has said that the pipeline is a bad idea and that it is a Russian malign influence project. I share that sentiment, but fail to see how today’s decision will advance U.S. efforts to counter Russian aggression in Europe,” the senator said in a statement.
Menendez asked, “What does the administration now expect from Germany after having made this significant concession to exercise the waiver?” He added that the decision “has created uncertainty in many corners of Europe and I expect to hear very soon from the administration on its plans moving forward.”
Democratic Sen. Jeanne Shaheen of New Hampshire expressed “disappointment” with the move.
“Completion of this pipeline poses a threat to U.S. security interests and the stability of our partners in the region. The administration should uphold its commitment to Congress. Every option available to prevent its completion should be utilized,” Shaheen said in a statement.
Although several European governments and members of both parties in Congress strongly oppose the project, German Chancellor Angela Merkel’s government had quietly lobbied the administration not to impose sanctions that would block the completion of the pipeline, which runs under the Baltic Sea to Germany.
In weighing its decision, the Biden administration sought to balance the need to counter Russia with its desire to repair relations with Germany, which had been badly strained during Donald Trump’s tenure in the White House. But critics said the administration had failed to fulfill its vows to stand up to Moscow, and that the move would give Putin valuable leverage over Ukraine and other Eastern European states.
“It demonstrates that ultimately standing up to Russia was of less importance,” said John Herbst, a retired career diplomat and former U.S. ambassador to Ukraine. “It really undercuts Biden’s ‘I’m-tough on Russia’ stance.'”
But Herbst said there was still time to change course and that a political backlash among Democrats on Capitol Hill could alter the White House’s calculations.
During the administration’s deliberations, some career diplomats opposed the decision but the White House overruled their objections, two sources familiar with the discussions said.
Russia currently has to transport natural gas through Ukraine to Europe and the controversial Nord Stream 2 pipeline would bypass Ukraine, depriving it of transit revenues and making it potentially more vulnerable to Russian aggression, Herbst and other opponents of the project say.
In the mandatory report to Congress issued Wednesday, which was required under recently passed legislation, the State Department had to list entities that are involved in the Nord Stream 2 project that merit sanctions. The State Department told Congress that it will sanction eight ships that are supporting the pipeline’s construction.
The report acknowledged that the company running the project, Nord Stream 2 AG, and its CEO, Warnig, are involved in sanctionable work.
But the administration decided to waive the enforcement of those sanctions on the Russian-owned company, Warnig and other corporate officers, the State Department report said.
The decision will mean that vessels working on the pipeline could be penalized but not the company that contracted them to do the work, Nord Stream 2 AG, which is owned by Russian state oil giant Gazprom but is based in Switzerland.
The decisions on sanctions “demonstrate the Administration’s commitment to energy security in Europe, consistent with the President’s pledge to rebuild relationships with our allies and partners in Europe,” Secretary of State Blinken said in a statement. He added that the administration would continue to oppose the completion of the pipeline: “Our opposition to the Nord Stream 2 pipeline is unwavering.”
Blinken met with his Russian counterpart, Foreign Minister Sergey Lavrov, in Iceland on Wednesday.
The Russia-to-Germany pipeline has been a source of tension between Washington and Berlin for years, with Chancellor Merkel arguing it is a purely commercial matter that should not be subject to geopolitics or linked to human rights concerns.
Nord Stream 2 would double the shipments of Russian natural gas to Germany, providing German industry with inexpensive energy as the country makes a transition from coal and nuclear energy to renewable sources.
The pipeline is more than 90 percent complete and pipeline opponents argued that a failure to take quick action would allow the project to be completed.
Poland and Ukraine in recent months have both appealed publicly and privately to the Biden administration to take prompt action to stop the pipeline.
“We continue to count on the United States to take decisive action to stop the construction of the Nord Stream 2 gas pipeline; it is still not too late,” the Polish embassy in Washington said in an email Wednesday.
“Many countries perceive Nord Stream 2 as a project visibly marked by geopolitics, aiming to strengthen the position of Russia as a major gas supplier to Europe and to undermine Ukraine and the entire region’s energy security,” it said.
Opinion in Germany is mixed over the issue, and upcoming federal elections in September could see a new government shift the country’s policy on Nord Stream 2. The Green party is currently ahead of Merkel’s Christian Democratic Union in polls, and its leader, Annalena Baerbock, has said Germany should reject the project given European Union sanctions imposed on Russia over its actions in Ukraine.
“This pipeline contradicts our sanctions, so it cannot go in place,” Baerbock said on May 6 from Berlin at a virtual event organized by the Atlantic Council think tank’s Europe Center. “It cannot start.”
Kremlin spokesman Dmitry Peskov reacted to initial reports about the sanctions decision, calling it a “positive signal” if it turned out to be true.
Russian Deputy Foreign Minister Sergei Ryabkov said the waiving of sanctions would create “a chance for a gradual transition toward the normalisation of our bilateral ties, TASS news agency reported.
Republican lawmakers pounced on the decision, charging the administration with showing weakness, defying Congress and failing to live up to its tough rhetoric on Russia.
“Stunning. In defiance of U.S. law, Biden is actively helping Putin build his pipeline,” tweeted Republican Sen. Ted Cruz of Texas.
“Objectively speaking, the Biden administration is shaping up to be the most pro-Russia administration of the modern era.”
Cruz has sought to block confirmation of Biden administration nominees to State Department posts due to the delay in implementing sanctions on companies working on Nord Stream 2.
Republican Sen. Ben Sasse of Nebraska, a member of the Senate Select Committee on Intelligence who was critical of former President Donald Trump’s approach to Russia, said the Biden administration has made a “strategic mistake.”
“Two months ago, President Biden called Putin a ‘killer,’ but today he’s planning to give Putin, his regime, and his cronies massive strategic leverage in Europe. You can’t pretend to be a Russia hawk but then just roll over,” Sasse said.