The State Department on Wednesday waived sanctions on the corporate entity and CEO overseeing the construction of Nord Stream 2, a move widely interpreted as a signal that the U.S. will not stand in the way of the Russia-to-Germany pipeline's completion.
Yes, but: State Department officials told reporters that by listing several vessels and companies participating in the controversial project for sanctions, as mandated by Congress, they were in fact sending a "clear signal" to Russia — even contending that they would continue to employ sanctions "to try to stop this pipeline."
Between the lines: By waiving sanctions on the Swiss firm, Nord Stream 2 AG, and its German CEO, Matthias Warnig, a Putin crony, the Biden administration was prioritizing its relationship with Germany over its opposition to the natural gas pipeline, which one State Department official called "a Kremlin geopolitical project that threatens European energy security."
- Sanctioning European firms to stop a pipeline into which Germany has sunk significant political capital would force an early confrontation with a key ally.
- But the pipeline is loathed on Capitol Hill — particularly but not exclusively among Republicans — and the administration is sensitive to any accusations that it's going soft on Russia.
- That's left the administration in an uncomfortable middle ground, arguing that the pipeline is a disaster and they want to stop it, while declining to take the one step that could actually endanger its completion.
- Officials on Wednesday's briefing call repeatedly noted that the pipeline was 90% complete when President Biden took office, and one said that blocking it had "always been a long shot."
What they're saying: "There is no ambiguity in our position, and today's actions... show that we're determined to use the tools we have to support our trans-Atlantic energy security goals," a senior State Department official said in laying out a policy that, at least to some reporters on the call, seemed quite ambiguous.
What to watch: Germany's foreign minister welcomed the announcement and said Germany would work with the U.S. to attempt to ensure the sanctions waiver remains in place when the issue is revisited in 90 days.
- The U.S. and Germany could potentially collaborate on ways to limit the vulnerability of Ukraine, which will be bypassed by Nord Stream 2 and views the pipeline as a critical threat to its energy security.
Axios first reported on Tuesday that Biden would be waiving sanctions on Nord Stream 2 AG.