US and Germany reach truce over Nord Stream 2 pipeline

The US and Germany have reached a deal to resolve their longstanding dispute over the Nord Stream 2 pipeline, including a promise from Berlin to impose sanctions on Russia if Moscow threatens its neighbours’ energy security. 

The announcement comes after a bilateral meeting last week at the White House between US president Joe Biden and German chancellor Angela Merkel, and will ease a diplomatic row between the two countries over Europe’s energy supply.

However, Ukrainian officials and several US lawmakers said the promises from Germany did not provide sufficient protection to American allies from potential Russian actions to disrupt energy security.

The construction of the Nord Stream pipeline, which will pump gas from Russia to Germany across the Baltic Sea, has long been a sore point between Washington and Berlin. US officials consider it Russian president Vladimir Putin’s geopolitical project to keep Europe dependent on his country’s energy while jeopardising the security of central and eastern European countries such as Poland and Ukraine.

Under the agreement announced on Wednesday, Berlin pledged to impose sanctions on Moscow if its energy policies endangered Washington’s regional allies, which could include measures to limit Russian energy export capabilities to Europe, a US official said.

Berlin will set up a billion-dollar fund to promote Ukraine’s transition to clean energy, beginning with an initial $175m, while the US would help to promote and support investments. Berlin would make another $70m available to improve Ukraine’s energy infrastructure security, including building its cyber capacity, a US official said.

Germany would also appoint a special envoy to help Kyiv negotiate an extension of its gas transit agreements with Russia beyond 2024 in order to earn gas transit fees “for as long as possible”, a senior US official said. 

“As a transatlantic partner, we are firmly on the side of Ukraine,” said Heiko Maas, Germany’s foreign minister.

Some lawmakers on Capitol Hill said the agreement did not do enough to protect US allies. “I am not yet convinced that this agreement — or any bilateral agreement — can sufficiently provide assurances to our European allies and minimise the considerable economic impact and security implications of this pipeline’s completion,” said Jeanne Shaheen, a Democratic senator from New Hampshire.

As the US and Germany released a joint statement touting their accord, Ukrainian officials reacted furiously. Foreign minister Dmytro Kuleba tweeted that the country would begin consultations with the EU and Germany over the pipeline’s legality. “Notes to Brussels & Berlin already sent,” Kuleba added.

Ukrainian president Volodymyr Zelensky’s office said in a statement that “talks regarding the Nord Stream 2 project as a security threat for Ukraine and the region will be continued” during an August 30 visit by Zelensky to the White House, which the Biden administration announced just hours before the pipeline agreement. 

Andriy Yermak, Zelensky’s chief of staff, held talks in Kyiv earlier on Wednesday with Derek Chollet, counsellor at the US state department. “Nord Stream 2 is a geopolitical weapon of Russia, which will definitely be used against Ukraine and Europe,” Yermak said in a statement.

The foreign ministers of Ukraine and Poland issued a statement calling on the US and Germany “to adequately address the security crisis in our region, that Russia is the only beneficiary to”.

In a call with Merkel on Wednesday, Putin praised Germany’s “consistent dedication” to Nord Stream 2, which he said was “exclusively commercial and aimed at ensuring Germany and the EU’s energy security”, according to a Kremlin readout. The leaders discussed extending Russian group Gazprom’s commitment to moving gas through Ukraine after the current deal expires in 2024, it added. 

Biden has said he disagrees with Merkel on the merits of the pipeline, but his administration had to accept that it was almost complete by the time he took office in January.

On Wednesday, Ned Price, a spokesperson for the state department, said Biden had made it “very clear” to Merkel that the US continued to oppose Nord Stream 2. 

“We continue to view it as a Kremlin geopolitical project whose goal is to expand Russia’s influence over Europe’s energy resources. We continue to believe it’s a bad deal for Germany, it’s a bad deal for Ukraine, it’s a bad deal for Europe and Europe’s broader energy security goals,” Price told reporters.

A state department official argued that the Biden administration had sanctioned more companies connected to the project than the Trump administration. “Certainly, we think that there is more that the previous administration could have done,” a state department official said. “But, you know, we were making the best of a bad hand.”

Additional reporting by Max Seddon in Moscow and Erika Solomon

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