U.S. and Germany Reach a Deal on Putin’s Pipeline Project


U.S. President Joe Biden and German Chancellor Angela Merkel attend a joint news conference in the East Room at the White House, July 15, 2021. (Tom Brenner/Reuters)
The proposed agreement will only intensify Ukrainian, Polish, and congressional fears of appeasement.

As the Russia-backed Nord Stream 2 natural-gas pipeline nears completion, likely by next month, the U.S. and Germany have struck a deal that would resolve their years-long dispute over the project, according to the Wall Street Journal.

A draft proposal under consideration by Washington and Berlin, which was obtained by Bloomberg, would commit Germany to retaliating against future Kremlin efforts to weaponize energy flows against Ukraine. According to the proposal, in such a situation, Germany would potentially respond by cutting off gas flows from Russia.

But the agreement will face major opposition, including from bipartisan critics in Congress and U.S. allies who might vocally object to it. These two groups view Nord Stream 2 as a malign, authoritarian influence project that would put frontline states at the mercy of Russian gas flows and increase Europe’s dependence on Moscow.

Curiously, the Biden administration sees it this way, too, but still takes a stance deferent to Chancellor Angela Merkel’s fierce advocacy for it and opposition to U.S. sanctions that would target European companies and individuals involved in its construction. Responding to the reports on a potential agreement during a press briefing this afternoon, State Department spokesman Ned Price reiterated that criticism: “We have made no bones about the fact that it is a bad deal for Germany. It is a bad deal for Ukraine and for Europe more broadly.”

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Ukraine stands to lose some of the revenue it makes from transit fees from the gas pipelines that currently run through its territory. The country’s leaders also worry that the completion of Nord Stream 2, which bypasses Ukraine, would detract from some of the leverage it needs to deal with the ongoing Russian military threat.

Still, the administration has consistently deferred to German sensitivities, if not rhetorically, then in practice. In May, it waived sanctions on the project’s German CEO Matthias Warnig and the corporate entity that he heads, and Price struck a defensive tone during his comments today. “It’s also worth a reminder of what this administration inherited and that it is a pipeline that was over 90 percent complete when we assumed office,” he said, reflecting the administration’s view that the pipeline’s completion is all but given.

But this was not always a given. Secretary of State Antony Blinken lost the intra-administration debate over the sanctions waivers to National Security Council officials who didn’t see stopping Nord Stream 2 as a worthy enough goal to damage U.S.–German ties. At one point, at least, senior State Department officials apparently viewed it as possible, or worthwhile, to attempt to stop the pipeline from being built.

But now, by mending fences with Germany’s outgoing government with a potential deal, compromising on U.S. opposition to Nord Stream 2, President Biden and his team might be creating problems elsewhere.

In recent months, top officials from those countries, including Ukrainian president Volodymyr Zelensky and Polish foreign minister Zbigniew Rau, publicly complained that the Biden administration hadn’t looped them in on key sanctions decisions.

Zelensky has called the pipeline a “real weapon,” telling Axios, “It is not very understandable . . . that the bullets to this weapon can possibly be provided by such a great country as the United States.” Ukraine fears that the project would allow Russia to sideline its central role in gas-transit routes, inflicting economic pain as a geopolitical weapon.

That scenario is far from theoretical. Moscow has cut energy flows to client states, and to Western-leaning governments, to achieve its political goals. It did so to Ukraine in 2006 over a dispute over energy costs. Given the country’s current pro-Western government, it’s not difficult to see why bolstering Russian leverage here worries Zelensky and others.

Surprisingly, Ukrainian and Polish officials have remained comparatively mum about the reported proposal, as a senior State Department official visits them this week.

Derek Chollet, the State Department counselor and a senior adviser to Blinken, is meeting Ukrainian officials in Kyiv today, and according to Reuters, which first reported yesterday that a deal on the pipeline is imminent, the Biden administration is “eager to ensure” that Zelensky’s team approves of the deal. He will also travel to Poland, where the State Department said he will “discuss strategic bilateral and regional ties.”

It seems that the State Department learned its lesson after bruising headlines that followed the Warnig waiver, when Zelensky and Rau revealed that the administration failed to consult them.

There’s also a hard-edged component of this diplomatic push. According to Politico, Biden administration officials have told Ukrainian officials that their public opposition to the deal could harm U.S.–Ukraine relations and that they should not consult with members of Congress on the deal.

In the face of this pressure, however, Poland and Ukraine are cleverly signaling their resolve to cooperate with each other, as the U.S. sells them short. Their ambassadors to the United States met yesterday, posting an image to Twitter publicizing their get-together. “May our cooperation in Washington, D.C. be close, fruitful and successful!” Piotr Wilczek, Poland’s envoy, wrote.

One thing that might reassure Kyiv is a provision in the agreement in which Germany pledges to help Ukraine secure a ten-year gas-transit agreement with Russia, placing its situation on firmer footing.

The other details of the deal unveiled by Bloomberg are not disastrous, merely lackluster. In a typical Biden-era flourish, Washington and Berlin would stand up a $1 billion “Green Fund” for Ukraine’s transition to green energy. Meanwhile, Germany would appoint an official specifically designated to supporting Ukraine’s energy market.

But otherwise, Ukraine and Poland are right to band together, anticipating geoeconomic abandonment by an administration that would prefer to swear them to silence.

The German promise to cut off Russian gas contained in the draft agreement is vague, and intentionally so, according to Bloomberg: “A senior U.S. official, who asked not to be identified discussing the terms of the deal, said the language was intentionally ambiguous because the administration didn’t want to give Russia a road map of its response to any malign behavior.” The Journal‘s report notes an additional reason for this; a pledge to automatically shut off energy flows in the event of a Russian coercion campaign — or, a “kill switch” — could become the target of litigation.

All of this dashes congressional hopes for a wish-list item: A firm German threat to, in the event of a coercion campaign, shut off Russian energy flows could have provided some minimal reassurance to the pipeline’s detractors.

So in Washington, Nord Stream 2 hawks on both sides of the aisle are girding for a fight.

“When Germany and Russia collude, the people of Central and Eastern Europe pay the price,” said Representative Marcy Kaptur (D., Ohio) on the House floor today. She also said Congress should reject any deal that would “fail to protect transatlantic security and Ukraine’s sovereignty.” Her Republican colleagues are sure to join the fray as well, panning the deal as a gift to Vladimir Putin.

And they’ll be right, but they won’t shift the needle on this, as Biden doesn’t need their approval. So Ukraine, Poland, and others facing the brunt of Putin’s malign activities will pay the price because, overcompensating for U.S.–German tensions, the Biden administration is treating one ally’s appeasement of authoritarianism with kid gloves, as it rams through this deal at the expense of others.

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