NORD STREAM 2: GERMANY AND AUSTRIA STAND UP TO THE UNITED STATES OVER PIPELINE SANCTIONS




Robert Harneis -TDO- (FRANCE) Germany and Austria have urged the United States not to impose sanctions on Nord Stream 2, a Russian gas pipeline, less than a day after they were announced. They spoke in unusually stark terms of the risk they posed to joint action on Ukraine.

The German and Austrian foreign ministers, Sigmar Gabriel and Sebastian Kurz, voiced their anger in a joint statement on 15 June saying the “threat of illegal extraterritorial sanctions” on EU firms involved in the Nord Steam 2 project “impacts European-American relations in a new and very negative way.”

They specifically drew attention to their belief that American legislators were hypocritically trying to favor their own energy industry, accusing the US of exploiting the Ukraine conflict to help US companies sell more gas to Europe. They said, “The draft bill of the US is surprisingly candid about what is actually at stake, namely selling American liquefied natural gas and ending the supply of Russian natural gas to the European market”, adding “This is about the competitiveness of our energy-intensive industries and about thousands of jobs”, insisting it would “diminish the effectiveness of our stance on the conflict in Ukraine if we were to no longer take joint action” against Russia in future.

Nord Stream 2 is designed to pump 55 billion cubic meters of gas a year from Russia direct to Germany under the Baltic Sea from 2020. It is majority-owned by Russian state firm Gazprom, but also involves German and Austrian companies OMV, Uniper, and Wintershall, as well as French firm Engie and Anglo-Dutch company Shell. The US sanctions bill, which passed by 97 votes against two in the Senate on Thursday, would enable the Treasury Department to impose penalties on any firm that made a significant investment in the pipeline in what could see the EU companies walk away from the fresh risk.

“Europe’s energy supply network is Europe’s affair, not that of the United States of America!”, Gabriel and Kurz said, in an unusual use of the exclamation mark in a diplomatic communique. “We decide who supplies us with energy, and how they do it”, they said. They added that the EU firms were “participating in efforts to expand Europe’s energy supply network” in a project “based on transparency and on free market principles.”

Referring to the further progress of the proposal through Congress they claimed, “There is still enough time … to prevent this!”. However, some commentators fear that the current anti-Russian hysteria in Washington is such that few politicians will dare to oppose the move.

The new US sanctions go further by threatening penalties against firms that help Russia to extract oil from Arctic offshore, deep water, or shale deposits. They threaten fines against persons or entities that help Russia to sell arms. They restrict banks from providing short-term credit to six major Russian lenders. They also prevent US President Donald Trump from cancelling existing or future Russia sanctions via an executive order, saying he must first file a report to Congress justifying such a decision and allow Congressmen to vote on it.

The justification claimed for the bill is Russia’s supposed ongoing aggression in Ukraine, its actions in Syria, and bizarre unproven accusations that it meddled in last year’s US elections via cyber-attacks.

EU firms were encouraged to abandon Nord Stream 2 last year when a warning on the pipeline by Poland’s energy regulator saw foreign investors temporarily suspend participation. It would seem that the United States having failed to stop the pipeline through Polish bureaucratic obstruction are now attempting the threat of sanctions. They are operating in concert with those EU nations that would prefer the supply of Russia gas to be overland and therefore a source of revenue and vulnerable to interference. They are also concerned that the new pipeline, combined with Turkish Stream, will weaken Ukraine through whose territory much Russian gas still passes with regular disputes about payment.

The European Commission is divided on the issue. It has repeated the concerns of those nations that object and is in talks with the German energy regulator on the legal model for the pipeline. They are however reluctant to challenge Germany. The result of the EU interference with South Stream through the Black Sea and pressure on Bulgaria was cancellation of the pipeline by Russia leaving southern Europe short of gas for the future. They are also embarrassed by the fact that they actively encouraged Nord Stream 1, so why not Nord Stream 2? They are undoubtedly under great pressure from Washington.

Germany is generally docile in its dealings with the US but in the light of the commitment to abandon nuclear power, a reliable supply of gas is vital. At the time of the launching of Nord Stream 1, former Chancellor Gerhard Schroeder caused controversy by heading up the company building it. But German Chancellor Angela Merkel, from the center-right CDU party, has also defended Nord Stream 2 as she defended Nord Stream 1. At an EU summit in 2015 she allegedly told the then Italian leader Matteo Renzi that it was none of his business. The violence of the Austro-German reaction is also related to growing exasperation with the unpredictable antics of the Trump administration.

There is a long history of the United States trying to stop Europe developing reliable gas supplies with Russia and before that the Soviet Union going back 35 years. Germany, France and other EU nations continue to object to this damaging pressure whilst at the same time the United States does not hesitate to trade with Russia when it suits. In 2016 the Pentagon announced it was buying 16 Russian rocket engines because they could not be manufactured in the US.

Speaking on Russian TV on Thursday, Russian President Vladimir Putin said the new US measures were designed to "contain" his country's resurgence. He commented, “Russia's history shows that we have had sanctions from the moment that Russia started to raise itself up and feel strong". He added, “If there had been no Crimea or other problems, then they would have invented something else in order to contain Russia,”.