WASHINGTON — The U.S. Department of State has issued a statement saying that United States officials announced on Wednesday that they had dropped their threat to scuttle the Nord Stream 2 natural gas pipelines from Russia to Germany, officially putting an end to a years-long dispute with Berlin over an energy deal that critics have warned would allow Moscow to deprive Ukraine of transit fees that are critical to Kyiv’s economy.
The Biden administration’s decision amounted to an admission that the pipeline project had progressed too far to be stopped and that relations with Germany, a critical ally, were too important to risk deteriorating over a disagreement.
Republicans and Democrats in Congress, who have called for the imposition of economic sanctions to halt the pipelines, were enraged by the decision, and they accused the administration of being soft on Russia on Wednesday morning.
They are approximately 750 miles long and run from Russia directly under the Baltic Sea to Germany, bypassing Poland and Ukraine while avoiding some transit fees that would otherwise be paid to those countries. Developed by a subsidiary of Gazprom, the Russian energy giant controlled by the Kremlin, they will more than double the amount of natural gas that Russia can export directly to Germany.
Despite construction delays caused by investors’ concerns about being targeted by U.S. sanctions, the $11 billion project is expected to be completed by the end of the year.
According to reports, the new agreement is an attempt by President Biden to portray the inevitable completion of the pipelines as a diplomatic victory and a defence of the interests of Poland and Ukraine, both of which stand to lose financially as a result of the agreement. If Russia were to use its control over energy supplies to harm or endanger Ukraine, Poland, the Baltic states, or any other allied country of the United States, the document calls for Germany to impose sanctions on Russia.
Officials from the State Department who spoke to reporters on the condition of anonymity on Wednesday stated that the Biden administration continues to have “profound differences” with Germany over the project, according to the officials. However, the officials mentioned a $1 billion investment fund, which will be administered by Germany, that will aid Ukraine in its efforts to reduce its reliance on Russian gas exports.
Officials said Germany will contribute an initial $175 million to the fund, which will be used to attract private investors to help Ukraine improve its energy efficiency and energy security. Berlin and Washington are both seeking private investors to help Ukraine improve its energy efficiency and energy security.
Chancellor Angela Merkel met with Vice President Joe Biden in Washington last week, and the two leaders agreed that Russia should not be able to use energy as a weapon, according to Mr. Biden, who said the two leaders were “united in our conviction that Russia should not be able to use energy as a weapon.”
President Volodymyr Zelensky of Ukraine, who has urged Congress to try to halt the project with sanctions, will pay a visit to the White House in August, according to White House officials on Wednesday.
July 21, 2021, 10:02 p.m. ET
In a statement, Republican Senator Ted Cruz of Texas said that the agreement with Germany was “a generational geopolitical win” for Russian President Vladimir V. Putin and “a catastrophe” for the United States and its allies.
Mr. Cruz, whose constituents in Texas include major energy exporters, has slowed the confirmation of several Biden administration officials over the last several months because he is insistent that the United States prevent the pipelines from being completed in their current configuration. In a statement, he said that President Biden was “defying U.S. law and has completely surrendered” to Russian President Vladimir Putin. The gift from Biden will continue to benefit Russian dictators for decades to come, and Europe will continue to be a victim of Russian energy blackmail for decades to come.
Senator Jeanne Shaheen of New Hampshire, a Democrat, expressed her appreciation for the diplomatic efforts with key European allies in a statement. The Nord Stream 2 pipeline, she asserted, should not be built because it would allow the Kremlin to expand its malign influence throughout Eastern Europe, threaten the economic security of our European partners, and jeopardise global stability.
Her statement was followed by, “I continue to believe.”
According to State Department officials, the Biden administration had not capitulated and that American sanctions related to the project had been imposed against 19 entities since Mr. Biden took office, compared with only two entities during the term of President Donald J. Trump, who had taken office in January 2017.
Derek Chollet, the State Department’s counsellor, presented the agreement to senior Ukrainian officials in Kyiv on Tuesday and Wednesday, and he assured them of the United States’ continued support for the agreement. He also requested that the Ukrainian government refrain from lobbying Congress to impose additional sanctions in connection with the project.
Germany and Russia previously agreed to keep transit fees for natural gas flowing to Ukraine in place until 2024, and it is likely that this will be extended by another year as a result of this agreement.
According to a government spokesman, Steffen Seibert, “For the German government, it is essential that Ukraine continues to serve as a transit country even after Nord Stream 2 is completed.”
The pipelines have enabled Russia to further isolate Germany from its European allies as well as from the United States through geopolitical division. However, Mr. Biden, who has stated that he will continue to oppose the project, has made it clear that his top priority is China, and that obtaining German and European support for joint policies to restrain China and limit its economic and political influence is a critical part of that strategy.
American sanctions and threats of sanctions, according to Nord Stream AG’s managing director Matthias Warnig, have added at least 18 months to the project’s timeline and cost “hundreds of millions” of euros. Nord Stream AG is building and will operate the pipelines.
In an interview published on July 11 in the German business newspaper Handelsblatt, Mr. Warnig stated that the threat of US sanctions had made his team’s work “significantly more difficult in every respect,” including certification. “However, we are working on solutions and are confident that we will find a solution.”