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Biden Administration “Surrenders” to Germany on Russian Gas Pipeline

By Soeren Kern, August 4, 2021:

• “The willingness of the administration to make decisions of this magnitude without consulting the countries most exposed will not be lost on other parts of the world. Jerusalem and Riyadh, for example, are no doubt already strategizing around the potential of facing a surprise similar to the one that Washington just delivered to Warsaw and Kyiv.” — Kiron Skinner and Russell Berman, Foreign Policy, July 26, 2021.
• “The lesson learned by Germany is that it can pursue its own inclinations of doing business with dictators regardless of principles and with no consequences from Washington. More dangerously, the lesson for Moscow and Beijing is that sanctions for international aggression will never be sustained for very long. The Biden administration has made the fragile international order even less secure.” — Kiron Skinner and Russell Berman, Foreign Policy, July 26, 2021.
• “The project creates conditions for Russia’s escalation of military aggression against Ukraine, as well as the continuation of a hybrid war against the EU and NATO…. This Russian pipeline threatens the national security not only of Ukraine, but also of all of Europe.” — Ukrainian Parliament, July 21, 2021.
• “The U.S.-German deal is embarrassingly weak. It relies on a vague assurance that after Putin ramps up the blackmail enabled by the deal, Germany will take unspecified actions in response…. Overall, Biden handed Putin the biggest gift he’s received in years. He also signaled to Putin that when push comes to shove, the American president is weak and will bow to political pressure.” — U.S. Senator Ted Cruz, Washington Examiner, July 22, 2021.
• “Remarkably, Washington agreed to end its opposition to the project without any recognizable benefit in exchange: Merkel has neither promised increased engagement for NATO nor more clarity about China. The compromise between Biden and Merkel is not a compromise at all, but an American capitulation.” — Robin Alexander, Die Welt, July 21, 2021.

• The Biden administration has reached an agreement with German Chancellor Angela Merkel that allows for the completion of a controversial natural gas pipeline between Russia and Germany.

The July 21 deal to complete the Nord Stream 2 pipeline, which would double shipments of Russian natural gas to Germany by transporting the gas under the Baltic Sea, has angered the leaders of many countries in Eastern and Western Europe; they argue that it will effectively give Moscow a stranglehold over European gas supplies and open the continent to Russian blackmail.

Both the Obama and Trump administrations steadfastly opposed the pipeline on the grounds that, once completed, it would strengthen Russian President Vladimir Putin’s economic and political influence over Europe.

The Trump administration was especially critical of the pipeline because it will funnel billions of dollars to Russia at a time that Germany is free-riding on the U.S. defense umbrella that protects Germany from that same Russia.

The Biden administration’s abrupt reversal of long-standing bipartisan policy consensus has baffled observers from across the political aisle. Just one day before the Biden-Merkel deal was announced, State Department Spokesman Ned Price criticized the pipeline as a “Kremlin geopolitical project that is intended to expand Russia’s influence over Europe’s energy resources and to circumvent Ukraine.” White House Press Secretary Jen Psaki previously asserted that the Biden administration “continues to believe that Nord Stream 2 is a bad deal for Europe.”

The Biden administration has not explained why or how completion of the pipeline will promote American or European strategic interests. Geopolitical analysts on both sides of the Atlantic say that the pipeline deal will: 1) weaken American and strengthen Russian influence in Europe; 2) heighten divisions between the Eastern and Western European members of the European Union; 3) push some of the EU’s eastern periphery closer to China; 4) deprive Ukraine of the transit fees it now collects on gas pumped through an existing pipeline and thereby undermine Kiev’s struggle against Russian aggression; and 5) allow President Putin to strong-arm Germany and the European Union by turning off deliveries of natural gas whenever he wants.

The Biden-Merkel agreement will avert the resumption of sanctions that the U.S. Congress has mandated against Nord Stream 2 AG and its chief executive, Matthias Warnig, an ally of Putin. President Joe Biden waived those sanctions in May because, he said, they were “counter-productive” to U.S.-German relations. In exchange, Merkel, whose final term in office ends in September, offered only vague promises to protect Europe from potential Russian threats.

U.S. sanctions delayed completion of the 1,230-km (764-mile) pipeline by more than a year and added at least $1 billion to its cost. The €9.5 billion ($11.5 billion) project, which is 90% complete, was initially slated to become operational at the end of 2019, but was delayed after several key participants were threatened with U.S. sanctions and bailed out. As a result of the Biden-Merkel deal, Nord Stream 2 is now expected to be completed by the end of August 2021.

REACTIONS TO THE BIDEN-MERKEL DEAL

In an essay published by Foreign Policy, policy analysts Kiron Skinner and Russell Berman, wrote that by “surrendering” to Merkel on Nord Stream 2, Biden abandoned a bipartisan consensus, got nothing in return, and made the world less secure:

“Bipartisan opposition to the Nord Stream 2 pipeline was a cornerstone of the foreign policies of both the Obama and Trump administrations, an unambiguous response to Russia’s annexation of Crimea and the Kremlin’s record of using gas deliveries as a weapon of coercion in Eastern Europe. The recent decision by the Biden administration to reverse the policy of its predecessors and to refrain from sanctioning participants in the pipeline project is nothing but a capitulation to pressure from Germany and a gift to Russian President Vladimir Putin. The damage to American national interest will be profound….

“The willingness of the administration to make decisions of this magnitude without consulting the countries most exposed will not be lost on other parts of the world. Jerusalem and Riyadh, for example, are no doubt already strategizing around the potential of facing a surprise similar to the one that Washington just delivered to Warsaw and Kyiv….

“The lesson learned by Germany is that it can pursue its own inclinations of doing business with dictators regardless of principles and with no consequences from Washington. More dangerously, the lesson for Moscow and Beijing is that sanctions for international aggression will never be sustained for very long. The Biden administration has made the fragile international order even less secure.”

In a joint statement, Ukrainian Foreign Minister Dmytro Kuleba and Polish Foreign Minister Zbigniew Rau said that the Biden-Merkel deal “has created political, military and energy threats for Ukraine and Central Europe, while increasing Russia’s potential to destabilize the security situation in Europe, perpetuating divisions among NATO and European Union member states.”

The Ukrainian Parliament, in a two-page statement, said:

“Nord Stream 2 is a purely geopolitical project aimed at making Europe dependent on the Russian gas monopoly. Moscow is implementing this project with a view to exacerbating and strengthening discordances within the democratic and European communities. The Nord Stream 2 project is also a tool for projecting the military force of the Russian Federation against NATO countries in Russia’s priority, the Baltic Sea….

“The project creates conditions for Russia’s escalation of military aggression against Ukraine, as well as the continuation of a hybrid war against the EU and NATO. The commissioning of the pipeline will remove Ukraine’s important lever to contain Russia, making it vulnerable to the Kremlin’s anti-democratic and anti-reformist vision of Ukraine. This Russian pipeline threatens the national security not only of Ukraine, but also of all of Europe.”

U.S. Senator Ted Cruz, a fierce opponent of the pipeline, described the Biden-Merkel deal as “catastrophic” for U.S. strategic interests. In an opinion article published by the Washington Examiner, Cruz wrote:

“This decision is a total surrender to Putin. It is a multibillion-dollar gift that will keep on giving in perpetuity at the expense of the United States and our allies. It is a generational geopolitical mistake. Russian dictators, decades from now, will be reaping billions of dollars every year from President Joe Biden’s gift….

“The U.S.-German deal is embarrassingly weak. It relies on a vague assurance that after Putin ramps up the blackmail enabled by the deal, Germany will take unspecified actions in response. When asked for details of what such actions might be, the White House says it doesn’t want to specify because doing so would benefit Putin. Again, embarrassing.

“Overall, Biden handed Putin the biggest gift he’s received in years. He also signaled to Putin that when push comes to shove, the American president is weak and will bow to political pressure.”

European affairs columnist Wolfgang Münchau noted that the political cost of the U.S.-German deal on Nord Stream 2 will vastly exceed its commercial benefits:

“The Baltic States and Poland, as well as Ukraine, see the pipeline as a massive violation of their own security interests. The first consequence will be a strategic alliance between Poland and China. That has already started. China is the only security option left for Poland, as Russia and Germany are building a political axis that leaves Poland in the lurch — now with US support. As a sheer by-product, any attempt by the EU to forge a closer and common foreign security policy is doomed now….

“Biden and his foreign policy team believe, wrongly in my view, that they can co-opt Germany into their China strategy. They will discover that the candidate most likely to succeed Angela Merkel is even more of a mercantilist than she is. Armin Laschet stands in the tradition of German corporatism.”

Robin Alexander, columnist for the German newspaper Die Welt, noted:

“Remarkably, Washington agreed to end its opposition to the project without any recognizable benefit in exchange: Merkel has neither promised increased engagement for NATO nor more clarity about China. The compromise between Biden and Merkel is not a compromise at all, but an American capitulation.”

Veteran geopolitical analyst Andrew Michta warned that America’s capitulation on Nord Stream 2 will “redefine” Europe for years to come:

“The strategic myopia of the NS2 decision is disheartening, for it shows our inability to learn from Europe’s evolution over the past three decades. The stunning transformation of post-communist Europe after 1990 was possible not only because of the powerful appeal of democracy and markets, but above all because Russia was literally expelled from the region. It was that factor above all others that allowed for NATO and then EU enlargement to the East, thereby creating the conditions that transformed Central Europe from a hyperinflation-ridden economic basket case into the most rapidly growing part of the European Union. National security and state sovereignty were the sine qua non of the successful transformation of post-communist Central Europe. Furthermore, the emergence of Belarus and Ukraine alongside the Russian Federation offered the greatest opportunity to date for Russia itself to break out of the imperial cycle. So long as the sovereignty of Belarus and Ukraine were preserved, there would be no back-to-empire pathway for Moscow, with the Russian Federation having at least a shot at becoming a ‘normal’ nation-state….

“In light of the NS2 deal and what it signifies in geostrategic terms, Ukraine’s continued independence has been put further in question, while Belarus is no longer in a position to charter an even quasi-independent course of Russia, making a regional solution to the security equation in the region that favors NATO all but unattainable. And if Putin completes the process of re-assembling the Russian imperial core, his armor and missile installations will be right at NATO’s Eastern border.

“As one surveys Europe’s recent history, there are only a few policy decisions that in hindsight deserve to be called transformative, for they set in motion developments that would shape power relationships between states for years to come. We have not yet seen the full impact of the NS2 deal, but arguably the consequences of the US-German agreement will reverberate across Europe for years to come.”

A BRIEF HISTORY OF NORD STREAM 2

Nord Stream 2 is led by Russia’s Gazprom, with half of the funding provided by Germany’s Uniper and Wintershall, the Anglo-Dutch company Shell, Austria’s OMV and France’s Engie.

Despite the multinational participation, the pipeline is essentially a German-Russian project promoted from its inception by Germany’s center-left Social Democratic Party (SPD), which, even during the Cold War, viewed closer economic ties with Russia to defuse East-West tensions.

Germany’s former SPD chancellor, Gerhard Schröder, a confidant of President Putin, has been Europe’s leading proponent of the pipeline. Schröder, who led Germany between 1998 and 2005, has been the Chairman of Shareholders’ Committee of Nord Stream since 2006. He is also Chairman of the Board of Directors of Rosneft, Russia’s biggest oil producer. He has used his connections in Germany and elsewhere in Europe to lobby for both Nord Stream 1 and Nord Stream 2.

In 2017, when Nord Stream was suffering from several serious setbacks, the former SPD leader and Foreign Minister Sigmar Gabriel revived the project, as did his successor, Frank-Walter Steinmeier, who is now Germany’s president.

Germany’s current Social Democratic Foreign Minister, Heiko Maas, has criticized U.S. sanctions as foreign interference: “Decisions on European energy policy are made in Europe, not the USA. We fundamentally reject foreign interventions and sanctions with extraterritorial effects.”

Europe is, in fact, deeply divided over the Nord Stream project and Germany is in the minority position. Russia is the largest supplier of natural gas to the EU, according to Eurostat. Just over 40% of EU imports of natural gas come from Russia, followed by Norway (at around 35%). Nord Stream 2, when combined with the existing Nord Stream 1, would concentrate 80% of the EU’s Russian-imported gas along that pipeline route.

Germany’s Nordic, Baltic and Eastern European neighbors have accused Berlin of ignoring their concerns that the pipeline is a threat to Europe’s energy security and that it will strengthen Gazprom’s already dominant position on the market.

In March 2016, the leaders of the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slovakia, in a letter to the European Commission, warned that Nord Stream 2 would pose “risks for energy security in the region of central and eastern Europe” and generate “potentially destabilizing geopolitical consequences.”

A report by the Swedish Defense Research Agency found that Russia has threatened to cut energy supplies to Central and Eastern European more than 50 times. Even after some of those states joined the European Union, Russian threats continued.

In December 2018, the European Parliament, by a vote of 433 to 105, condemned Nord Stream 2 as “a political project that poses a threat to European energy security.” It called for the project to be cancelled.

Nord Stream 2 should have been operational at the end of 2019, but the project was delayed after applications to lay pipes under Danish waters were left pending since April 2017. Nord Stream Chairman Gerhard Schroeder blamed U.S. political pressure on Denmark as the main reason for the delay in approving the permits. “Denmark is putting Europe’s energy security at risk,” he said.

After Denmark’s Social Democratic Party won the Danish general elections in June 2019, the new government removed the last major hurdle to complete the Russian-led project. In October 2019, the Danish Energy Agency approved a permit for Nord Stream to lay pipes in a 147-km section in the Danish Exclusive Economic Zone (EEZ) southeast of Bornholm, a Danish island in the Baltic Sea.

In August 2020, after Russian opposition leader Alexei Navalny was poisoned with novichok, a military-grade nerve agent developed by the Soviet Union, Chancellor Merkel faced intense pressure to pull out of the pipeline project. Merkel said that the two issues should be “decoupled.” The Biden administration, apparently, agrees with Merkel on rewarding dictators and human rights violators with multibillion dollar business deals.

EDITORS NOTE: This Geller Report column is republished with permission. All rights reserved.

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