Germany sidelines eastern European fears to strike US deal on Nord Stream 2

The US and Germany have reached a deal over the Nord Stream 2 gas pipeline that both sides say will stop Russia from using the project as political leverage over their European allies.

The almost complete new pipeline will have the capacity to carry 55 billion cubic metres of gas per year to Europe under the Baltic Sea and will double Russian gas exports to Germany.

However, it has been met with fierce resistance from Ukraine, which stands to lose around $3bn (£2.2bn) a year in gas transit fees, as well as US Republicans, who claim the pipeline will leave European countries “at the mercy” of Vladimir Putin.

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‘A bad pipeline’

Announcing the deal, US official Victoria Nuland told reporters that it remains “a bad pipeline”, but added the agreement “envisaged sanctions against Moscow if it tried to blackmail Ukraine”, which has warned that the “pipeline threatens its security”, the BBC says.

The deal aims to “allay fears about European dependence on Russian energy”. This “has posed a major foreign policy dilemma for the Biden administration” due to fears among Republicans and Democrats that it hands “Russia too much power over European gas supplies, potentially shutting off gas to Ukraine and Poland”, Sky News reports.

Ukraine has been battling with Russian-backed separatists since 2014, while Moscow also annexed the Crimea peninsula from Ukraine in the same year. In early April this year, a massing of Russian troops on its border with Ukraine raised fears that Moscow was plotting another attack on its eastern European neighbour.

Under the terms of the deal, the US and Germany pledged to impose costs on Russia to prevent it from using the pipeline as a political weapon, saying in a joint statement that the two nations are “united in their determination to hold Russia to account for its aggression and malign activities by imposing costs via sanctions and other tools”.

“Should Russia attempt to use energy as a weapon or commit further aggressive acts against Ukraine, Germany will take action at the national level and press for effective measures at the European level, including sanctions, to limit Russian export capabilities to Europe in the energy sector,” the statement added.

Berlin will also “set up a billion-dollar fund to promote Ukraine’s transition to clean energy”, the Financial Times (FT) reports, and a special envoy will be appointed to “help Kyiv negotiate an extension of its gas transit agreements with Russia beyond 2024”.

However, some “critics have said the deal does not go far enough”, Sky News says. Poland has joined Ukraine in its opposition to the project that it claims “threatens the security of central and eastern Europe”, according to the BBC.

Ukraine has “demanded formal talks with Brussels and Berlin on the pipeline”, Politico reports, with a joint statement by Kyiv’s foreign minister, Dmytro Kuleba, and his Polish counterpart, Zbigniew Rau, saying the deal “cannot be considered sufficient”.

An end to US opposition to the pipeline “has created a political, military and energy threat for Ukraine and Central Europe, while increasing Russia's potential to destabilise the security situation in Europe, perpetuating divisions among NATO and European Union member states”, the pair added.

The deal is also creating a headache for Joe Biden, who has been accused of handing a “gift” to the Kremlin and “actively helping Putin build his pipeline”, The Telegraph says.

A US State Department spokesperson yesterday said that the White House still considers it to be “a Kremlin geopolitical project that is intended to expand Russia's influence over Europe's energy resources and to circumvent Ukraine”.

They added: “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.”

However, in striking the deal with Germany and making clear that sanctions will not stop the project’s completion, Biden has opened himself up to claims by Republicans that he has performed a “total surrender to Putin”.

“This will be a generational geopolitical win for Putin and a catastrophe for the United States and our allies”, Republican congressman Ted Cruz said. “Decades from now Russian dictators will still be reaping billions from Biden’s gift, and Europe will still be subject to Russian energy blackmail.”

This was echoed by fellow GOP congressman Steve Womack, who added: “The implications of Nord Stream 2 are startling. Its completion will leave Ukraine and European energy at the mercy of Putin. The Biden administration’s current posture is shaping up to be one of the greatest foreign policy blunders in recent history. This project needs to be stopped.”

Biden has also taken fire from his own side of the aisle, with Democratic Senator Jeanne Shaheen warning that she is “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”.

‘Firmly on the side of Ukraine’

As lawmakers on Capitol Hill and eastern European ministers line up to warn that the deal does “not provide sufficient protection to American allies from potential Russian actions to disrupt energy security”, the FT says, German Chancellor Angela Merkel has been keen to stress that the pipeline is an “exclusively commercial” arrangement.

German foreign minister Heiko Mass also said that the deal was not an indication of a shift in the country’s approach to its allies, adding: “As a transatlantic partner, we are firmly on the side of Ukraine.”

But in a call with Merkel on Wednesday, Putin praised Berlin’s “consistent dedication” to Nord Stream 2, echoing the departing chancellor’s pledge that the pipeline project was only focused on “ensuring Germany and the EU’s energy security”, the paper adds.

Having the US on board will not mean the dispute subsides overnight. The Ukrainian parliament’s foreign affairs committee published a three-page statement last night calling on the US, Germany and the EU to stop the project, labelling it “inadmissible”.

There also “remains strong bipartisan opposition to the pipeline in Congress”, Sky News reports, as US officials still fear any arrangement that allows Moscow to “export gas directly to Germany and potentially cut off other nations”.

Biden has “sought to assuage Ukraine by inviting its president to the White House”, The Telegraph says, with a meeting between the two scheduled to take place on 30 August.

But the US president will stand accused of “prioritising improving relations with Berlin” – a key tenet of his strategy for dealing with Russia and China – over European national security after that close relationship “suffered under Donald Trump”, the paper adds.