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Biden Takes No Action Against Nord Stream 2 Participants

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The Russian pipelay barge Fortuna (undated file image courtesy MRTS)

By The Maritime Executive 02-22-2021 09:54:00

The Biden administration is taking a hands-off approach to Gazprom's nearly-complete Nord Stream 2 subsea pipeline, making no significant moves against companies violating U.S. sanctions on the project, according to sources familiar with a status report that the State Department completed last week. 

The administration's report names the Russian pipelay barge Fortuna and its owner, KVT-RUS, as designated entities with a role in the project. However, both were already sanctioned during the Trump administration, and the designation is not expected to have a material effect.

“Congress has passed multiple bipartisan laws regarding this project, and specifically broadened the mandatory sanctions to include the types of pipe-laying activities occurring right now. The administration's decision to ignore these activities demands an immediate explanation," said U.S. Senator Jim Risch (R-ID), who had access to the report as the ranking member of the Senate Foreign Relations Committee. "We know pipeline construction is currently underway in the Baltic Sea. Maritime tracking information makes it clear that ships not covered in today's report are currently active in supporting Nord Stream 2 construction."

President Joe Biden and newly-confirmed Secretary of State Antony Blinken have stated that they oppose the completion of Nord Stream 2, but they face two competing priorities: shoring up America's alliance with Germany, which has a strong economic interest in the pipeline, or defending America's allies in Eastern Europe, who would be negatively affected. Blinken is said to oppose issuing unilateral sanctions against the Western European firms involved in supporting the project, preferring diplomacy. 

If completed, Nord Stream 2 would allow Russia to bypass overland pipeline networks in Ukraine and Poland, providing a direct supply of gas to Western Europe. This would mean less revenue for the Ukrainian and Polish governments, and it would make it easier for Russia to shut off gas supplies to its Eastern European neighbors, as it did in 2006 and 2009. 

"This [sanctions] report is a gift to the Russians and their ongoing efforts to undermine European energy security, destabilize Ukraine, and facilitate corruption and malign influence throughout Europe," said Risch. "Unless this action is corrected, we risk the abandonment of our Central and Eastern European allies, the undermining of NATO, and a reversal of U.S. efforts to push back on Russian influence."

In a joint op-ed published in Politico on Monday, the foreign ministers of Poland and Ukraine called on President Biden to show resolve and "use all means at his disposal" to bring Nord Stream 2 to a halt, as the Trump administration did in 2019-20. 

"[The U.S.] needs to dismiss claims that Nord Stream 2 has become 'too big to fail' and that it simply needs to be finished. If the project is successful, Russia could try to convince the Ukrainian public that the West doesn’t care about its own principles, and ultimately, about the security and prosperity of Ukraine," wrote Polish foreign minister Zbigniew Rau and his Ukrainian counterpart Dmytro Kuleba. "Autocratic rulers in the Kremlin and elsewhere can and should be held accountable. The West, led by the United States, cannot afford to cower in the face of blackmail."

Nord Stream 2 is about 90 percent complete, and less than 100 nm of pipelay work remains, primarily in the Danish waters of the Baltic Sea. At the current rate of work, it could be finished as early as this summer, according to Axios.