Nord Stream 2 Deal Will Finish Project, Not Include U.S. Sanctions for Germany, Russia

A Nord Stream 2 pipeline deal between the U.S. and Germany will allow the project to be completed and will not include new U.S. sanctions for Germany and Russia, the Associated Press reported.

The completion of the pipeline that will transport gas from Russia to Europe is opposed by Ukraine and Poland. As part of the deal, the U.S. and Germany will make concessions to the two countries, according to Congressional aides, who spoke with the AP, briefed on some of the deal's details that could potentially be announced Wednesday.

President Joe Biden's administration views the pipeline as a threat to energy security in Europe and previously imposed sanctions on some individuals involved in its construction. However, sanctions were waived against the German company involved.

"We have ongoing concerns about how the project threatens European energy security, undermines Ukraine's security, and the security of our eastern flank, NATO allies and partners," White House press secretary Jen Psaki said Tuesday.

For more reporting from the Associated Press, see below.

President Joe Biden and Chancellor Angela Merkel
A Nord Stream 2 pipeline deal between the U.S. and Germany will let the project be completed for gas to be transferred from Russia to Europe. In this photo, German Chancellor Angela Merkel and U.S. President Joe Biden hold a joint news conference in the East Room of the White House on July 15, 2021 in Washington, DC. Chip Somodevilla/Getty Images

The pipeline is also opposed by both Republicans and Democrats in Congress.

It was not immediately clear if concessions to Ukraine and Poland would be welcomed.

Administration officials declined to comment on the specifics of the matter. The State Department said Monday that a senior diplomat would be visiting both Poland and Ukraine this week in part to discuss Nord Stream 2 in what are expected to be contentious talks.

"I expect that the State Department and others will have more on this soon," Psaki told reporters.

The Nord Stream 2 project has posed a major foreign policy dilemma for the Biden administration. U.S. officials from both parties have long feared that it would give Russia too much power over European gas supplies, potentially shutting off gas to Russian adversaries Ukraine and Poland. But the pipeline is almost completed and the U.S. has been determined to rebuild ties with Germany that were damaged during the Trump administration.

Biden's approach to Ukraine is also a sensitive political subject. Former President Donald Trump's attempt to pressure Ukraine's president to dig up dirt on Biden and his son led to Trump's first impeachment. He was later acquitted by the Senate.

Word of the impending agreement comes as Ukraine is eager to have the White House make good on an invitation to President Volodymyr Zelenskyy to visit Washington. The invitation was extended in principle for "later this summer" before Biden met with Russian President Vladimir Putin in Geneva last month.

Although Zelenskyy said at the time he expected to meet Biden in July, no date has been announced as the month draws to a close and Ukraine's public reaction to the Nord Stream agreement may be muted as a result.

Nord Stream 2 has been a topic of intense debate between U.S. and German officials for some time and it was a major agenda item during Biden's meeting with German Chancellor Angela Merkel last week. Merkel supports the pipeline and Biden has suggested that punishing Germany for that support would be counterproductive to broader U.S. interests.

But like the Trump administration before it, the Biden administration regards the Nord Stream 2 project as a threat to European energy security.

Biden's move to waive sanctions against the German company constructing the pipeline and its top executives drew angry responses from members of Congress and disappointment from Ukraine and Poland.

Administration officials have defended the waivers, saying they can be rescinded at any time and that that threat actually gives the U.S. more leverage. That argument has been scoffed at by pipeline opponents, although Psaki on Tuesday reiterated the administration's concerns.

Poland, Ukraine and other eastern and central European countries bypassed by the pipeline are concerned that Russia will use gas supplies as a political weapon. Lawmakers from both sides of the aisle in Congress and some members of the administration are sympathetic to that position

Under the terms of the expected U.S.-Germany agreement, Ukraine would get $50 million in green energy technology credits, a guarantee of repayment for gas transit fees it will lose by being bypassed by the pipeline through 2024, and a pledge from both Germany and the U.S. that sanctions will be revisited should Russia use the gas as a political weapon, according to the congressional aides.

In a nod to Poland, Germany will also agree to sign onto the so-called "Three Seas Initiative," an EU and U.S.-promoted scheme that aims to boost investment, infrastructure development and energy security among the countries bordering the Baltic, Black, and Adriatic seas, according to the aides.