Biden Administration Reviews Nord Stream 2 Gas Pipeline

By Brett Forrest

WASHINGTON -- The Biden administration is reviewing U.S. policy toward a pipeline designed to carry Russian natural gas to Germany beneath the Baltic Sea, under new pressure after construction on the $11 billion project resumed this month, according to people with knowledge of the deliberations.

The undersea pipeline, Nord Stream 2, is more than 90% completed, with about 100 miles remaining. Construction resumed in earnest on Feb. 6, more than a year after it came to a halt in the face of opposition from the Trump administration and acts of Congress authorizing sanctions on companies and individuals involved in the project. The Biden administration hasn't thus far imposed sanctions required by law.

The Biden administration has opened talks with Berlin on the future of the pipeline, including "threats of sanctions against companies involved in the construction of Nord Stream 2," a German official said.

The administration on Tuesday faces a deadline to report a list of companies it deems in violation of the U.S. laws aimed at halting the Nord Stream 2 pipeline. Those companies would be potential targets for U.S. sanctions. The Biden administration could also waive the application of sanctions under a national-interest clause, placating Germany, a critical European ally, handing Russia a geopolitical victory, and crossing a bipartisan coalition in Congress.

"The arrival of Russian infrastructure into a NATO country puts all NATO members at risk," wrote Sens. Jeanne Shaheen (D., N.H.), one of the principal authors of the sanctions legislation, and Jim Risch (R., Idaho), the top Republican on the Senate Foreign Relations Committee, to the White House on Friday. "The U.S. relationship with Germany is a cornerstone of the transatlantic alliance. But allowing the completion of Nord Stream II is not a constructive path forward for this partnership."

Nord Stream 2 will allow Gazprom, Russia's gas-export monopoly, to all but abandon the Ukrainian transit system that has handled the bulk of Russian gas deliveries to Europe for decades. U.S. lawmakers worry that Nord Stream 2 will strengthen Russia's grip on the European energy market, scotch any geopolitical leverage Ukraine may still have in its struggle with Russia, and increase Moscow's influence on the continent.

The Biden administration is eager to improve ties to Berlin, which were strained by President Trump's skepticism of the North Atlantic Treaty Organization alliance and threats of tariffs on German goods, and German Chancellor Angela Merkel's criticism of Mr. Trump's "America First" foreign policy.

Mr. Trump publicly opposed the pipeline, at one point urging Berlin to halt construction as the price of averting a trade war with the U.S. Berlin and Russian officials have characterized Nord Stream 2 as a solely commercial venture advancing energy security for Europe.

Mr. Biden hasn't articulated a policy on the pipeline. White House spokeswoman Jen Psaki said last month that "the president continues to believe that Nord Stream 2 is a bad deal for Europe."

But that was before construction on the pipeline resumed. When the administration didn't respond by applying mandatory sanctions, that cast its policy in doubt. Ned Price, the principal State Department spokesman, declined to state a formal policy at a briefing Friday.

"Our position on Nord Stream 2 has been very clear and it remains unchanged," he said.

Officials on the White House National Security Council have met to discuss the pipeline, including Germany's willingness to place a moratorium on the project, according to people with knowledge of the discussions. A National Security Council spokeswoman declined to comment.

Another State Department spokesman said the administration was aware of the resumption of work on Nord Stream 2 and would "monitor activity to complete or certify the pipeline and, if such activity takes place, make a determination on the applicability of sanctions."

The Senate Foreign Relations Committee has requested a classified White House briefing on the pipeline, according to a Senate aide familiar with the request.

"We are sure that [the pipeline] will be built despite those destructive approaches, which we have seen on the part of the U.S. that certainly, in its turn, has been delaying the implementation of this project," Russian Deputy Prime Minister Alexander Novak told Russian state television on Sunday.

A spokesman for Nord Stream 2 AG, the Swiss-registered, Russian-owned company building the pipeline, said, "U.S. sanctions actions against companies conducting legitimate business in the [European Union] on the Nord Stream 2 project are contrary to international law and a violation of Europe's energy sovereignty."

On Jan. 19, the final full day of the Trump administration, the Treasury Department sanctioned the Fortuna, the Russian-owned barge that is now laying the Nord Stream 2 pipe on the Baltic Sea floor.

William Mauldin contributed to this article.

Write to Brett Forrest at [e-mail]

(END) Dow Jones Newswires

02-16-21 0714ET