US, Germany reach a deal to allow the completion of Nord Stream 2

They committed to support Ukraine and Poland by funding alternative energy and development projects

Photo: EPA

The United States and Germany on Wednesday announced a deal to allow the completion of a controversial Russian gas pipeline to Europe without the imposition of further US sanctions, news wires reported. Under the terms of the deal, the US and Germany committed to countering any Russian attempt to use the Nord Stream 2 pipeline as a political weapon. And, they agreed to support Ukraine and Poland, both of which are bypassed by the project and fear Russia's intentions, by funding alternative energy and development projects.

“The United States and Germany are united in their determination to hold Russia to account for its aggression and malign activities by imposing costs via sanctions and other tools," they said in a joint statement that covered Nord Stream 2 as well as Russia's support for separatists in Ukraine.

“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,” it said.

The Nord Stream 2 project has posed a major foreign policy dilemma for the Biden administration, AP noted. US 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 US has been determined to rebuild ties with Germany that were damaged during the Trump administration.

As such, the agreement is not a clear political win for either President Joe Biden or German Chancellor Angela Merkel, an unabashed supporter of the pipeline who will step down later this year. For Biden, he risks appearing weak as it relates to Russia, and Merkel's governing party faces a serious challenge from Germany's Green Party, which opposes the pipeline, in September elections.

Still, the two sides committed to supporting a $1bn fund for Ukraine to diversify its energy sources, of which Germany will provide an initial $175 million grant. And, Germany guaranteed that it would reimburse Ukraine for gas transit fees it will lose from being bypassed by Nord Stream 2 until 2024, with a possible 10-year extension.

In a nod to Poland, Germany also agreed to sign onto the “Three Seas Initiative,” an EU and US-promoted scheme that aims to boost investment, infrastructure development and energy security among the countries bordering the Baltic, Black, and Adriatic seas. The German government, the statement said, would help to contribute up to $1.7 bn of European Union funding for the initiative through 2027.

Despite the agreement, there remains strong bipartisan opposition to the pipeline in Congress, as well as in Ukraine and Poland, and like the Trump administration before it, the Biden administration also says it opposes the pipeline. US officials have said sanctions won't stop it, AP noted.

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