Americas, Europe

US, Germany reach agreement on controversial Nord Stream 2 pipeline

Deal staves off US sanctions as Berlin agrees to extensive measures to assuage concerns

Michael Hernandez and Elena Teslova   | 21.07.2021
US, Germany reach agreement on controversial Nord Stream 2 pipeline


The US and Germany have reached an agreement on the controversial Nord Stream 2 natural gas pipeline that will see Berlin take extensive measures to assuage US concerns, the countries announced Wednesday.

In exchange, the Biden administration will not impose further congressionally mandated sanctions on entities linked to the project after a senior administration official who spoke to reporters on condition of anonymity said the US determined economic penalties "would not stop the pipeline," which is roughly 98% complete.

The Biden administration in May waived sanctions on the Swiss firm running the project and its German CEO, beginning a three-month window in which to hold negotiations with Berlin.

"The United States and Germany are steadfast in their support for Ukraine’s sovereignty, territorial integrity, independence, and chosen European path. We recommit ourselves today to push back against Russian aggression and malign activities in Ukraine and beyond," a joint statement said.

The agreement was announced just days after German Chancellor Angela Merkel traveled to Washington to meet US President Joe Biden.

The US under successive presidents has warned that the pipeline is a bad deal for Germany and jeopardizes European energy security as well as posing the risk that Russia might cut off gas supplies that currently run through Ukraine.

Under the pact, Berlin agreed to appoint a special envoy to help extend the existing gas contract that it has with Russia "well beyond" its current expiration in 2024, the official said, and would take action at the national and EU levels should Russia attempt to use energy resources as a weapon against Kyiv.

"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 agreement said.

Germany has committed to utilizing "all available leverage to facilitate an extension of up to 10 years to Ukraine’s gas transit agreement with Russia" with full US support, it said.

Berlin will further invest "an initial donation" of $175 million toward energy security in Ukraine, part of a wider $1 billion green energy fund it is forming alongside the US.

"The fund will promote the use of renewable energy; facilitate the development of hydrogen; increase energy efficiency; accelerate the transition from coal; and foster carbon neutrality," the statement added.

Putin, Merkel discuss Nord Stream 2 over phone

Minutes after the State Department published the US-German deal on Nord Stream 2, the Kremlin issued a statement saying Russian President Vladimir Putin held a phone call with Merkel.

In accordance with the deal, Merkel raised a question on gas transit via Ukraine after the expiration of the Russian-Ukrainian agreement, which is valid until 2024.

"Merkel also told Putin about the discussion on the developments around the pipeline project with US President Joseph Biden in Washington. Vladimir Putin made his own comments on this subject," the statement said.

Putin also conveyed his condolences to Merkel over the unprecedented floods in western Germany which have left at least 171 people dead and large-scale destruction.

The Nord Stream 2 pipeline will carry gas from Russia to Germany, which will then be distributed throughout the European Union.

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