The State Department cited the parent company and chief executive of a Russian natural-gas pipeline for sanctions but waived the penalties, clearing a hurdle for the completion of a project that U.S. officials say will increase Moscow’s influence in Europe. In a report released Wednesday, the State Department named Nord Stream 2 AG, the Swiss-registered Russian firm behind the project, as well as its chief executive officer, Matthias Warnig, as having knowingly engaged in sanctionable activity but waived the application of these sanctions on national-security grounds.
Nord Stream 2 has rankled a bipartisan majority on Capitol Hill and tested U.S. relations with Germany, a chief customer for the pipeline. U.S. lawmakers and some officials worry that Nord Stream 2 will strengthen Russia’s grip on the European energy market and weaken U.S. partner Ukraine, which hosts a gas-transit network and is trying to resist Russian aggression.
With less than roughly 10% of construction remaining through Danish and German waters in the Baltic Sea, the 764-mile pipeline now has a clearer path to completion with the sanctions waived.
Officials at Nord Stream 2 AG didn’t respond to a request for comment.
“Today’s actions demonstrate the Administration’s commitment to energy security in Europe, consistent with the President’s pledge to rebuild relationships with our allies and partners in Europe,” Secretary of State Secretary of State Antony Blinken said in a statement. “We will continue to oppose the completion of this project, which would weaken European energy security and that of Ukraine and Eastern flank NATO and EU countries. Our opposition to the Nord Stream 2 pipeline is unwavering.”
“We will continue to oppose the completion of this project.”
In its Wednesday report, the State Department also sanctioned four ships involved in construction, three companies providing vessels to the project and a Russian federal office, the Marine Rescue Service, which is providing another nine ships.
Opponents of the pipeline have for several months said that anything short of sanctioning Nord Stream 2 AG would enable the project to proceed. Previous sanctions targeted companies providing ships and services to complete the pipeline. Gazprom, the Russian gas company behind Nord Stream 2, circumvented those earlier this year by employing pipe-laying and other ships whose Russian owners relied less on the Western financial system that the sanctions prohibited them from using.
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 as well as German Chancellor Angela Merkel’s criticism of Mr. Trump’s “America First” foreign policy.
“The issue is how to deal with Nord Stream 2, a bad idea, while not trashing relations with Germany,” said Dan Fried, a former senior State Department official and current fellow at the Atlantic Council think tank. “We need Germany to help on Nord Stream 2 and to help on the Putin challenge.”
Sen. James Risch, an Idaho Republican, said the decision would weaken U.S. leverage over Russia ahead of a planned summit between President Biden and Russian President Vladimir Putin, and deal a blow to U.S. allies in Europe.
“The administration seems to be suggesting it is somehow in the United States’ best interest to allow this Russian malign influence project to be completed,” Sen. Risch, the ranking Republican on the Senate Foreign Relations Committee, said in a statement. “The administration is prioritizing perceived German and Russian interests over those of our allies in Central, Eastern, and Northern Europe.”
Sen. Jeanne Shaheen, a New Hampshire Democrat, said, “Completion of this pipeline poses a threat to U.S. security interests and the stability of our partners in the region.”
The $11 billion pipeline is designed to carry Russian natural gas to Germany beneath the Baltic, and fewer than 100 miles remain to be built. Construction resumed in earnest in February, 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.
Nord Stream 2 will enable 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.