Nord Stream 2: U.S., Germany reach agreement on Russian gas pipeline

The Biden administration reached an agreement with Germany on Wednesday that allows for the completion of a controversial natural gas pipeline between Russia and Germany, ending a heated dispute between the two allies that overlapped three successive U.S. administrations.

In exchange for an end to U.S. efforts to block the Nord Stream 2 pipeline, Germany will invest in Ukraine’s green technology infrastructure, and Berlin and Washington will work together on initiatives to mitigate Russia’s energy dominance in Europe.

The decision drew immediate criticism from Russia hawks in Congress who hoped the United States could find a way to block the nearly completed multibillion-dollar project they say gives Moscow leverage over U.S. allies in Europe.

This is a generational geopolitical mistake that decades from now future Russian dictators will be reaping billions of dollars of benefits annually from,” said Sen. Ted Cruz (R-Tex.).

The Biden administration viewed the project as a dilemma that forced it to choose between restoring its beleaguered relationship with Berlin and keeping its public promise to oppose the project, which was 90 percent complete when President Biden took office. U.S. officials doubted that U.S. sanctions could prevent its completion and argued that a deal with Germany rather than a protracted fight offered the best outcome.

“Look, this is a bad situation and a bad pipeline,” Victoria Nuland, the No. 3 official at the State Department, told senators in Washington on Wednesday. “But we need to help protect Ukraine. And I feel that we have made some significant steps in that direction with this agreement.”

The Senate Foreign Relations Committee’s top Republican, James E. Risch (Idaho), said he would continue to pursue sanctions legislation in an effort to block the project.

“Congress must act where the administration has failed, and I will continue working with colleagues on both sides of the aisle to impose meaningful costs on this malign Russian project before it becomes operational,” he said in a statement.

Biden meets with Merkel in his first session with a European leader at the White House

President Biden and German Chancellor Angela Merkel hold a joint news conference at the White House on July 15. (Chip Somodevilla/Getty Images)

The four-point agreement includes a commitment by Germany to create and administer a $1 billion green technology fund for Ukraine designed to promote renewable energy, facilitate the development of hydrogen and accelerate the country’s transition away from coal, said a senior administration official who spoke on the condition of anonymity to discuss details of the deal.

o jump-start the fund, Germany will provide at least 150 million euros, or about $177 million, the official said.

Because the Nord Stream 2 pipeline circumvents Ukraine, a current transit partner with Moscow, Kyiv could lose some $2 billion in annual payments from Moscow as part of a transit contract for Russian gas that’s set to end in 2024.

In an effort to stave that off, Germany agreed to appoint a special envoy to help Ukraine negotiate an extension of its transit contact with Russia up to 10 years, the senior administration official said. “Germany is committing in writing to use all of its available leverage to negotiate that agreement,” the official said.

Germany also agreed to press for sanctions in the event Russia attempts to use its energy clout as a weapon against Ukraine, according to the joint statement signed by Washington and Berlin.

Ukrainian officials say their primary concern is the Kremlin feeling more emboldened in its dealings with Kyiv in the event that it no longer serves as a transit space for Russian gas. Ukrainian forces are in regular battle with Kremlin-backed separatists in Eastern Ukraine where efforts to negotiate an end to the seven-year-old war have long stalled.