US, Germany reach deal on controversial Russian pipeline

The Biden administration on Wednesday announced a far-reaching agreement with Germany in an effort to ensure Ukraine’s energy security as the U.S. steps back its efforts to prevent the use of a controversial Russian pipeline delivering natural gas to Europe.

The announcement marks a significant compromise between the U.S. and Germany over the fate of the Nord Stream 2 pipeline, a Russian gas line transiting the Baltic Sea to Germany, which the administration has called a “geopolitical malign influence project.”

The pipeline is believed to be about 95 percent complete and U.S. opposition has stretched across three administrations — with presidents Obama, Trump and Biden.

Both the Trump and Biden administrations had imposed sanctions on individuals and entities involved in the pipeline’s construction, saying it threatens Europe’s energy security and robs Ukraine of key revenue related to the delivery of natural gas. 

The Ukrainian government, in a joint statement with Poland, slammed the deal on Wednesday. Ukraine’s Foreign Minister Dmytro Kuleba and his Polish counterpart, Zbigniew Rau, said the security promises in the U.S. and German agreement “cannot be considered sufficient to effectively limit the threats created by NS2.”

“We call on the United States and Germany to adequately address the security crisis in our region, that Russia is the only beneficiary to.”

A senior State Department official on Wednesday said the U.S. maintains its opposition to the pipeline, but that the agreement with Germany is meant to reduce the risk from Russia of the operational pipeline.

“What we have is really a commitment on the part of both the United States and Germany to hold Russia accountable and to impose costs if it elects to use energy as a weapon or to commit aggressive acts,” the senior official said. “And so that’s the headline here, that’s our commitment.”

The agreement was released as a joint statement between the U.S. and Germany and follows the visit by German Chancellor Angela Merkel to the White House last week.

It also comes as the White House on Wednesday announced that Ukrainian President Volodymyr Zelensky will visit Washington in August, although the senior official said that announcement was not related to the issuance of the U.S. and German agreement.

Zelensky posted on Twitter that he “looks forward to a productive and substantive meeting” with Biden and the “serious security threat NS2 poses” to Ukraine. 

The pipeline is a significant point of tension between Washington and Berlin and the Biden administration has sought to work with Germany in an effort to preserve relations while also addressing risks posed by the pipeline.

“Allies must resolve their differences in a spirit of pragmatism, friendship and trust. This is how we approach managing our profound differences over the North Stream to pipeline,” the senior official said.

Key to the agreement are commitments from Germany to stay vigilant on confronting Russian efforts to use the pipeline for malign influence and ensure Ukraine has, for at least 10 years, the security of continuing to transit natural gas from Russia to Europe, a key source of revenue for the 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,” on Russia’s energy sector, the statement reads.

“This commitment is designed to ensure that Russia will not misuse any pipeline, including Nord Stream 2, to achieve aggressive political ends by using energy as a weapon.”

Russia has drawn the ire of the U.S., Europe and most of the international community for its invasion and annexation of Ukraine’s Crimean peninsula in 2014.

The U.S. is a key contributor to Ukraine’s military preparedness and raised alarm about a buildup of Russian troops on the eastern edge of the country, where Ukraine forces have fought Russia-backed troops since 2014.

Russia’s Nord Stream 2 pipeline is viewed as an extension of Moscow’s ambitions to undermine Kyiv.

As part of the agreement with Germany, the Biden administration said Berlin will appoint a special envoy and “utilize all available leverage” to extend an agreement to at least 2034 for natural gas to transit from Russia through Ukraine to Europe — a pathway that was meant to become obsolete when Nord Stream 2 becomes operational.

The agreement also aims to invest in and help Ukraine become independent of Russian gas and transit fees. This includes establishing a $1 billion “Green Fund” for Ukraine to transition to “energy efficiency and energy security”. Germany is further committing 16 million euros (nearly $19 million) to support Ukraine’s energy security, among other initiatives.

The agreement is sure to draw intense scrutiny on Capitol Hill where Republicans have criticized the administration’s strategy and held hostage the president’s nominees over its policy towards Nord Stream 2.

Sen. Ted Cruz (R-Texas) has blocked confirmation votes for at least 12 nominees for the State Department in an effort to force the Biden administration to impose sanctions on the pipeline.

Democrats, likewise, are concerned over the power Russia has over the pipeline.

Sen. Jeanne Shaheen (D-N.H.), a member of the Senate Foreign Relations Committee, cautiously welcomed the agreement between the U.S. and Germany but warned of the risk from Russia.

“Putin has made it clear – through his rhetoric and actions – that he will circumvent any conditions placed by the West in order to advance the Kremlin’s agenda, which threatens the territorial integrity of Ukraine and undermines regional European energy security,” Shaheen said in a statement.

“While I look forward to being briefed by the administration on the final details of the agreement, I’m skeptical that it will be sufficient when the key player at the table – Russia – refuses to play by the rules,” she added. “More than ever, the U.S., Germany and our European partners must be prepared to respond together in the face of any aggressive action by Russia to destabilize our European allies.”

Updated: July 22 at 11:18 a.m.