Trump Imposes Sanctions To Stop Nord Stream 2 – But It’s Too late

Donald Trump last night signed into law sanctions from the U.S. Congress against companies involved in constructing a new gas pipeline between Russia and Germany. But analysts say the Trump administration dithered too long for these sanctions to stop the project’s completion.

The sanctions, part of an overall defence bill, will allow the U.S. to deny visas and block the property of individuals and companies financing the project. The U.S. says the $11 billion Nord Stream 2 pipeline from Russian oil giant Gazprom, which follows the route of the existing Nord Stream 1 pipeline under the Baltic Sea, would make the European Union even more dependent on Russian gas than it already is. It has been joined in these objections by Poland and other Eastern European countries. The bill describes the pipeline as a “tool of coercion”.

However the main countries involved in the pipeline’s construction, Russia and Germany, suspect the U.S. is using energy security concerns as a smokescreen for its own economic interests. Sitting on a glut of gas supply from the shale gas boom, the U.S. is eager to export the surplus to Europe on tankers in the form of liquified natural gas (LNG). It is believed the pipeline would dampen EU demand and make it less economically interesting to build the expensive LNG port terminals necessary to import American gas.

The European Union has identified overdependence on Russian gas as a security threat, with the country currently supplying about 40% of the EU’s gas. Official approval of the pipeline at EU level has been blocked at EU level, but there is ongoing litigation over whether the EU could even block the pipeline if it wanted to. Energy sourcing is a national competence in the EU.

Though the pipeline project remains controversial and unpopular in Europe, Trump’s attacks have only seemed to cause European leaders to rally around the project. The issue came to a head at a NATO summit in Brussels last year, where Trump attacked Germany for accepting the pipeline, while at the same time casting doubt on whether the U.S. would defend the country if it was attacked by Russia.

German Chancellor Angela Merkel has condemned the U.S. sanctions, with her foreign minister Heiko Maas saying the sanctions amounted to "interference in autonomous decisions taken in Europe".

“European energy policy is being decided in Europe, not in the US,” he said.

An EU spokesperson told the AFP news agency that it “opposes the imposition of sanctions against EU companies conducting legitimate business”.

Too late

Opposition to the pipeline has been bipartisan in America, with both Republicans and Democrats saying it would have security implications for Europe. The fear is that Moscow can threaten Brussels with shutting off the taps unless the EU does what it says. They also believe the pipeline is an effort to bypass Ukraine, the country through which most Russian gas to the EU now flows. Eliminating this route would reduce Ukraine’s political leverage in its ongoing conflict with Russia.

But aside from the NATO summit outburst, the Trump administration has shown limited interest in Congress’s objection to the pipeline over the past three years. In the mean time, construction has progressed at breakneck speed.

Already last year it was clear that the pipeline was probably unstoppable unless the U.S. took immediate action, which it did not. Since then, Denmark has given the last approval needed for the project. The company constructing Nord Stream 2 says it is now 83% finished, with 2,042 kilometers (1,270 miles) already laid at the bottom of the Baltic Sea. They say the last section through Danish territorial waters, approved after a long delay in October, can be constructed in just five weeks.

The pipeline is expected to start pumping gas midway through next year.

Administration officials have told U.S. news outlets off the record that they know the sanctions are too late to stop Nord Stream 2, but adopting the sanctions now is intended as a shot across the bow to stop future projects. The sanctions also target Turkstream, a pipeline bringing gas from Russia to Turkey. However the move will also be too late to stop that pipeline.

The Trump administration’s delay in taking meaningful action against Nord Stream has caused immense frustration in the U.S. Congress. However, observers say even the limited U.S. interference that did occur prompted a backlash in Europe that was not helpful to the cause of those against the pipeline – an unlikely grouping of environmentalists, Atlanticists and Eastern European nationalists.

The Trump administration now has 60 days to identify companies and individuals providing services on the pipeline. Those targeted by the sanctions would then have 30 days to wind down their operations. Allseas, a Swiss-Dutch offshore energy company laying pipes for the project, said in a statement today it “will proceed, consistent with the legislation’s wind down provision, and expect guidance comprising of the necessary regulatory, technical and environmental clarifications from the relevant U.S. authority”.

While this could pose difficulties for the project in its final months, by the time the list-drafting process is complete, construction of the pipeline is expected to have been completed. By that point one of the only companies left to target may be Gazprom, which is already the subject of U.S. and EU sanctions.

Though the economic impact of the sanctions may be minimal, the political implications could be severe. The move has caused a further rift between the EU and U.S., at a time when European trust in the American government is already at an unprecedented low.