My EuroNews #3: US Sanctions killing Nord Stream 2. Yet Berlin persists trying, with Moscow.

My 3rd EuroNews Nord Stream 2 sanctions interview, 6 January 2021 (After 30-seconds intro)

[This post is a dey late due to the violent attack on the US Capitol orchestrated by the outgoing-president and his followers. This assault has been defeated and the election is being certified by Congress. Trump will soon leave and Biden will take office in accordance with the Constitution and laws. T. O’D.]

The EuroNews Morning Show asked me [yesterday 6 January,] again about the Nord Stream 2 pipeline. Two key points made in the earlier interviews were:

  1. That the plans of Nord Stream 2 AG (NS2 AG) to restart pipelaying before the holidays in German waters was a propaganda exercise (viz, “a disinformation campaign”) orchestrated by Moscow and Gazprom to create the impression the pipeline can be finished.
  2. Despite this new pipelaying “bravado”, the pipeline was effectively “dead” because of the US sanctions.

These points were an assessment of the impact of the new sanctions law, which was about to be enacted by the US Congress.  This is the “Clarifications” of the Protecting Europe’s Energy Security Act, or PEESCA, which was enacted December 2021, despite a veto by President Trump. These PEESCA sanctions have been added to the previous PEESCA (December 2002) sanctions and the Countering America’s Adversaries Through Sanctions Act (CAATSA, initially 2017) sanctions against NS2.

Further, it is now clear that Gazprom, the 100% owner of NS2 AG, accomplished MUCH LESS new pipelaying in December 2020 than they had claimed they would.  However, this is being obscured with statements to the press that Gazprom completely finished all pipelaying in German waters for NS2 (e.g., German business daily Handelsblatt.)

However, Gazprom (i.e., NS2) did NOT finish. Far from it. Unfortunately, the German and much of the European press has been reporting this Russian claim without having independently fact checked it. Two points here:

  1. Gazprom’s pipelaying ships only completed 2.6 km of ONE of the TWO parallel pipe strings that comprise NS2. Besides the remaining 2.6 km. of the other string that remains to be copleted, there remain about 13.9 km of each string to be built, all in German waters. [My sources: this is what I am told by officials of other countries who are following these developments closely, and who can query the German officials directly for such information – as, by the way German and other media could have done too, of course.]
  2. Further, as I told EuroNews a few weeks ago, there are no USA sanctions against this work recently done (2.6 km of construction) in German waters because these are shallow waters. US sanctions apply only to water over 30 m. deep. The sanctioned deep-water activity is almost all in Danish waters.

All in all, this is not some victory over the US sanctions such as NS2 AG claims, which proves NS2 will be completed.

Further, I told EuroNews today that, yes, DNV-GL has now abandoned the project under threat of US sanctions. This is the Norwegian certification and standards firm that the Danish regulatory agency required be utilized in the pipelaying permit granted to NS2 AG. It, or its German subsidy, is also the firm that NS2 AG was using in German waters.

I was asked if this would indeed kill the project. I said this “yes, this SHOULD kill the project.” However, I made clear that this confrontation, including between the US and German transatlantic allies is not over. 

It is very possible Russia will attempt to find a substitute firm, one without the international standing of DNV-GL, one somehow or seemingly insulated from the application of US sanctions, and, if so, then hope to get the Danish and German regulators to allow Gazprom to continue work with this new certification and standards firm.

However, to feel somehow insulated from the impact of US sanctions, such a firm would have to be a Russian-owned firm, or something similar. (In contrast, DNV-GL has about 250 offices in 30 countries. It works all over the world, including the USA.) USA officials would be very active to impose sanctions on any such substitute firm Gazprom might produce for German and Danish permit-granting authorities.

Would German and Danish authorities agree to allow a substandard firm to do this work in their respective waters? The use of a sub-par firm without extensive experience in such large and complex projects would also be upsetting to any insurance companies involved in construction.

However, insurance companies too are sanctioned. Already the insurance “clubs” representing 90% of firms internationally have pulled. So, the Russian owners of NS2 AG would also have to find a less-than internationally recognized insurance firm, one with little business anywhere US sanctions might undermine the company, for this project.

So, as I have said repeatedly, this pipeline project is stuck; it is essentially dead due to these US sanctions. But, as I also told EuroNews, the fight is not over. Consider:

  1. Moscow is already trying to use companies whose ownership is hidden in layers of postbox firms and similar tactics, for example for the pipelaying ship it is using.
  2. The US officials are bound by US law to go after these firms as fast as possible to hit them with sanctions. Note: PEESA and PEESCA do not give US officials or the president – whether Trump or now Biden- hardly any discretion in softening or avoiding imposition of sanctions on building this pipeline.

The German officials involved are currently in sharp conflict with US officials over this. They are hoping that Joe Biden will not pursue this so aggressively and will give them a break. I seriously doubt this will work. Even if Biden wanted to let the German and Russian governments finish NS2 (and he apparently does not, based on his past statements), these present sanctions would have to be altered by Congress. It is doubtful Biden would ask Congress, which is so upset with Russian behavior on so many fronts, to do such a thing, and even more doubtful they would ever agree.

Consider not only the recent Navalny poisining (which hasn’t in the least deterred German officials), but the huge cyber attack of 2020, which is strongly believed to have been a Russian operation. On the contrary, Biden will be under significant congressional pressure to strengthen pressure on Russia, and to “punish” it harshly, as many have already demanded from both parties. And, then too, there is the continued Russian forceful occupation of Ukrainian territories, which Biden took a leading role in fighting against in the Obama administration. This German illusion of somehow Biden will “trade” them NS2 in exchange for … for what? Is quite unrealistic, in my view.

However, the German side has announced (i.e., Foreign Minister Heiko Mass. 28 January) that the German government will strongly pursue this against the Biden administration. Germany is thus not only pursuing what is almost certainly a lost cause, a “dead project”, and a project in the interests of Putin’s Moscow. By declaring it will lobby the Biden administration for this project, Berlin will now poison relations with a third consecutive US administration and continue to poison transatlantic relations with Congress.  This is, in my view, a grave misjudgment by Ms. Merkel and her government.

The reasons Germany is doing this are clearly geopolitical. More accurately, out of geopolitical weakness. The German leadership knows Europe is deeply dependent on Russian gas supplies and they have no idea how to escape this anytime soon (viz, contrary to bravado about producing “100% renewable energy” from wind and solar in the future, this is only now about 17% of its electricity, and it is committed to closing all coal and nuclear plants on a rapid schedule).

The German leadership is also very alarmed that 80% of these Russian gas supplies (which in total provide 40% of all EU gas imports) must now be sent via pipelines across Ukraine, and a significant amount also also must cross Belarus.  Putin is clearly at war with Ukraine. Who knows what Putin’s regime will decide to do if he decides he has to come to the rescue of Lukashenko in Belarus. 

Indeed, German leadership is deeply afraid of these Russia versus Ukrainian and versus Belarus conflict interrupting gas supplies to the EU. Putin, for his part, also wants to escape having to send Russian gas across Ukraine and Belarus. Escaping this would give him a much freer hand to act with force against the democracy and independence movements of these countries.

So, the German leadership, with striking near-unanimity, and led by Ms. Merkel, have made a “real politik” decision to help Putin build new pipelines directly to Germany, allowing Gazprom to abandon the presently in-use soviet-era pipelines across Ukraine and Belarus. 

German leaders are broadly united in the decision that Germany will not defend Ukraine and Belarus people’s democratic and independence movements if this means it must risk their and the EU’s gas deliveries from Russia’s Siberian fields.  This is the key reason that the US Congress and three consecutive US administrations have opposed Nord Stream 1, and Nord Stream 2.  Putin must not be given a free hand against Ukraine and Belarus. And, besides, there is absolutely no guarantee Putin would not use the threat of cutting off the gas supplies via NS2, across Germany to prevent Germany and the European Union from ever coming to the aid of Ukraine or Belarus under any Russian threat or outright attack. In fact, he would threaten to cut these pipeline supplies if Germany or the EU dared aid the US in coming to the defense of Ukraine and/or Belarus (or for that matter, the Baltic countries, Poland, and other states Putin has expressed interest in subverting).

The US is joined in this view by several EU states, especially Poland, the Baltic States, some Nordic states, and others. In fact, the EU Parliament has opposed this project, as has the EU Commission, to varying degrees.

For more of my analysis of this crisis in transatlantic relations and of the EU and USA v. Putin’s Moscow, see especially these links:

  1. Many of my articles reposted to my blog at http://GlobalBarrel.com
  2. GERMANY agrees with Moscow’s plan because it is afraid of the security of Europe’s gas supplies flowing via Ukraine and does not trust the Ukrainians, so it  agrees with Putin to send gas via Germany to Europe instead of via Ukraine  (See: https://berlinpolicyjournal.com/author/odonnell/ especially “Neue Neue OstPolitiks”
  3. SANCTIONS:  A very harsh confrontation is taking place between Washington and Berlin over Nord Stream 2. This shows the USA and  German elites DISAGREE on basic strategy versus Russia and on Ukraine. (See: https://www.aicgs.org/2020/10/nord-stream-2-berlin-washington-mutual-intransigence-shows-transatlantic-divide-on-russia/ )

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