Here are four issues on the Biden-Blinkin sanctions decision I discussed with EuroNews and other news media in the last few days:
-1- Regarding Biden’s waiving of sanctions on the company Nord Stream 2 AG and its head Matthias Warnig (former Stazi officer):
These sanctions would be unlikely to stop NS2, though it would cause difficulty for the firm and the European oil and gas firms that are partnering with it.
I am not surprised, however, in light of the upcoming Biden-Putin summit. It should be noted that the Russian side (e.g., their ambassador here in Berlin) has made clear, publicly, that sanctions would kill the Biden-Putin summit — which both sides need on many hot issues (see my comments of yesterday, on Iran negotiations, and US necessity to withdraw on-the-ground forces from the Middle East, and to focus on “Great Power Competition” vs. especially China, and Russia).
-2- As for effect of the new sanctions on the pipeline’s construction, and what options the US has:
– The new sanctions on the ships likely will not stop construction work. There are already sanctions on Russian pipelaying ships, and no effects were seen. Perhaps there will be some complications for Gazprom.
— What is important to note is that sanctions on insurance and on the specialty commissioning firms were both seen in Congress (and by State) as very effective innovations/instruments added in PEESCA. The State Department worked hard since late last year and succeeded in getting all the reputable insurance and commissioning firms to withdraw. But the effectiveness of this always depended on German and Danish permitting agencies rejecting alternate Russian firms and withdrawing the NS2 AG’s construction permits. However, neither agency “gives a damn” (quoting someone familiar with these discussions), and the Danes seemingly even less than the Germans. In fact, it is still not clear what if any firms are providing the commissioning at present in Danish waters.
The failure of these harsh and very purposefully targeted measures was unexpected in Washington.
The State Department worked on the Danes (in both the Pompeo and Blinkin eras), but the Danish authorities simply don’t care.
– Contrary to demands by some US legislators, the US will not sanction Gazprom Co. proper absent some major new Russian aggression, as it would cause complex knock-on energy supply difficulties and hard-to-foresee consequences across Europe and elsewhere for allied countries’ gas supplies and their companies that do business with Gazprom. That has been clear for years.
– So, it is likely it would still be possible to stop Nord Stream 2 with US sanctions. This would require sanctioning the German port of Muckran and/or German firms (and perhaps other allied firms working with the port. This could stop the Russians from being able to taking away the pipes stored in the German port.
Note, however, PEESCA bans sanctions on government entities; perhaps this would include the partially-government-owned port of Muckran. This prohibition on sanctioning government entities (unless they are engaged working as a business aiding construction), was Dem. Senator Menendez’ addition to the PEESCA bill. He is the chairman of the important Senate Foreign Affairs Committee at the center of all these sanctions matters v. NS2.
In any case, any possibility of stopping construction now involves sanctioning German entities.All the political parties here would be outraged if Biden sanctioned German firms (this is clear from debates and votes in the Bundestag on this matter), maybe not the Greens to the same extent. This is clearly a Biden consideration in that he needs German cooperation on several issues.
-3- Regarding the deteriorating US-German transatlantic “partnership” and the “tremendous pressure” Congress is asserting on Biden for stronger action against Germany’s gas alliance with Moscow
While Biden is not ready to sanction its important ally Germany at this point, in consideration of several other ongoing issues, US patience, in both parties and across at least the previous three consecutive US administrations, has grown very thin towards Berlin. It should not be underestimated how much pressure Biden is under from Congress, insisting he do whatever is necessary – against Russian or German entities, applying whatever sanctions need to be applied – to stop Nord Stream 2 construction.
For example, this means the proposed climate-mitigation partnership between Berlin and DC, promoted at the beginning of the Biden presidency, is effectively dead. If the administration moved forward with this partnership with Berlin, it would only enrage Congress, asking how the president could possibly make such an alliance on energy with Berlin while Belin consistently refuses to compromise in any way on the crucial energy and security matter of NS2. This should be remembered in looking at the visit of John Kerry yesterday to Berlin.
To be clear: contrary to press reports and various DC or Berlin think-tank experts, who assume that German officials either have already begun to, or soon will “talk seriously” or “negotiate” with the US to make some deal to mitigate NS2 impact on Ukraine, Poland and the Baltic states: in reality the German side constantly avoids having any meaningful dialogue on these issues and warns sanctions on German entities would be a red line. I am told this by diplomats of various states involved in these issues here.
-4- Germany should address US concerns on NS2 and the threat to Ukraine’s security it poses.
– So, for better or worse, Biden waits for the Summit. Berlin should use this lull to seriously address the US concerns on NS2 and Ukraine; or the transatlantic relationship will very likely only deteriorate in the weeks after the upcoming Biden-Putin summit.
Best, Tom O’D. Berlin, Tues AM, 20May2021
– PS: Note that Putin drew down troops around Ukraine after Biden proposed the summit. Also, Putin can easily undermine an Iran deal and keep the US deep in Mideast entanglement that are a distraction from its sstrong desire to focus on “Great Power Competition” elsewhere. Both Obama and Trump attempted this disengagement, with different tactics towards Iran.
The Global Barrel 