US waives sanctions against Nord Stream 2 pipeline company & its German CEO as Blinken & Lavrov meet in Iceland

The US State Department has waived sanctions on Nord Stream 2 AG and its German CEO Matthias Warnig, citing concerns for the American national interest. Four ships and four entities were blacklisted in a report sent to Congress.

Imposing sanctions on the company and its CEO under the Protecting Europe’s Energy Security Act (PEESA) would “negatively impact US relations with Germany, the EU and other European allies and partners,” the State Department said on Wednesday.

Those relations are critical to US efforts against the Covid-19 pandemic, climate change, defending “our democracies against authoritarianism” and countering Russia, China, Iran and the security of Ukraine, the State Department said.

The decision was in line with a report in Axios on Tuesday that the Biden administration intended to sanction “a handful of Russian ships” but not the German-based company or Warnig, a former East German secret agent turned investment banker.

Anonymous officials speaking to Axios said the Biden administration had determined that the only way to stop the pipeline would be to sanction German end-users of Russian gas, and that the current White House was “not willing to rupture its relationship with Germany over Nord Stream 2.”

The announcement also seemed perfectly timed to coincide with the meeting between US Secretary of State Antony Blinken and his Russian counterpart Sergey Lavrov, on the sidelines of the Arctic Council meeting in Reykjavik, Iceland on Wednesday.

As the meeting was still underway, Blinken issued a statement confirming the waiver. In addition to four vessels listed in the report to Congress, nine more vessels linked to Russia’s Marine Rescue Service – which the US believes are “involved” in the pipeline’s construction – will be subject to the sanctions, he said.

Rehashing Washington’s usual talking points to justify the ongoing US crackdown on Nord Stream 2, Blinken claimed that the pipeline would “weaken” the energy security of Europe, Ukraine, NATO and the EU. “Our opposition to the Nord Stream 2 pipeline is unwavering,” Blinken said, vowing to “continue to oppose” its completion.

President Joe Biden reportedly remains committed to stopping any gas from flowing through the pipeline, though it was not immediately clear how. Nord Stream 2 is about 95% completed. Construction of the final stretch in German territorial waters has been delayed by pressure from Washington.

Anyone working on the expansion of the gas pipeline between Russia and Germany was engaging in “sanctionable behavior” under the 2019 Countering America's Adversaries Through Sanctions Act (CAATSA) and PEESA and should “immediately” stop, Blinken had said in March. He called the pipeline “a Russian geopolitical project intended to divide Europe and weaken European energy security.”

He called the pipeline “a Russian geopolitical project intended to divide Europe and weaken European energy security.”

Once completed, Nord Stream 2 would double the volume of gas already pumped via the Baltic Sea directly to Germany, bypassing Ukraine and Poland. The US has argued this would deprive Kiev of billions in transit fees, but Moscow has not signaled that it intends to reduce the volume of gas currently transiting Ukraine on its way to Europe, which is greater than that of NS2. 

US proposals for the EU to buy “freedom molecules” of American liquefied natural gas (LNG) have been largely dismissed as too expensive and logistically impractical. 

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