US lawmakers advance Nord Stream 2 sanctions

US lawmakers who want to stop construction of Russian state-controlled Gazprom's planned 55bn m³/yr Nord Stream 2 gas pipeline are hoping to advance new sanctions by writing them into a broader defence spending bill.

A similar legislative manoeuvre succeeded late last year, by amending a defence spending bill for fiscal year 2020 to include sanctions that stopped the completion of the final offshore stretch of the pipeline. The Senate is now debating the defence bill for fiscal year 2021, and an amendment proposed by Armed Services Committee chairman James Inhofe again includes a mandate updating sanctions targeting the pipeline.

The text largely replicates a bipartisan bill targeting Nord Stream 2 that senators Ted Cruz and Jeanne Shaheen pitched last month, with the exception of leaving out the retroactive application of sanctions against entities participating in construction of the pipeline.

The Inhofe amendment mandates sanctions not only against companies engaged in the construction of the offshore portion of the pipeline, but also entities that provide underwriting and insurance to pipelaying vessels, or that facilitate ship retrofitting and upgrading. And it would target any entity that "provided services for the testing, inspection or certification necessary for, or associated with, the operation of the Nord Stream 2 pipeline" — a threat that lawmakers' staff suggest could apply even against regulators in Germany that will have to approve the pipeline.

German regulator Bnetza is responsible for the possible certification of Nord Stream 2. And technical tests, inspections and certifications must be carried out during pipelaying and pre-commissioning before final approval by the Stralsund mining authority.

The Senate is yet to approve the defence spending bill, and the House of Representatives is debating its own version that is likely to delay the passage until at least later this month. A bipartisan House group has proposed its own version of Nord Stream 2 sanctions, which omits the language targeting entities certifying the pipeline, and would not apply them retroactively.

Congress' previous measures against Nord Stream 2 — in 2017 and 2019 — may have had the stated goal of encouraging diversity of European gas supplies, but they also reflected a bipartisan push to penalise Moscow over its alleged interference in the 2016 US presidential election. Momentum in Congress is again swinging in favour of strong action against the Kremlin, this time over allegations, denied by Moscow, of bounties placed by Russian intelligence agents for the killing of US military personnel in Afghanistan.

Trump has viewed sanctions against the project through the prism of helping to promote US LNG exports to Europe — ironically, a point Moscow also makes, by criticising the proposed sanctions as an unfair competition tool.

EU foreign affairs commissioner Josep Borrell calls the sanctions "unacceptable and contrary to international law". German government officials told a Bundestag panel on 1 July that the threat of US sanctions is "an encroachment on the German and European sovereignty of energy policy".

But German officials' arguments are finding a less acceptable audience in the US Congress. The 2017 measure against Nord Stream 2 required the administration to impose sanctions after consultations with its European partners — language missing from the more recent bills.

That Berlin opposes the threat of US sanctions may only serve to boost Trump's interest in applying them. "Germany is paying Russia billions of dollars to purchase energy from Russia through the pipeline, and I am saying, 'What's that all about?'" Trump said last week.

By Haik Gugarats