<article><p class="lead">The US Congress is expected to pass new sanctions aimed at derailing completion of the Nord Stream 2 pipeline from Russia to Germany by the end of the year, as part of a broader defense spending authorization legislation.</p><p>The House of Representatives and the Senate yesterday formed a committee to reconcile the versions of defense legislation that each chamber passed earlier this year. The two versions agree on mandating new sanctions against companies engaged in the construction of the offshore portion of the near-complete Nord Stream 2, as well as entities that provide underwriting and insurance to pipelaying vessels and facilitate ship retrofitting and upgrading. A similar legislative maneuver last year derailed completion of the project as it forced Swiss contractor Allseas to remove a pipe-laying vessel from the project.</p><p>The Nord Stream 2 consortium has not disclosed which vessels will be used for the uncompleted 100 mile (160km) segment of Nord Stream 2 in Danish and German waters. </p><p>The key issue to be reconciled is a provision in the Senate version that would mandate sanctions against any entity that "provided services for the testing, inspection or certification necessary for, or associated with, the operation of the Nord Stream 2 pipeline." That language is written so broadly that it could potentially apply even against regulators in Germany and Denmark.</p><p>Implementing the legislation is likely to straddle the final weeks of President Donald Trump's term in office, which ends on 20 January, and the incoming administration led by president-elect Joe Biden. Some lawmakers are pushing for an opt-out for the White House to delay enforcing parts of the sanctions bill or to include a requirement to coordinate sanctions with European allies, in light of opposition from the German government.</p><p>"Coordination has to be more than just giving a heads up five minutes before sanction policies take place," German foreign ministry deputy director general for economic affairs Alexander Schonfelder says. "Needless to say, sanctions against allies are not acceptable."</p><p>Schonfelder's argument is likely to gain greater acceptance at the Biden White House than in the outgoing administration of President Donald Trump. The latest guidance issued by the State Department set today as a deadline for companies and entities providing goods and services for vessels used to lay the final offshore segment of the pipeline to wind down their participation, or face sanctions. But the State Department is yet to act on any of its previous threats to impose sanctions against project participants. </p><h3>Deep negative state</h3><p>The Biden team has vowed further sanctions against Moscow over alleged Russian interference in the US election, even though it has not specified the Nord Stream 2 project. Given Berlin's opposition to new sanctions and Biden's pledge to improve relations with the EU, his administration should focus on mitigating Nord Stream 2's strategic risks, former State Department sanctions coordinator Dan Fried says. That mitigation can take the form of working with the EU to build out new LNG import infrastructure and gas pipeline interconnections, as well as offering support for Ukraine if it loses Russian gas transit revenue, Fried says.</p><p>With Trump's departure, Moscow loses a perceived ally at the White House — Russian president Vladimir Putin is among the few foreign leaders who has not congratulated Biden on his victory yet. But US-Russia relations even under Trump reached a "steady, but negative state," with few opportunities for improvement, deputy secretary of state Stephen Biegun says. "That improvement can only happen if, first, you find sentiment and willingness here in the US, and second, if the Russian Federation is serious enough about such engagement," he said.</p><p class="bylines"><i>By Haik Gugarats</i></p></article>
