Clicky

Shipping News and Reviews

Sanctions received't cease Nord Stream. 2. Diplomacy will.

Nord Stream 2, a gas pipeline that would connect Russia and Germany under the Baltic Sea, has become a rarity in Washington today: a non-partisan Bête Noire.

Last month, US Secretary of State Antony Blinken called it "a bad deal" and warned that "any company involved in the Nord Stream 2 pipeline risks US sanctions and should stop working on the pipeline immediately". Meanwhile, two leading Republican lawmakers wrote a foreign policy article urging President Joe Biden to "stop pulling" and impose sanctions on "all ships and companies currently working on the completion of the Nord Stream 2 pipeline ".

With the project around 95 percent complete, time is running out to stop it. But the solution most are pushing for – sanctions – is not the answer.

That's because there are only two players who can kill Nord Stream 2: the Russian and German governments. As Washington escalated sanctions on the pipeline, many international companies have withdrawn. If Nord Stream 2 were just a “commercial project”, as Berlin claims, the risk of US sanctions would have almost definitely stopped it by now. But the Russian and German governments intervened to keep the project alive. Russia relocated a pipe-laying ship, the Akademik Cherskiy, from the Pacific to the Baltic Sea to work on Nord Stream 2, replacing a Swiss ship. And in Germany, the state of Mecklenburg-Western Pomerania, where the pipeline ends up, has set up a foundation to protect German contractors from sanctions.

To achieve its goals, Washington must change its mind in the Kremlin or in the German chancellery. Moscow, which wants to complete the project despite sanctions against one of its ships, is unlikely to cooperate. For Russian President Vladimir Putin, Nord Stream 2 would provide further leverage over Europe – the European Union relies on Russia for around 40 percent of its gas supplies – while weakening Ukraine, which is currently making billions of dollars by paying transit fees for the Exports lowers cross its territory. Berlin's calculation thus remains Washington's only hope of crushing the project.

So the question is how. Imposing sanctions on German project participants would undoubtedly be harmful. However, there is little guarantee that this would actually change Berlin politics. American sanctions are powerful because they block access to the US financial system – and that access is critical to operating as a global corporation. However, sanctions are far from omnipotent: they cannot, for example, prevent ships from laying pipes into the sea or prevent gas from flowing. They are best understood as a threat: if you work on the pipeline, you will have economic consequences.

If the United States were to impose sanctions on German companies that are involved in Nord Stream 2, there would be little incentive for these companies to stop working on the project. The risk of US sanctions is well known. By now, every company working on the pipeline has already decided that continuing the effort is worth the potential penalties. Since these companies are supporting Nord Stream 2 with Berlin's consent, they would most likely get support from the federal government if they fell under US sanctions.

To make matters worse, such sanctions are also likely to lead to a serious rift in German-American relations, shift public opinion in Germany against the Biden government, and possibly advocate the completion of the pipeline.

Nobody enjoys the sight of their government being bullied. Sanctions against German companies could lead to Germans gathering around the flag, establishing a connection between the opposition to Nord Stream 2 and bending against the American will – and thereby making such an opposition politically toxic. By imposing sanctions on Germany, the United States could give Nord Stream 2 exactly the domestic boost it needs to make it happen. It could also motivate Berlin to advocate bypassing the US financial system – which would weaken all American sanctions programs.

Sanctions against Germany could very well backfire. Fortunately, there is a better way to stop Nord Stream 2: to stall the project until after the upcoming German elections, which are due to take place in September.

Two factors suggest that delay is Washington's smartest policy option. The first concerns Chancellor Angela Merkel, who will step down after almost 16 years in office. Merkel herself was a half-hearted supporter of Nord Stream 2 after publicly considering ending the project after poisoning Russian opposition leader Alexei Navalny last year. Merkel has a proud legacy of opposing Kremlin aggression and has been named "Climate Chancellor" for her longtime green policy advocate.

Merkel was unwilling to spend political capital to kill Nord Stream 2. German business interests strongly support the pipeline and prompt their government to insist that it is a "commercial project". However, it's hard to believe that Merkel would like one of her final acts as Chancellor to be a ribbon cutting ceremony to celebrate the completion of one of the world's longest offshore gas pipelines. A delay could suit Merkel well.

The second factor is the German Green Party, which stands just behind Merkel's Christian Democratic Union and will likely play a "kingmaker" role in the next government. In March, the Greens added a pillar to their platform stating that Nord Stream 2 should be "stopped" for both climatic and geopolitical reasons.

If, as it seems likely, the Greens are part of the new German government coalition, the pipeline could be a toast.

All of this suggests that Washington's best hope of sinking the pipeline is to delay completion after September. The way to do this is not through sanctioning German companies – which could have the opposite effect. It is through silent negotiations with Berlin that the federal government is encouraging to throw just enough sand in the gears to delay the project. Let's call it a ceasefire: In return for Berlin imposing a moratorium on the construction of pipelines and official permits by the end of the year, Washington would agree not to sanction any German companies during the same period.

To close such a deal would require reviving an art that was all but lost during the Trump administration: diplomacy. Biden has committed to it. Here's his chance.

Comments are closed.