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9th Aug 2020

US halts building of Russia-Germany pipeline

  • Allseas vessels, such as Pioneering Spirit, could be seized by US authorities (Photo: nord-stream2.com)

US sanctions have interrupted construction of Russia's divisive gas pipeline to Germany, Nord Stream 2.

The measures, signed by US president Donald Trump on Friday (20 December), prompted the Swiss engineering firm laying the pipe, Allseas, to immediately stop work.

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  • Most of the Baltic Sea pipe already in place (Photo: Axel Schmidt)

Allseas "has suspended its Nord Stream 2 pipelay activities" it said on Saturday.

And it would fully comply with US "guidance" on "regulatory, technical, and environmental" details of the sanctions, the firm said.

The US measures called for asset freezes against those "engaged in pipe-laying ... for the construction of the Nord Stream 2 pipeline project".

That meant the US would have seized Allseas' ships - the Audacia, Pioneering Spirit, and Solitaire - if they ever entered American waters after completing the Russian pipe.

It would also have seized the firm's office in Houston, Texas, and barred it from working in the US for years.

"Stop NOW and leave the pipeline unfinished ... or make a foolish attempt to rush to complete the pipeline and risk putting your company out of business," two US senators, Ted Cruz and Ron Johnson, told Allseas CEO Edward Heerema in a letter last week.

Allseas' announcement marked the first major setback for the Russian project since construction began two years ago.

Germany had carved out Nord Stream 2 from EU sanctions on Russia over its invasion of Ukraine.

It had thwarted European Commission attempts to impose EU energy law on the pipe.

Denmark, Finland, and Sweden had granted environmental permits in their waters.

And most of the 1,200km-long pipe had been laid in the Baltic Sea when the US bombshell struck.

Stop NOW

For their part, Germany and Russia vowed to go ahead anyway, setting the scene for another transatlantic clash.

"The [German] federal government rejects such extraterritorial sanctions. They ... represent interference in our domestic affairs," German chancellor Angela Merkel's office said on Saturday.

"Completing the project is essential for European supply security," Russia also said through its Nord Stream 2 consortium in Switzerland.

"We, together with the companies supporting the project, will work on finishing the pipeline as soon as possible," it added.

The supporting companies are five EU energy firms - Engie, OMV, Shell, Uniper, and Wintershall - who, together, invested €5bn in Nord Stream 2 and who also risked losses if it was left "unfinished".

The Russia pipeline clash is just one of several foreign policy and trade imbroglios between the US and Europe since Trump came to power.

And the disputes, including on Iran, Israel, Syria, Nato, trade, and climate, have damaged trust between Western allies.

Upside-down world

For its part, the European Commission never liked Nord Stream 2 on grounds it would entrench EU energy dependence on Russia.

But it liked Trump's way of doing things even less, it said.

"As a matter of principle, the EU opposes the imposition of sanctions against EU companies conducting legitimate business," a commission spokesman told the AFP news agency on Friday.

And for once, Russian propaganda outlets, such as RT, amply quoted German and EU lines, conjuring an upside-down world of EU-Russia unity against US hostility.

Nord Stream 2 has long divided the EU as well as the West more broadly on strategic grounds.

It would enable Russia to pump almost all of its EU gas exports via Germany, allowing the Kremlin to cut off Poland, the Baltic states, or Ukraine for political reasons.

It was seen as a betrayal in eastern Europe, where it had been compared to the Molotov-Ribbentrop pact, a Nazi-Soviet-era deal to carve up the region, and it was mistrusted by Nordic countries.

'Pro-Europe' sanctions

The US ambassador to Germany, Richard Grenell, highlighted those divisions on Saturday.

"We stand with the 15 European countries, the European Parliament, and the European Commission ... who have concerns over Nord Stream 2," he said.

"Our position is pro-Europe ... and many European diplomats are thanking us for this support," he added.

Germany was "particularly surprised" by the US move, Berlin noted, because it came amid incipient breakthroughs in other Russia-Ukraine gas transit disputes.

The commission said it would analyse the US bill before taking a legal position.

"The commission's objective has always been to ensure that Nord Stream 2 operates in a transparent and non-discriminatory way with the appropriate degree of regulatory oversight," a commission spokesman said.

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