US’s forthcoming Russia sanctions won’t include Nord Stream 2

DOJ's legal approval for a new slate of sanctions to stop the Russia-Germany pipeline was reversed recently.

US’s forthcoming Russia sanctions won’t include Nord Stream 2

WASHINGTON — Congressionally mandated sanctions against the major Russia-Germany gas pipeline Nord Stream 2 won’t be included in the Biden administration’s expected rollout of new penalties on Moscow over its SolarWinds espionage campaign and election interference efforts.

The U.S. Justice Department gave legal sign-off last month to at least two sanctions packages targeting Nord Stream 2 AG, the company responsible for the planning, construction and subsequent operation of the pipeline, and its CEO Matthias Warnig. But that legal approval was reversed last week amid an ongoing internal debate over which entities meet the legal threshold for sanctions, according to three people familiar with the matter.

Democratic and Republican lawmakers have already inquired with the State Department about the reversal, which they only learned about through unofficial channels, according to two people familiar with the conversations.

Lawmakers have argued that several pipe-laying vessels and entities, including Nord Stream 2 AG and its CEO, meet the legal threshold for sanctions under the Protecting Europe’s Energy Security Act of 2019, known as PEESA.

But another person familiar with the reversal said some administration officials felt the legal approval was granted prematurely, before the State Department was fully ready to implement the new penalties. Legal signoff is one of the final steps in the interagency process before sanctions are imposed.

The NSC referred to the State Department for comment. The State Department and Justice Department declined to comment.

The Biden administration is expected to roll out new sanctions against Russian government and intelligence officials as soon as Thursday in response to the Russian espionage campaign known as SolarWinds and election interference in 2020, according to two people with knowledge of the plans. Several Russian diplomats will also be expelled from the U.S. as part of the response, the people said. The State Department was notifying partners and stakeholders of the imminent sanctions on Wednesday night.

At the same time, though, the administration has been reluctant to move too aggressively on Nord Stream 2 as it works to rebuild the U.S.-Germany relationship, officials said. While the administration does want to impede Moscow’s energy leverage — President Joe Biden has called Nord Stream 2 “a bad deal for Europe” — it also wants to strengthen the U.S. relationship with Berlin, which has been lobbying Washington for the pipeline’s construction to continue unabated.

“We very much want to restore our relationship with Germany after four years of abuse by the previous administration,” said a senior administration official. “But Congress is not budging. We are between a rock and a hard place.”

Lawmakers are indeed pressuring the administration to do more to halt the pipeline, which is more than 95 percent complete and proceeding quickly. Last month, the Danish Maritime Authority revealed that a new Russian pipe-laying vessel named the Akademik Cherskiy would soon be joining Nord Stream 2, potentially speeding construction of the pipeline even further.

The issue is particularly urgent for Ukraine. Nord Stream 2 would allow Russia to bypass Ukraine in shipping Russian gas to the EU through the Baltic Sea, depriving Kyiv of crucial revenue.

The Biden administration is required under PEESA to submit a report to Congress every 90 days — the next is due in May — identifying entities involved in the construction of the pipeline that are eligible for sanctions. The list now includes at least seven Russian vessels, according to a letter sent by Sen. Ted Cruz (R-Texas) and Sen. Jim Risch (R-Idaho) to Secretary of State Antony Blinken last month.

So far, however, the State Department has not issued new sanctions on Nord Stream 2; rather, it has upheld sanctions imposed by the Trump administration on the Russian pipe-laying vessel Fortuna and its owner KVT-RUS.