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Global Economy

US sanctions against Nord Stream 2 AG

After the federal government suspended the approval process for the German-Russian gas pipeline Nord Stream 2, the USA are now introducing sanctions against the operating company and its top managers. The Treasury Department in Washington said business with the operator Nord Stream 2 AG must be terminated within a week.

US President Joe Biden announced the punitive measures against Switzerland-based Nord Stream 2 AG and its management in a written statement. He had previously refrained from doing so out of consideration for Germany.

Close coordination with Germany

In response to Moscow's recognition of the separatist regions of Donetsk and Luhansk in eastern Ukraine, the West imposed a series of sanctions on Russia. Biden said the Nord Stream 2 decision was another part of that first tranche of sanctions. "As I have made clear, if Russia continues to escalate, we will not hesitate to take further steps."

The USA had coordinated closely with the federal government on the issue. Biden thanked Chancellor Olaf Scholz "for his close partnership and continued commitment to holding Russia accountable for its actions."

US State Department spokesman Ned Price said the sanctions would mean the end of Nord Stream 2. "By acting together with the Germans, how and when and how we did it, we have ensured that this $11 billion investment is now a piece of steel on the bottom of the sea."

Procedure could take months

The Americans' decision is another major blow to the pipeline. The federal government suspended the approval process on Tuesday, putting the project on hold indefinitely. The pipeline is completed but not yet operational.

According to the federal government, it could still be months before a possible decision on the future of Nord Stream 2 is made. A prerequisite for this would be a report on the impact of the project on security of supply. When asked whether it would take weeks, months or years to create it, government spokesman Steffen Hebestreit said: "I'm not counting on weeks."

Several European companies involved

The operating company of the pipeline, Nord Stream 2 AG, based in Switzerland, belongs to the Russian state-owned company Gazprom. The pipeline was built to bring gas from Russia to Germany bypassing Ukraine. The Düsseldorf utility Uniper, the Austrian energy company OMV, Shell and the French Engie also participated in the financing. The total costs were estimated at 9.5 billion euros.

According to the US Treasury Department, the punitive measures are also aimed at German Nord Stream CEO Matthias Warnig. According to the White House, former Chancellor Gerhard Schröder, who has headed Nord Stream's shareholders' committee since 2005, is not affected by the sanctions.

USA skeptical for a long time

In the US, there has long been major opposition to Nord Stream 2, among both Republicans and Democrats. Critics have argued that the pipeline is primarily a geopolitical project by Russia. Putin's goal is to decouple Ukraine from Europe and make Europe even more dependent on Russian gas. In the past few months, Republicans have tried unsuccessfully to push through a tightening of sanctions laws in Congress. From their ranks came praise for Biden's decision.

Biden has also been against Nord Stream 2 for a long time. Nevertheless, the Democrat had issued special permits last May that spared Nord Stream 2 AG from US sanctions. This waiver of sanctions was expressly made out of consideration for Germany as an ally. At the time, Biden also stated that the United States would no longer be able to prevent the pipeline from being completed.

The issue of Nord Stream 2 had long caused resentment and anger between Germany and the USA. In order to defuse the dispute, Germany pledged greater support to Ukraine in a joint statement with the United States last July. In view of the Ukraine crisis, the situation has changed fundamentally once again. Since the federal government has now turned away from Nord Stream 2 of its own accord, Biden no longer has to take Berlin into account.

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