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US announces sanctions on Nord Stream 2

February 23, 2022

The Biden administration has announced plans to impose sanctions on Nord Stream 2 AG, the company building a controversial gas pipeline from Russia to Germany.

Pressebild Nord Stream 2
Germany halted the pipeline's certification process this week over after Russia recognized two separatist regions in UkraineImage: Nikolai Ryutin/Nord Stream 2

The United States will impose sanctions on the company in charge of building the Nord Stream 2 gas pipeline, President Joe Biden announced Wednesday.

"Today, I have directed my administration to impose sanctions on Nord Stream 2 AG and its corporate officers," Biden said in a statement released by the White House.

The US welcomed Germany's decision on Tuesday to halt the certification of the pipeline in response to Russia's recognition of the independence of the self-proclaimed "People's Republics" of Luhansk and Donetsk. The White House said it would follow up with measures of its own.

Germany halts Nord Stream 2

US imposes fresh round of sanctions 

The measures against the company behind the Russian natural gas pipeline are the latest round of sanctions imposed by Western powers. The US, the UK, and the European Union, along with others like Japan and Australia, imposed sanctions on Tuesday that took aim at Russia's economy.

The Nord Stream 2 pipeline, which cost around €9.5 billion ($10.6 billion) to build, would carry gas directly across the Baltic Sea to Germany.  

Germany considered the pipeline essential to its energy needs, but Germany's Economy Minister Rober Habeck on Wednesday said Germany's gas supply was secured even without Nord Stream 2, though prices were likely to rise further in the short term.

Biden lauds unified response

Biden in his statement praised Germany for being a "leader" for moving ahead in a coordinated manner, adding that the US would not "hesitate to take further steps if Russia continues to escalate."

"By acting together with the Germans how we did, when we did, and the way in which we did, we have ensured that this is an $11 billion prize investment that is now a hunk of steel, sitting at the bottom of the sea," State Department spokesperson Ned Price said.

A controversial pipeline

Germany had faced immense pressure from the very beginning to pull the plug on the project even as it maintained the pipeline was a commercial project, with several European partners and the US fearing it would make the country overly reliant on Russia.

The pipeline, which runs from western Russia to northeastern Germany, had been sitting idle, pending certification from Germany and the European Union, ever since its completion in September last year.

But the completion of the pipeline was far from a smooth process. Besides the pressure from world powers, in 2018, as the pipeline was being built, then US President Donald Trump announced sanctions on anyone involved in the project.

Most companies backed out of the scheme, with Russia's state-owned energy company Gazprom saying it would complete the project alone. So it did, and in May 2021, President Biden waived sanctions on Gazprom in a bid to reset relations with Germany.

Nord Stream 2 AG is a registered Swiss firm that belongs to Gazprom. Gazprom owns the entire pipeline but paid half the costs, with the rest shared by Shell, Austria's OMV, France's Engie and Germany's Uniper and Wintershall DEA.

rm/nm (Reuters, AP)