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Nord Stream 2 is again at the centre of political games

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The prospects for the imminent completion of Russia's Nord Stream 2 energy project continue to haunt politicians on both sides of the Atlantic. And although the tone of rhetoric against Russia has noticeably decreased in Washington, the Americans are actively using the topic of the gas pipeline in their political games, writes Alexi Ivanov, Moscow correspondent.

President Biden did not impose sanctions against Nord Stream AG (51% of the company belongs to GAZPROM) but strengthened sanctions against Russian pipe-laying companies. In Washington, they made it clear that they would no longer be able to stop the almost finished project. Nevertheless, Secretary of State Blinken continues to speak "about the danger" of the Russian gas pipeline for the energy security of Europe.

In turn, for Germany, Nord Stream 2 has long been a headache. The unprecedented pressure that Washington has exerted on Berlin in the last period is unlikely to have pleased Germany.

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However, in the end, the White House decided not to demonize Germany, but to achieve compromises for America that would allow Washington, if necessary, to control the transit of Russian gas, especially if it tries to significantly reduce the gas flow to Europe through Ukraine.

In Ukraine itself, the upcoming launch of Nord Stream 2 raises serious concerns, primarily due to potential losses for Kiev as a result of Moscow's reduction in gas pumping through the Ukrainian gas transportation system. Many experts in Ukraine seriously calculate possible losses.

The Russian Foreign Ministry has already reacted to such gloomy forecasts. First of all, the Ministry stated that Nord Stream 2 is a purely economic project that has no political dimension. Ukraine has a contract with Gazprom until 2024, and the issue of further gas transit will be resolved through negotiations. At the same time, Moscow is convinced that Ukraine will not remain without Russian gas. That was clearly stated by high ranking representatives of the Russian Foreign Ministry.

Along with Ukraine, Poland actively expresses its dissatisfaction with the Nord Stream 2. Warsaw is known for its negative attitude to the Russian gas supplies to Europe. The country has already launched the construction of an alternative pipeline to Denmark, the Baltic Pipe, to deliver gas from Norway. However, experts doubt that the relatively modest reserves of Norwegian gas will be able to compete with natural fuel from Russia.

In any case, various political games and intrigues around the Nord Stream 2 are likely to last for a long time, largely due to pressure from Washington, the unwillingness of Germany and other EU countries to quarrel with America, as well as the desire to support Ukraine.

Energy

US and Germany strike Nord Stream 2 pipeline deal to push back on Russian 'aggression'

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Workers are seen at the construction site of the Nord Stream 2 gas pipeline, near the town of Kingisepp, Leningrad region, Russia, June 5, 2019. REUTERS/Anton Vaganov/File Photo

The United States and Germany have unveiled an agreement on the Nord Stream 2 gas pipeline under which Berlin pledged to respond to any attempt by Russia to use energy as a weapon against Ukraine and other Central and Eastern European countries, write Simon Lewis, Andrea Shalal, Andreas Rinke, Thomas Escritt, Pavel Polityuk, Arshad Mohammed, David Brunnstrom and Doyinsola Oladipo.

The pact aims to mitigate what critics see as the strategic dangers of the $11 billion pipeline, now 98% complete, being built under the Baltic Sea to carry gas from Russia's Arctic region to Germany.

U.S. officials have opposed the pipeline, which would allow Russia to export gas directly to Germany and potentially cut off other nations, but President Joe Biden's administration has chosen not to try to kill it with US sanctions.

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Instead, it has negotiated the pact with Germany that threatens to impose costs on Russia if it seeks to use the pipeline to harm Ukraine or other countries in the region.

But those measures appeared to have done little to calm fears in Ukraine, which said it was asking for talks with both the European Union and Germany over the pipeline. The agreement also faces political opposition in the United States and Germany.

A joint statement setting out the details of the deal said Washington and Berlin were "united in their determination to hold Russia to account for its aggression and malign activities by imposing costs via sanctions and other tools."

If Russia attempts to "use energy as a weapon or commit further aggressive acts against Ukraine," Germany will take steps on its own and push for actions at the EU, including sanctions, "to limit Russian export capabilities to Europe in the energy sector," the statement said.

It did not detail specific Russian actions that would trigger such a move. "We elected not to provide Russia with a road map in terms of how they can evade that commitment to push back," a senior State Department official told reporters, speaking on condition of anonymity.

"We also will certainly look to hold any future German governments accountable for the commitments that they have made in this," the official said.

Under the agreement, Germany will "utilize all available leverage" to extend by 10 years the Russia-Ukraine gas transit agreement, a source of major revenues to Ukraine that expires in 2024.

Germany will also contribute at least $175 million to a new $1 billion "Green Fund for Ukraine" aimed at improving the country's energy independence.

Ukraine sent notes to Brussels and Berlin calling for consultations, Foreign Minister Dmytro Kuleba said in a tweet, adding the pipeline "threatens Ukraine's security." Read more.

Kuleba also issued a statement with Poland's foreign minister, Zbigniew Rau, pledging to work together to oppose Nord Stream 2.

Ukrainian President Volodymyr Zelenskiy said he was looking forward to a "frank and vibrant"discussion with Biden over the pipeline when the two meet in Washington next month. The visit was announced by the White House on Wednesday, but press secretary Jen Psaki said the timing of the announcement was not related to the pipeline agreement.

German Chancellor Angela Merkel spoke by phone with Russian President Vladimir Putin hours before the release of the agreement, the German government said, saying Nord Stream 2 and gas transit via Ukraine were among the topics.

The pipeline had been hanging over US-German relations since former President Donald Trump said it could turn Germany into a "hostage of Russia" and approved some sanctions.

German Foreign Minister Heiko Maas said on Twitter he was "relieved that we have found a constructive solution".

Russian Foreign Minister Sergei Lavrov, asked about the reported details of the agreement earlier on Wednesday, said any threat of sanctions against Russia was not "acceptable," according to the Interfax news agency.

Even before it was made public, leaked details of the agreement were drawing criticism from ome lawmakers in both Germany and the United States.

Republican Senator Ted Cruz, who has been holding up Biden's ambassadorial nominations over his concerns about Nord Stream 2, said the reported agreement would be "a generational geopolitical win for Putin and a catastrophe for the United States and our allies."

Cruz and some other lawmakers on both sides of the aisle are furious with the Democratic president for waiving congressionally mandated sanctions against the pipeline and are working on ways to force the administration's hand on sanctions, according to congressional aides.

Democratic Senator Jeanne Shaheen, who sits on the Senate Foreign Relations Committee, said she was not convinced the agreement would mitigate the impact of the pipeline, which she said "empowers the Kremlin to spread its malign influence throughout Eastern Europe."

"I’m skeptical that it will be sufficient when the key player at the table – Russia – refuses to play by the rules," Shaheen said.

In Germany, top members of the environmentalist Greens party called the reported agreement "a bitter setback for climate protection" that would benefit Putin and weaken Ukraine.

Biden administration officials insist the pipeline was so close to being finished when they took office in January that there was no way for them to prevent its completion.

"Certainly we think that there is more that the previous administration could have done," the US official said. "But, you know, we were making the best of a bad hand."

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Energy

Joint statement of the US and Germany on support for Ukraine, European energy security and climate goals

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The US and Germany have issued a joint statement following German Chancellor Angela Merkel's recent visit to Washington to meet bilaterally with US President Joe Biden. The statement addresses the controversial Nordstream 2 project, which has divided opinion in the EU.

"The United States and Germany are steadfast in their support for Ukraine’s sovereignty, territorial integrity, independence, and chosen European path. We recommit ourselves today (22 July) to push back against Russian aggression and malign activities in Ukraine and beyond. The United States pledges to support Germany’s and France’s efforts to bring peace to eastern Ukraine via the Normandy Format. Germany will intensify its efforts within the Normandy Format to facilitate the implementation of the Minsk agreements. The United States and Germany affirm their commitment to tackling the climate crisis and taking decisive action to reduce emissions in the 2020s to keep a 1.5-degree Celsius temperature limit within reach.

"The United States and Germany are united in their determination to hold Russia to account for its aggression and malign activities by imposing costs via sanctions and other tools. We commit to working together via the newly established US-EU High Level Dialogue on Russia, and via bilateral channels, to ensure the United States and the EU remain prepared, including with appropriate tools and mechanisms, to respond together to Russian aggression and malign activities, including Russian efforts to use energy as a weapon. Should Russia attempt to use energy as a weapon or commit further aggressive acts against Ukraine, Germany will take action at the national level and press for effective measures at the European level, including sanctions, to limit Russian export capabilities to Europe in the energy sector, including gas, and/or in other economically relevant sectors. This commitment is designed to ensure that Russia will not misuse any pipeline, including Nord Stream 2, to achieve aggressive political ends by using energy as a weapon.

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"We support the energy security of Ukraine and Central and Eastern Europe, including the key principles enshrined in the EU’s Third Energy Package of diversity and security of supply. Germany underscores that it will abide by both the letter and the spirit of the Third Energy Package with respect to Nord Stream 2 under German jurisdiction to ensure unbundling and third-party access. This includes an assessment of any risks posed by certification of the project operator to the security of energy supply of the EU.

"The United States and Germany are united in their belief that it is in Ukraine’s and Europe’s interest for gas transit via Ukraine to continue beyond 2024. In line with this belief, Germany commits to utilize all available leverage to facilitate an extension of up to 10 years to Ukraine’s gas Transit agreement with Russia, including appointing a special envoy to support those negotiations, to begin as soon as possible and no later than September 1. The United States commits to fully support these efforts.

"The United States and Germany are resolute in their commitment to the fight against climate change and ensuring the success of the Paris Agreement by reducing our own emissions in line with net-zero by 2050 at the latest, encouraging the strengthening of climate ambition of other major economies, and collaborating on the policies and technologies to accelerate the global net-zero transition. That is why we have launched the U.S.-Germany Climate and Energy Partnership. The Partnership will foster U.S.-Germany collaboration on developing actionable roadmaps to reach our ambitious emission reduction targets; coordinating our domestic policies and priorities in sectoral decarbonization initiatives and multilateral fora; mobilizing investment in energy transition; and developing, demonstrating, and scaling critical energy technologies such as renewable energy and storage, hydrogen, energy efficiency, and electric mobility.

"As part of the US-Germany Climate and Energy Partnership, we have decided to establish a pillar to support the energy transitions in emerging economies. This pillar will include a focus on supporting Ukraine and other countries in Central and Eastern Europe. These efforts will not only contribute to the fight against climate change but will support European energy security by reducing demand for Russian energy.

"In line with these efforts, Germany commits to establish and administer a Green Fund for Ukraine to support Ukraine’s energy transition, energy efficiency, and energy security. Germany and the United States will endeavor to promote and support investments of at least $1 billion in the Green Fund for Ukraine, including from third parties such as private-sector entities. Germany will provide an initial donation to the fund of at least $175 million and will work toward extending its commitments in the coming budget years. The fund will promote the use of renewable energy; facilitate the development of hydrogen; increase energy efficiency; accelerate the transition from coal; and foster carbon neutrality. The United States plans to support the initiative via technical assistance and policy support consistent with the objectives of the fund, in addition to programs supporting market integration, regulatory reform, and renewables development in Ukraine’s energy sector.

"In addition, Germany will continue to support bilateral energy projects with Ukraine, especially in the field of renewables and energy efficiency, as well as coal transition support, including the appointment of a special envoy with dedicated funding of $70 million. Germany is also ready to launch a Ukraine Resilience Package to support Ukraine’s energy security. This will include efforts to safeguard and increase the capacity for reverse flows of gas to Ukraine, with the aim of shielding Ukraine completely from potential future attempts by Russia to cut gas supplies to the country. It will also include technical assistance for Ukraine’s integration into the European electricity grid, building on and in coordination with the ongoing work by the EU and the U.S. Agency for International Development. In addition, Germany will facilitate Ukraine’s inclusion in Germany’s Cyber Capacity Building Facility, support efforts to reform Ukraine’s energy sector, and assist with identifying options to modernize Ukraine’s gas transmission systems.

"The United States and Germany express their strong support for the Three Seas Initiative and its efforts to strengthen infrastructure connectivity and energy security in Central and Eastern Europe. Germany commits to expand its engagement with the initiative with an eye toward financially supporting projects of the Three Seas Initiative in the fields of regional energy security and renewable energy. In addition, Germany will support projects of common interest in the energy sector via the EU budget, with contributions of up to $1.77 billion in 2021-2027. The United States remains committed to investing in the Three Seas Initiative and continues to encourage concrete investments by members and others."

Robert Pszczel, senior officer for Russia and the Western Balkans, Public Diplomacy Division (PDD), NATO HQ, was not overly impressed with the agreement:

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Energy

US and Germany to announce deal on Nord Stream 2 pipeline in coming days - sources

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The logo of the Nord Stream 2 gas pipeline project is seen on a pipe at the Chelyabinsk pipe rolling plant in Chelyabinsk, Russia, February 26, 2020. REUTERS/Maxim Shemetov/File Photo

The United States and Germany are expected to announce in coming days a deal resolving their long-standing dispute over Russia's $11 billion Nord Stream 2 natural gas pipeline, sources familiar with the matter said on Monday (19 July), writes Andrea Shalal.

President Joe Biden and German Chancellor Angela Merkel failed to settle their differences over the undersea pipeline when they met last week, but agreed Moscow must not be allowed to use energy as a weapon against its neighbors. Read more.

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A deal is now in sight after discussions among US and German officials about US concerns that the pipeline, which is 98% complete, will increase Europe's dependence on Russian gas, and could rob Ukraine of the transit fees it now collects on gas pumped through an existing pipeline.

An agreement would avert the resumption of currently waived US sanctions against Nord Stream 2 AG, the company behind the pipeline, and its chief executive.

Details were not immediately available, but the sources said the deal would include commitments by both sides to ensure increased investment in Ukraine's energy sector to offset any negative fallout from the new pipeline, which will bring gas from the Arctic to Germany under the Baltic Sea.

"It's looking good," said one of the sources, who spoke on condition of anonymity because the talks are still ongoing. "We expect those conversations to reach resolution in coming days."

A second source said the two sides were nearing an agreement that would assuage concerns raised by US lawmakers, as well as those of Ukraine.

Derek Chollet, a senior adviser to Secretary of State Antony Blinken, will meet with senior Ukrainian government officials in Kyiv on Tuesday and Wednesday to reinforce the strategic value of US-Ukrainian ties, the State Department said on Monday.

One of the sources said the United States was eager to ensure that Ukraine supported the expected agreement with Germany.

The Biden administration concluded in May that Nord Stream 2 AG and its CEO engaged in sanctionable behavior. But Biden waived the sanctions to allow time to work out a deal and keep rebuilding ties with Germany that were badly frayed during former President Donald Trump's administration. Read more.

In addition to assurances by Germany about its willingness to "reverse flow" gas to Ukraine if Russia ever cuts off supplies to Eastern Europe, the sources said the agreement would include a pledge by both countries to invest in Ukraine's energy transformation, energy efficiency and energy security.

It was not immediately clear whether both countries would announce significant government investments, or whether they would seek to leverage private investments in Ukraine.

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