Nord Stream 2, the undersea Russian pipeline designed to transport more natural gas to Germany, is the energy project nearly everyone in Washington, D.C. loves to hate. Some lawmakers are going to great lengths to drill home their point. Sen. Ted Cruz, a co-author of mandatory sanctions legislation targeting the pipeline, blocked a vote on President Joe Biden’s nominee to lead the CIA, William Burns, over the issue. That hold that was lifted about two weeks later after Secretary of State Antony Blinken indicated all entities associated with the project were at risk of U.S. sanctions. Blinken reiterated this position during his latest meeting with NATO foreign ministers.
The $11 billion pipeline could theoretically double the amount of Russian gas that flows to Europe, boosting Moscow’s bottom line and providing Russian President Vladimir Putin with a potent geopolitical weapon to wield against the West. The question, however, is whether the benefits to the United States of destroying Nord Stream 2 are worth the costs, which have not been properly considered.
As frustrated as some lawmakers are with the pace of sanctions by the Biden administration, there are legitimate reasons to think twice before plunging into a full-scale economic assault against the project.
The immediate issue is time. As Blinken said during his testimony to the House Foreign Affairs Committee earlier this month, the pipeline is 95% complete. Any attempt to thwart it could fail no matter how hard Washington pushes. While previous U.S. sanctions have deterred European insurance companies and pipe-layers from participating in the project and convinced others to flee it altogether, the chance of Nord Stream 2 frittering away when so much progress has already been made is exceedingly low. The worst possible scenario for Washington would be to embark on a concerted campaign against Nord Stream 2, only to watch as work on the pipeline finishes and the first cubic meters of gas start flowing to the German coastline. America’s soft power would suffer as a result—and the Russians, more than happy to poke Washington in the eye at any opportunity, would surely use the project’s survival in the face of U.S. sanctions to strengthen the perception of waning U.S. influence in Europe.
The Biden administration came into office promising to repair and strengthen its alliances in Europe. But it is hard to see how to achieve that when this very same administration is open to waging economic warfare on European companies participating in Nord Stream 2. The White House must ask: Is taking a sledgehammer to the pipeline worth the damage to a U.S.-German relationship that weathered an intense amount of pressure over the previous four years?
Berlin has had ample opportunity to pull out from Nord Stream 2, or at least distance itself from the project. But to Washington’s regret, the German government remains quite committed to it. With the exception of some subtle rhetorical shifts from senior German ministers, Berlin’s position has remained the same. In fact its stance has been constant through numerous cases of bad Russian behavior, from the targeted killing of a Chechen exile on German soil and Russian hacks on the German parliament, to the poisoning, arrest, and imprisonment of Russian opposition leader Alexei Navalny.
The fact that Russian malfeasance has not pushed German Chancellor Angela Merkel to kill the pipeline is a strong indication that Berlin sees Nord Stream 2 as being in its own economic interest. It is difficult to see how the Biden administration can change Berlin’s assessment. Cutting off German and European companies from the U.S. financial system and roiling the bilateral U.S.-German relationship is a high price to pay for stopping an energy project that is nearly complete—especially when other creative options are on the table.
Finally, the Biden administration cannot afford to view the Nord Stream 2 issue in a vacuum.
U.S. officials are responsible for maintaining the long-term strength of the U.S. dollar and financial system. While sanctions have become an increasingly popular foreign policy tool on both sides of Pennsylvania Avenue, they aren’t cost-free. The more Washington deploys secondary sanctions against a growing list of countries for a growing list of reasons, the more willing those countries, including U.S. allies in Europe, will be open to exploring alternate payment methods to get around U.S. restrictions. The aggressive use of U.S. sanctions exposes U.S. companies to retaliation, which takes the form of import restrictions or weighty tariffs. Penalizing European entities over a project some in Europe see as integral to its own energy interests would give European policymakers more justification to de-dollarize their economies. If stopping Nord Stream 2 comes at the danger of contributing to the erosion of the U.S. financial system, it may be best to leave the pipeline alone.
U.S. foreign policy practitioners should always be attuned to the risks of unintended consequences. Washington’s desire to counter Russia should not get in the way of a prudent strategic approach.
Daniel R. DePetris is a fellow at Defense Priorities and a foreign affairs columnist at Newsweek. The views expressed are the author's own.
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