In Europe, the Biden administration’s mantra has been “America is back.” But given Wednesday’s U.S.-German Nord Stream II agreement, a more accurate and honest slogan might be “America is backing away.”
The deal shamefully sells out U.S. security interests in Europe in service of comity with select allies, most importantly Germany.
The NS2 natural gas pipeline, planned to run from Russia to Germany, is neither economically necessary nor geopolitically prudent. It would increase European dependence on Russian gas and magnify Russia’s ability to use its European energy dominance as a political trump card. It would also calcify European disagreements over energy that the Nord Stream II project has opened, and it would undermine U.S. allies in Eastern and Central Europe.
Russian gas currently reaches Europe via undersea pipelines, exports of liquefied natural gas, and overland routes running through the Baltic states and Ukraine. Nord Stream II would benefit Russia by allowing it to avoid the transit fees collected by Eastern European nations such as Ukraine. Kyiv uses that money to defend itself in the ongoing, Russian-supported war in Ukraine’s Donbas region. In 2020, 56 billion cubic meters of gas arrived in Europe via Ukraine. Losing those transit fees could cost Ukraine as much as 3% of its gross domestic product.
The first half of 2021 already has seen a 12.7% year-over-year decline in gas transit via Ukraine. This is just a taste of what is to come, as is Russian President Vladimir Putin’s June statement that Ukraine will need to show “good will” to ensure the continuance of overland Russian gas transit.
In the United States, opposition to the Nord Stream II is bipartisan and expansive. Nearly all of Europe opposes it as well. Even in Germany and the few other nations whose governments still support the pipeline, sizeable portions of the public object to the project. All this makes the Biden administration’s capitulation more baffling.
Yet Team Biden seems eager to placate German Chancellor Angela Merkel and move on from the issue. They claim the pipeline was a fait accompli when they took office and that continued opposition would only poison U.S.-German relations.
This is factually inaccurate. Action by the United States under the Trump administration arrested the pipeline’s progress and called into question whether it would, in fact, be completed. A mere year ago, the CEO of Uniper, one of the five major European energy companies financing Nord Stream II, openly discussed contingency planning to cover losses if the pipeline died under withering U.S. sanctions pressure.
Yet with winter receding, construction restarted this February, despite official statements from the Biden administration that the United States remained opposed. Three months later, Washington signaled acquiescence by withdrawing sanctions against the operator (Nord Stream 2 AG) and its CEO.
Desperately searching for an off-ramp, the Biden administration has found one in the form of a U.S.-German agreement on measures that purport to mitigate the negative impacts of the pipeline’s completion.
According to the agreement, should Russia seek to use its energy imports as a weapon against Ukraine, Germany would take an “unspecified action” in response, while advocating for EU-wide measures. U.S. officials have indicated that limiting gas imports from Russia to Germany could be one such action, however Germany has been silent on that prospect.
Ominously, German officials specifically rejected a “kill-switch clause in the pipeline’s operating rules,” sought by the United States.
The United States and Germany agreed to a promote a $1 billion “Green Fund”—with an initial German investment of $175 million—to finance Ukrainian transition to clean energy sources. Germany would also appoint a special envoy to support bilateral energy projects with Ukraine and commit “to use leverage to extend Ukraine’s gas transit agreement with Russia for as long as 10 years after it expires in 2024.”
This extraordinarily weak agreement will do nothing to deter Russia from wielding energy as a weapon in Europe. Rather it will likely embolden Putin, who will interpret the lack of U.S. resolve to stop Nord Stream II as license for further aggression.
The Biden administration and Merkel chancellery negotiated the agreement over the heads of the rest of Europe, including those eastern European allies most impacted. In fact, U.S. officials have reportedly gone so far as to threaten Ukraine to keep quiet over its opposition to the agreement, lest it cause severe damage to U.S.-Ukrainian bilateral relations.
The agreed “mechanisms” to allow the pipeline to be completed, while purportedly reining in Russia and assuaging the concerns of Eastern European nations, are mere diplomatic smokescreens. They mask an abdication of U.S. leadership on an issue of key importance for transatlantic relations.
The vague language of “unspecified actions” makes it most likely that future Russian energy coercion will be met either by no response or a merely symbolic one.
While U.S. officials have indicated that limiting Russian gas flows could be one such response, German officials have not gone so far. To think that a new government in Germany will throttle gas supplies, driving up prices in the middle of winter, at a time when European gas reserves are at historic lows strains credulity.
Germany’s promise to help extend Russia’s gas transit agreement with Ukraine is merely a promise to try. History has shown that no Russian assurance granted in negotiations can be trusted. Moscow will have little incentive to negotiate an extension, especially once Nord Stream II is completed.
Finally, the planned “green fund” for Ukraine, even if fully funded, has no guarantee of success, nor is it clear that a Ukrainian energy transition is supported by Ukrainians themselves.
Nord Stream II is a geopolitical Trojan horse, one that Moscow wants to heave across the finish line before German elections in September. There is no magical fix that pleases all—only the cold reality of what is in the U.S. national interest: ending Nord Stream II.
The U.S.-German accord is a hollow and dangerous diplomatic gesture. It ensures the completion of Nord Stream II without giving the transatlantic community the tools needed to deter and punish the Russian energy coercion that is sure to come.
Daniel Kochis is a senior policy analyst of European affairs in The Heritage Foundation’s Margaret Thatcher Center for Freedom. The views expressed are the author's own.
