Ukrainian President Volodymyr Zelensky was surprised and disappointed when he learned that the Biden administration had decided to scrap sanctions on a firm overseeing Russia’s contested Nord Stream 2 gas pipeline to Germany, an energy project that Ukraine sees as a dire national security threat.
Russia’s gas is currently passing via Ukraine on its way to Europe. Nord Stream 2, a natural gas pipeline connecting Russia and Germany, would allow Russia to bypass and isolate Kyiv, Ukraine’s capital.
According to Zelensky, the United States is the only power capable of halting Russia.
President Joe Biden ‘s action contradicted his previous statements that he strongly supports Ukraine and opposes Putin.
In an interview with Axios that aired Sunday on June 6 , Volodymyr Zelensky said that this was a weapon, a real weapon… in the hands of the Russian Federation. It was difficult to comprehend… that such a big country as the United States could possibly provide the bullets for that weapon.
Putin is already using his newfound power in Ukraine. On Friday, Russian President Vladimir Putin stated that if Ukraine still wants Russian gas to run through it, it must demonstrate good will.
Nord Stream is a system of offshore natural gas pipelines in Europe, running under the Baltic Sea from Russia to Germany. It includes two active pipelines running from Vyborg to Lubmin near Greifswald, forming the original Nord Stream, and two further pipelines under construction running from Ust-Luga to Lubmin termed Nord Stream 2.
In Lubmin the lines connect to the OPAL line to Olbernhau on the Czech border and to the NEL line to Rehden near Bremen.
The original Nord Stream is owned and operated by Nord Stream AG, whose majority shareholder is the Russian state company Gazprom. Nord Stream 2 is owned and will be operated by Nord Stream 2 AG, which is also a wholly-owned subsidiary of Gazprom.
Russian and German officials have claimed that the pipeline leads to economic savings due to the elimination of transit fees (as transit countries would be bypassed) and higher operating pressure of the offshore pipeline, which leads to lower operating costs (by eliminating the necessity for expensive midway compressor stations).
However, according to Ukrtransgaz, the Ukrainian gas transportation system operator, Ukraine alone will lose natural gas transit revenues up to $720 million per year.
At the same time, according to Naftogaz, Ukraine’s board chairman Ukraine will lose $3 billion, which it annually receives from the transit of natural gas to the EU countries if the Nord Stream 2 pipeline is built.
Businesses involved in Nord Stream 2 have been sanctioned by the United States, seeking to sell more of its own liquefied natural gas (LNG) to EU states, with the passing of the National Defense Authorization Act for Fiscal Year 2020 on 20 December 2019.
Then, sanctions against some firms involved were lifted on 19 May 2021 for 90 days.
While the Biden administration has called the pipeline a “Kremlin geopolitical project,” it opposes sanctions out of concerns about harming the U.S.-German relationship. German officials largely support the pipeline because it will transport relatively cheap gas to Germany.
German Finance Minister Olaf Scholz called the sanctions “a severe intervention in German and European internal affairs.” At the same time, the EU spokesman criticized “the imposition of sanctions against EU companies conducting legitimate business.”
German Foreign Minister Heiko Maas tweeted that “European energy policy is decided in Europe, not in the United States.”
Russian Foreign Minister Sergey Lavrov also criticized the sanctions, saying that the U.S. Congress is ” literally overwhelmed with the desire to do everything to destroy” Russia–United States relations.
The German Eastern Business Association (OAOEV) said in a statement: “America wants to sell its liquefied gas in Europe, for which Germany is building terminals. Should we arrive at the conclusion that US sanctions are intended to push competitors out of the European market, our enthusiasm for bilateral projects with the US will significantly cool.”