Biden Admin Waives Sanctions on Russia’s Nord Stream 2 Company and CEO

May 20, 2021 Updated: May 20, 2021

The Biden administration has waived sanctions on the company and CEO overseeing the construction of Russia’s Nord Stream 2 natural gas pipeline project, Secretary of State Antony Blinken announced Wednesday, saying that the decision was made in the U.S. national interest.

Blinken waived the sanctions despite Congress receiving a report on the pipeline project from the State Department, which concluded that the company Nord Stream 2 AG and its CEO Matthias Warnig, an ally of Russian President Vladimir Putin, engaged in sanctionable activity.

State Department spokesman Ned Price has previously said however that sanctions are only “one of many tools” that can be used.

The State Department had imposed sanctions on four Russian ships, including the Akademik Cherskiy, which began pipe-laying for the project in Danish waters in April. It had also imposed the measures on five other Russian entities, including the Russian Marine Rescue Service.

“Today’s actions demonstrate the administration’s commitment to energy security in Europe, consistent with the President’s pledge to rebuild relationships with our allies and partners in Europe,” Blinken said in a press release, which was issued as he met Russian Foreign Minister Sergey Lavrov for the first time in Iceland for an Arctic Council conference.

The Trump administration had previously imposed sanctions on any companies helping Russia’s state energy company Gazprom build the $11 billion pipeline to take gas under the Baltic Sea to Europe via Germany.

Former President Donald Trump opposed the project on the grounds that it would strengthen Putin’s economic and political influence over Europe. Poland has been one of the fiercest critics of the pipeline, which would sharply reduce central and Eastern European countries’ bargaining power in case of a supply dispute with Russia, which has in the past cut deliveries of the fuel to Ukraine and parts of Europe in winter during pricing disputes.

Many EU officials in Brussels have also expressed opposition to the project, hoping to reduce the bloc’s energy dependence on Russia.

U.S. President Joe Biden has also expressed opposition to the project, which would bypass Ukraine and deprive it of lucrative transit fees, including when he was vice president under former President Barack Obama. The White House said as recently as January that the president believes the pipeline is a “bad deal for Europe.”

The pipeline, which is roughly 95 percent complete, would double the capacity of the existing Nord Stream duct to deliver gas from Russia to Europe via Germany under the Baltic Sea. It’s expected to be completed by this year.

U.S. officials hope the waiver will give time for discussions with Germany on potential negative effects of the pipeline and provide some leverage to deepen cooperation on broader issues that the administration considers priority, such as the pandemic, climate change, the economic recovery, and dealing with communist China and Russia.

The move has been met with fierce opposition from both sides of the aisle.

Chairman of the Senate Foreign Relations Committee (SFRC) Sen. Bob Menendez (D-N.J.) said in a statement that he is “opposed to the decision by the Biden Administration to waive sanctions on NS2 AG and Matthias Warnig.”

“I urge the administration to rip off the Band-Aid, lift these waivers, and move forward with the congressionally mandated sanctions,” he said.

Sen. Jim Risch, senior Republican on the SFRC, said the waivers will be “a gift to Putin that will only weaken the United States’ leverage in the lead up to the impending Biden-Putin summit.”

“While hardworking Americans are suffering a domestic energy crisis with soaring gas prices, lines at pumps, and empty gas stations, President Biden is helping Putin increase Russia’s energy development rather than reclaim America’s energy independence,” Rep. Elise Stefanik (R-N.Y) said in a statement.

Stefanik said the move gives Russia “dangerous leverage” and puts America’s energy and national security at risk, particularly given Biden’s decision to cancel the Keystone XL Pipeline.

Former Secretary of State Mike Pompeo also commented on Twitter that if Biden couldn’t prioritize American jobs over climate change concerns, that he shouldn’t do so for Russia.

German Foreign Minister Heiko Maas, who spoke to Blinken by phone, welcomed the decision, saying it was a “constructive step that we will gladly continue to discuss with our partners in Washington.”

The Greens party in Germany has vowed it will work to end the Nord Stream 2 project ahead of the upcoming election.

Reuters contributed to this report.