U.S. Waives Sanctions on Nord Stream 2 Company and CEO

By Timothy Gardner, Andrea Shalal and Steve Holland

WASHINGTON, May 19 (Reuters) – The Biden administration waived sanctions on the company behind Russia’s Nord Stream 2 gas pipeline to Germany and its chief executive, according to a State Department report sent to Congress on Wednesday.

The report, a copy of which was seen by Reuters, concluded that Nord Stream 2 AG and its CEO, Matthias Warnig, an ally of Russian President Vladimir Putin, engaged in sanctionable activity but that it was in the U.S. national interest to waive the sanctions.

The move came as the Biden administration seeks to rebuild ties with Germany after relations deteriorated under Republican former President Donald Trump. The waivers have no specific end date, but can be rescinded by the secretary of state.

President Joe Biden, a Democrat, opposes the $11 billion project that would take Russian gas from the Arctic to Germany, saying it is a bad deal for Europe.

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

But U.S. lawmakers who oppose the project said those did not go far enough.

Senator Jim Risch, the senior Republican on the Senate Foreign Relations Committee, 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.”

Senator Jeanne Shaheen, a Democrat, said of the pipeline: “Every option available to prevent its completion should be utilized.”

RACING TO FINISH

Russia’s state energy company, Gazprom, and its Western partners are racing to finish the pipeline to send gas under the Baltic Sea. The project, now about 95% complete, would bypass Ukraine, depriving it of lucrative transit fees and potentially undermine its struggle against Russian aggression.

Yuriy Vitrenko, the new CEO of Ukraine’s state-owned energy company, Naftogaz, said Nord Stream 2 is Russia’s “most malign and dangerous geopolitical project” and that Ukraine would ask Washington to fully apply its laws and impose sanctions to stop the pipeline.

At the rate it is being constructed, it will be finished before the end of the year, if not sooner, analysts said.

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

Germany has been pressing for the United States to allow the pipeline, arguing that the overall relationship was too important to sacrifice over what Berlin has described as a commercial project.

“We see this as a constructive step, which we are happy to further discuss with our partners in Washington,” German Foreign Minister Heiko Maas told reporters.

Russian officials signaled on Wednesday that waivers could help mend Washington’s fraught ties with Moscow. (Reporting by Andrea Shalal, Timothy Gardner and Steve Holland in Washington and Sabine Siebold in Berlin; Additional reporting by Patricia Zengerle; Writing by Susan Heavey; Editing by Steve Orlofsky and Peter Cooney)

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