Nord Stream 2 could still sabotage German-American relations

OLAF SCHOLZ and Joe Biden seem to be destined to have as cordial a relationship as Angela Merkel and Barack Obama did. The incoming German chancellor and the American president are both Atlanticists on the centre-left of their respective political spectrums who are committed to fighting climate change. Mr Scholz has called America “Europe’s closest and most important partner”. As finance minister he got on well with the Biden administration.

Even so, one geopolitical conundrum is casting a big shadow over the relationship. Nord Stream 2, a recently completed 1,230km (764-mile) undersea pipeline for natural gas from Russia to Germany, is fiercely opposed by America’s Congress. Mr Biden opposes it too, but waived sanctions in May to avoid a row with a close ally. If Republican senators have their way, he may be compelled to impose them after all.

Led by Ted Cruz, a senator from Texas, Republicans in the Senate are pushing for new sanctions via an amendment to the annual National Defence Authorisation Act (NDAA). On December 1st the Senate was due to vote on 21 amendments to the NDAA, including the one involving the NS2 sanctions. But voting had been held up as The Economist went to press, as the Republicans tried to add yet more amendments. Mr Cruz and his allies are also blocking the appointment of several dozen foreign-policy officials, including the American ambassadors to Germany, Israel and Egypt, to increase the pressure on Mr Biden.

Many American lawmakers have opposed NS2 since Gazprom, Russia’s state-controlled gas giant, joined forces with five European energy firms in 2015 to build it alongside an existing pipeline under the Baltic Sea, at a cost of €9.5bn ($11bn). They fret that the new pipeline, which doubles Russia’s capacity to export gas to Germany, will increase Europe’s dependence on Russian energy. They worry that it will deprive Ukraine (and Poland) of transit fees of about $2bn a year from the existing pipelines that pass through their territory, and make it easier for Russia to cut supplies of winter gas to eastern Ukraine. And they argue that the current infrastructure already provides sufficient capacity for Europe’s energy needs. American opposition to NS2 is further fuelled by Russia’s military build-up on its border with Ukraine.

Germans argue that the pipeline is no threat to Ukraine so long as what is known as the “joint statement” is implemented. This is an agreement Angela Merkel, the outgoing chancellor, and Mr Biden struck in July, in which Germany vowed to take action, including imposing EU sanctions, if Russia were to use energy as a weapon against Ukraine. The statement also stipulates that Russia must honour its gas-transit agreement with Ukraine and extend it beyond 2024 by up to ten years. Germany has appointed a special envoy to help the renegotiation of the transit agreement.

Yet the pipeline has been hitting new problems. As well as the growing pressure from Congress, in mid-November Germany’s energy regulator suspended the certification process of the pipeline. It said that to secure an operating licence the NS2 consortium needed first to form a German subsidiary under German company law, which will introduce a delay.

Germany’s extensive coalition agreement does not directly mention NS2. It says only that European energy law “applies to energy projects in Germany”. Annalena Baerbock, the co-head of the Green Party who will soon be foreign minister, is a vocal critic of the pipeline. Last month she accused Russia of trying to blackmail the German government into allowing NS2 to start pumping gas by keeping gas prices high. Yet ultimately it will probably be Mr Scholz who decides his government’s stance on the pipeline. Leaders of his Social Democratic Party back the pipeline, which they say enhances Europe’s energy security. The pipeline still seems likely to go ahead, but a return to the harmony of the Merkel-Obama era is a long way off. ■