Speaking after his meeting with German Foreign Minister Heiko Maas in Brussels last month, U.S. Secretary of State Antony Blinken repeated his earlier warning that the Biden administration was poised to impose sanctions on companies involved in the construction of the Nord Stream 2 pipeline from Russia to Germany.
The controversial pipeline that the German government supports — and many in Washington, especially in Congress, vehemently oppose — has emerged as a major obstacle to better relations between the United States and its key European ally Germany. The Biden administration may want to sanction only Russian companies, but congressional opponents of the pipeline will for sure demand that it extract a pound of flesh from Germany as well.
It is but the latest example of U.S. reliance on sanctions as a substitute for policy toward Russia and the illogic of U.S. repeated attempts to force it to change its destructive course with little or no effect, while expecting different results.
The Nord Stream 2 sanctions represent one of those rare issues in Washington on which both political parties agree, and which have few, if any, constituents in home districts whose interests would be damaged by hitting Russian President Vladimir Putin hard.
Such faux bipartisanship is an invitation to proceed with little regard for the sanctions’ immediate effect or their likely longer-term consequences.
One of the key arguments against Nord Stream 2 put forth by its opponents is that it will enable Russia to increase its stranglehold on Europe’s energy supply. True, Russia accounts for about 45 percent of European Union gas imports — down from 75 percent in 1990. But it also supplies almost 30 percent of its oil imports — not a trivial amount.
Yet, nobody talks about Russian oil trade with Europe as a stranglehold. The reason is simple: Oil is a fungible commodity that is traded in vast quantities in physical and futures markets that Russia does not control.
And Russia is no longer the dominant supplier of gas to Europe it once was. More suppliers, major reforms introduced by the European Union, infrastructure investments (including liquefied natural gas terminals and new pipelines to connect underserved markets), and sluggish demand for gas have reduced Russian leverage and empowered its customers to negotiate better prices.
With Europe’s ambitious Green New Deal aimed at dramatically reducing the continent’s carbon footprint, Nord Stream 2 will reduce, not increase Russian leverage. The pipeline is 95 percent complete, and Russia, having invested $11 billion in it, will not abandon it. But it will be hardly the “stranglehold” on Europe’s gas supply its opponents charge.
From 2014, when the Kremlin illegally annexed Crimea and went to war with Ukraine, multiple rounds of U.S. sanctions have not forced Russia to abandon its aggressive policies. If anything, it has become even bolder in the past seven years. Sanctions have not prevented Russian military interventions in Syria and Libya, or meddling in U.S. domestic politics, all of which have intensified as the United States has imposed evermore sanctions on the Kremlin and its malign agents. To be sure, they have had a punitive effect, but when it comes to getting the Kremlin to cease and desist, there is little chance of it happening.
The post-2014 U.S. reliance on sanctions as the principal element of its policy toward Russia is even more problematic when one looks at the overall U.S.-Russian relations since the breakup of the Soviet Union in 1991. For nearly a quarter century, expanding trade and economic relations with Russia was one of the staples of U.S. policy intended to stabilize the relationship. Successive U.S. administrations encouraged U.S. oil companies to invest in the Russian energy sector. U.S. business executives joined senior U.S. officials on trips to Russia to promote trade and investment. Senior U.S. government officials attended forums of U.S. and Russian business leaders, whose participants included such prominent figures as Dick Cheney and Donald Rumsfeld before they resumed their public service. The Obama administration was for Exxon Mobil Corp.’s massive deal with Russia’s Rosneft to develop Arctic oil deposits in 2011 before it turned against it and killed it with sanctions after Russia invaded Ukraine.
The irony of the situation with Nord Stream 2 sanctions is that unlike Russia, Iran or North Korea, Germany is a U.S. treaty ally — the most important U.S. ally in Europe. Without its leadership and cooperation, there would have been no U.S.-EU sanctions to punish Russia for its malign activities. Threats to punish Germany sound outright frivolous when the United States is buying oil from Russia — over half a million barrels a day in 2020, according to Bloomberg — and contributing many millions of dollars to Putin’s war chest.
The Biden administration has pledged to rebuild ties to U.S. allies badly frayed during the four years of the Trump presidency. U.S. sanctions against Nord Stream 2 would amount to a self-defeating move that might not cause a major injury to the crucial U.S. ally in Europe, but for sure would be an insult.
Nord Stream 2 sanctions are a matter of U.S. law. But the law also allows a waiver. Setting the terms for that waiver in consultation with Berlin is the way out of the impasse. No U.S. president would ever tolerate the kind of meddling in U.S. sovereignty that sanctions on Nord Stream 2 would represent. There is no reason to subject U.S. ally Germany to it.
Eugene Rumer is the director of the Russia and Eurasia Program at the Carnegie Endowment for International Peace. He previously worked as a national intelligence officer on Russia and Eurasia for the U.S. National Intelligence Council.