The U.S. and Germany are close to a deal on the Nord Stream 2 pipeline that would threaten sanctions and other retaliation if Russia tries to use energy as a weapon against Ukraine, according to a draft text obtained by Bloomberg News.
Under the agreement, Germany would take unspecified national action if Russia commits such actions, a decision that may mark a concession from Chancellor Angela Merkel, who had previously balked at making independent moves against the Kremlin over the gas pipeline that will run from Russia to Germany.
If Russia attempted to use energy as a weapon or commit aggression against Ukraine, Germany would take action itself while also pressing for measures at the European level, including sanctions to limit Russia’s energy exports, according to the accord.
A senior U.S. official, who asked not to be identified discussing the terms of the deal, said the language was intentionally ambiguous because the administration didn’t want to give Russia a road map of its response to any malign behavior. The official didn’t rule out that such action could include limiting gas flows from Russia to Germany.
While suggesting the possibility of limits to Russian gas flows, that language will almost certainly disappoint critics — including many U.S. lawmakers — who say that the Biden administration hasn’t done enough to stop the pipeline, which was more than 90% complete when President Joe Biden came into office.
They had been looking for specific language under which Germany would vow to shut off the flow of gas through Nord Stream 2 in the event that Russia sought to exert undue influence on Ukraine. But Germany has long resisted such a move, saying such a threat would only further politicize a project that Merkel insists is purely business related.
Biden’s administration initially suggested it would try to halt construction but later shifted its approach, saying doing so would be a long shot and only sour relations with the German government.
“Can we make something out of a very bad hand that we inherited?” Secretary of State Antony Blinken said last month in an interview with the German publication Der Spiegel. “Because yes, President Biden has long said that the pipeline is a bad idea, that it will potentially be a tool of Russian economic coercion and strategic coercion, a tool that can be used not only against Ukraine but indeed Europe as a whole to the extent it increases dependence on Russian gas.”
The agreement is expected to be pinned down in the coming days before Ukraine’s President Volodymyr Zelenskiy makes a U.S. visit. State Department counselor Derek Chollet was set to arrive in Ukraine on Tuesday to discuss the pipeline, which Ukraine has opposed, before heading on to Poland, which is also against the project.
Under the draft agreement, the U.S. and Germany would seek to promote investments of as much as $1 billion in a so-called Green Fund to help Ukraine’s transition to cleaner sources of energy. Germany would commit to an initial $175 million investment in the fund, the text says.
Germany would also appoint a special envoy — with $70 million of funding — to support bilateral energy projects with Ukraine.
Lastly, the agreement would commit Germany to use leverage to extend Ukraine’s gas transit agreement with Russia for as long as 10 years after it expires in 2024. Those negotiations would start no later than Sept. 1.
Kremlin spokesman Dmitry Peskov didn’t immediately respond to a request for comment on the emerging U.S.-German accord. The Kremlin has long rejected allegations it uses energy supplies as a political weapon and has defended Nord Stream 2 as a purely commercial project. Russia has said it would consider using Ukraine to supply gas to Europe after the current transit contract expires but only if Kyiv offers attractive terms.
The progress comes after months of negotiations and a visit by Merkel to the White House last week. In a joint news conference, the two leaders said they are in agreement on deterring Russian President Vladimir Putin from abusing the pipeline for political gains, even as their assessments differ on the pipeline’s intent.
“Chancellor Merkel and I are absolutely united in our conviction that Russia must not be allowed to use energy as a weapon to coerce or threaten its neighbors,” Biden said. “We will be actively acting should Russia not respect this right of Ukraine that it has as a transit country.”
In her remarks, Merkel said, “We have a number of instruments, which for the most part are not on the German but on the European level, that we can implement” and that Germany was “in talks with our European friends.”
Earlier this year, the Biden administration imposed but immediately waived sanctions on Nord Stream 2 AG, the Switzerland-based parent company that’s building the pipeline. U.S. officials said waiving the sanctions gave them room for diplomatic discussions as they’re continuing negotiations with Berlin.