ASSESSMENTS

Despite Looming U.S. Sanctions, the Nord Stream 2 Pipeline Will Likely Proceed

Jul 17, 2019 | 10:00 GMT

A worker constructs a section of the Nord Stream 2 natural gas pipeline near Kingisepp, Russia.

Upon completion, the $11 billion Nord Stream 2 pipeline would have the capacity to annually send 55 billion cubic meters of Russian natural gas to Germany by way of the Baltic Sea.

(Alexander Demianchuk\TASS via Getty Images)

Highlights

Competition over energy supplies in Europe has become a key component of the U.S.-Russia standoff, as evidenced by Washington's threats to derail the Nord Stream 2 pipeline by imposing harsh economic sanctions.
However, the United States has yet to follow through on these threats, and it remains unlikely that it will for fear of irking Germany and the major European energy companies that have heavily invested in the project.
Thus, the White House is more likely to pursue measures that result in delays in the pipeline's construction rather than a complete cancellation, while continuing to back diversification projects and efforts to increase its own energy supplies to Europe.

For the first time, U.S. President Donald Trump directly acknowledged that Washington was, in fact, considering sanctioning Nord Stream 2 on June 12. This comes less than a month after U.S. Energy Secretary Rick Perry warned that a U.S. sanctions bill targeting the project could come into effect in the "not too distant future." These statements could mean the White House is seriously considering a proposed sanctions bill that, if fully imposed, would have the power to essentially grind construction a screeching halt. However, such a move would risk angering Germany at a time when the White House is trying to sway Berlin on a number of other important issues, including increasing its defense spending and barring Chinese telecommunications giant Huawei from rolling out its 5G network. Thus, the United States is more likely to stick with a more middle-of-the-ground approach that still throws a wrench in the project's timeline, without completely killing it. ...

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