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Home Finance & Regulations US attempt to tighten sanctions on Nord Stream 2 receives mixed reactions

US attempt to tighten sanctions on Nord Stream 2 receives mixed reactions

A group of US congressmen filed a bipartisan House companion bill of the US Senate’s Protecting Europe’s Energy Security Clarification Act, that would clarify and expand sanctions on the construction of the Nord Stream 2.

The proposed legislation follows the Protecting Europe’s Energy Security Act (PEESA) adopted last year in the annual US defence budget bill, which sanctioned the use of deep-sea pipe-laying vessels to build the controversial pipeline.

The news legislation will impose a wide range of sanctions against companies that engage in any pipe-laying activities or activities that facilitate pipe-laying, including site preparation, trenching, surveying, placing rocks, stringing, bending, welding, coating, lowering of pipe and backfilling.

Following the bill’s introduction, Congressmen Kinzinger, a supporter of the act said that the Nord Stream 2 pipeline is an attempt by Russia to destroy the transatlantic partnership and that the completion of the project would strengthen Russia’s ability to hold American allies in hostage. The Congressman added that the US is looking forward to work with Germany to find a solution that will ensure to meet their energy needs in a responsible and environmentally-friendly way.

According to Congresswoman Kaptur, Russia has undermined security in Europe for years by using energy as a weapon and the Nord Stream 2 project would only increase Russia’s influence.

“This bipartisan bill will allow for tailored sanctions against pipeline-related activities as we also look to provide increased energy resilience through efforts such as the Three Seas Initiatives,” underlined Ms Kaptur.

The Three Seas Fund designed to support regional cross-border investments – including energy – in Central and Eastern Europe just announced recently to present its first projects in October.

US representatives also voiced their concerns about the project’s implications for Ukraine, a country Moscow wishes to bypass by Nord Stream 2. The completion of the controversial project would be a painful blow to Ukraine’s economy. Ukraine’s national oil and gas company, Naftogaz welcomed the introduction of the new legislation and called the US Congress to pass the PEESA Clarification Act without delay. The bill must be passed by both chambers of Congress and signed by the President.

The construction of the pipeline spurred heated debates inside Europe. Supporters argue that the pipeline is crucial for Europe’s supply security, while opponents have criticised Nord Stream 2 on the grounds of environmental, geopolitical and security aspects.

The EU’s response to the threat of American sanctions came from Joseph Borrell, High Representative of the EU for Foreign Affairs and Security Policy.

“The EU’s position on US sanctions against European companies that carry out legitimate and lawful activities under European law is unequivocal,” Mr Borrell said in a written response dated June 25, according to Reuters. “They are unacceptable and contrary to international law, and the Union firmly opposes them.”

“The Commission is preparing the ground for the adoption of an enhanced sanctions mechanism that will improve Europe’s resilience to the effects of extra-territorial sanctions imposed by third countries,” he added without specifying what form the mechanism would take, or when it would be introduced.

German officials have also rejected the US plans to expand sanctions. Niels Annen, Minister of State at the German Federal Foreign Office, called the plan an “interference with European sovereignty.”

The Nord Stream 2 pipeline has been again under scrutiny over the last few months. The German energy market regulator – Bundesnetzagentur – declined to grant a derogation for the pipeline. The decision was considered a big success by Polish Oil and Gas Company PGNiG, involved in the derogation procedure. Poland is also a strong opponent of the Nord Stream 2 project from the start arguing that the completion of Nord Stream 2 carries negative consequences for the security of supply and competition on the gas market in Central and Eastern Europe.

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