Biden waives Nord Stream 2 sanctions in push to mend ties with Germany

US President Joe Biden has waived sanctions against the German company overseeing the construction of Russia's Nord Stream 2 natural gas pipeline across the Baltic Sea.

While new sanctions on the Russian companies and ships involved in the pipeline's construction have been imposed, the exclusion of Nord Stream 2 AG and its CEO, Matthias Warnig, has angered many Democrat and Republican lawmakers in the US.

A report sent to Congress by the State Department acknowledged that both Warnig and the company he heads had engaged in "sanctionable activities". Nonetheless, any sanctions against them were immediately lifted by Secretary of State Antony Blinken, who argued that doing so was in the US national interest.

The move is widely being seen as part of the Biden administration's attempts to repair diplomatic ties with Germany which became strained under former president Donald Trump. 

Read more: No further sanctions against Russia, say EU foreign ministers

The waivers have no end date and may be rescinded by the Secretary of State.

In an apparent attempt at a balancing act, the State Department imposed sanctions on four Russian ships involved in the pipeline's construction including the Akademik Cherskiy, which began pipe-laying for the project in Danish waters in April. 

Measures were also imposed on five other Russian entities including the Russian Marine Rescue Service.

"I have determined that it is in the national interest of the United States to waive the application of sanctions on Nord Stream 2 AG, its CEO Matthias Warnig, and Nord Stream 2 AG’s corporate officers," said Blinken in a statement issued as he met with his Russian counterpart, Foreign Minister Sergei Lavrov in Reykjavik during an Arctic Council conference.

"Today’s actions demonstrate the Administration’s commitment to energy security in Europe, consistent with the President’s pledge to rebuild relationships with our allies and partners in Europe.  We will continue to oppose the completion of this project, which would weaken European energy security and that of Ukraine and Eastern flank NATO and EU countries," he added.

Read more: Germany aims for new deal as US continue to monitor Nord Stream 2

Nord Stream 2 CEO Matthias Warnig, who has been spared sanctions, has been described as Russian President Vladimir Putin's oldest German friend and is active in Russian business circles. A former Stasi agent, Warnig became a banker in the 1990s and has sat on the boards of a number of German-Russian companies and banks.

It has been said that Warnig and Putin met in the 1980s through their respective secret agencies while the Russian leader was a KGB agent in the East German city of Dresden. The official line, however, is that the pair met later in St. Petersburg having already changed careers.

President Joe Biden has long expressed his opposition to the €9.5 billion pipeline, arguing that it would be a bad deal for Europe and would increase dependency on Russian gas imports - one of the few areas of agreement between the Democrat president and his Republican predecessor.

Read more: Nord Stream 2: Bundestag report finds US sanctions do not breach international law

The US is also concerned about the impact that Nord Stream 2 would have on Ukraine, removing a lucrative source of revenue for the country in the form of transit fees and undermining its struggle against Russia.

However, the Biden administration is limited in its options if it wants to retain good relations with Germany, according to news site Axios, which initially broke the story. It added that, with the project almost complete, US officials had concluded the only way to halt it completely would be to impose sanctions on the intended German end-users.

German Foreign Minister Heiko Maas told a press conference in Berlin that Germany views the move as a "constructive step," which "takes into consideration the extraordinarily good relations that have been established with the Biden administration."

Read more: Political Pipe Dreams

Chancellor Angela Merkel has repeatedly defended the project, saying that Russian gas already flows into Europe along other routes including Nord Stream 1, which also runs under the Baltic Sea from Russia to Germany.

US officials are hoping the waiver will be seen as a gesture of goodwill and will buy time for discussions with Berlin on the potential negative effects the project could have and allow for leverage on broader issues of cooperation, such as climate change, the pandemic economic recovery and how to deal with China and Russia.

Russia's state-owned energy company Gazprom - which owns Nord Stream 2 AG - along with its Western partner companies are now racing to finish the project, which is now around 95% complete. 

Analysts have predicted that the project will be finished before the end of the year if construction continues at its present rate.

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