Congress Picks a Fight with NATO Allies on Nord Stream 2

Sen. John Barrasso wants to impose sanctions on German and other European companies in an effort to scuttle the controversial gas pipeline project.

Sen. John Barrasso (right) speaks with Sen. Rob Portman after a Republican policy luncheon on March 20.
AP Photo/Jacquelyn Martin
July 18, 2018, 8 p.m.

The U.S. affront to key NATO allies isn’t subsiding in the wake of President Trump’s controversial trip to Europe. In fact, it’s just kicking off in the halls of Congress.

Senate Republican leaders are spearheading a sanctions package to punish European developers of the Nord Stream 2 pipeline—just as Trump is backing down from his criticism of the project. The package, led by staunch Trump supporter Sen. John Barrasso, would slap mandatory sanctions on two German companies, as well as energy behemoths based in Austria, France, and the Netherlands.

That approach is not helping to back up recent congressional moves to affirm support for North Atlantic Treaty Organization partners, according to European experts. And it may strain both internal divisions in NATO and the broader, already-embattled transatlantic alliance.

“If you look at this as a non-American, you wonder, ‘OK, is our energy policy now made in Washington, D.C.?’” said Tim Boersma, a native of Holland and natural-gas expert at Columbia University’s Center on Global Energy Policy. “That’s something historically countries do themselves. In this proposal, no longer I guess.”

The Nord Stream 2 pipeline, which is scheduled to start operating next year, would transport natural gas from the Russian Yamal and Nadym-Pur-Taz fields to Greifswald, a German port city on the Baltic Sea. That route is 1,300 miles shorter than the current pipeline, which snakes through Ukraine, Slovakia, and the Czech Republic before reaching Germany.

Gazprom, a Russian-owned energy company, is leading the project, and a number of European companies are investing. Engie, OMV, Royal Dutch Shell, Uniper, and Wintershall are all involved. The project would increase German imports of natural gas from Russia, but would fall far shy of the 60 to 70 percent dependence on Russian energy that Trump recently claimed. Russian natural-gas comprises roughly 10 percent of Germany's energy portfolio, according to reports.

Still, Barrasso, the Republican Policy Committee chairman, blasted Germany over its support for the project on the Senate floor Wednesday.

“Germany seems to be betting that increasing its ties to the Kremlin will have no effect on the political manipulations that Russia wants to play on Europe. I think it’s a sucker’s bet,” Barrasso said. “Usually, hostages need to be taken instead of volunteered. That’s what Germany is doing right now—volunteering to be a hostage of Russia.”

The bill would slap sanctions on companies that provide financing or material support to the pipeline. But an off-ramp is also included: The bill allows the president to waive sanctions by simply notifying Congress that waivers are in the U.S.'s national security interest.

Still, the language is tougher than the pipeline provision in the Countering America’s Adversaries Through Sanctions Act, a package of sanctions against Russia and North Korea that passed Congress with a veto-proof majority in July 2017.

Some lawmakers have encouraged the administration to use the provision in CAATSA to sanction entities that support Nord Stream 2, but officials haven't budged. Barrasso's proposal specifically outlines that the president "shall impose" CAATSA sanctions on any person or company involved in the pipeline's development.

Sen. Cory Gardner, chairman of the National Republican Senatorial Committee, is also on board, and Barrasso announced the legislation alongside the full Senate leadership team Tuesday. Many experts say the bill is viable, and Republicans and Democrats alike are already signaling they’ll likely back it.

“We’re very sympathetic to that. We think [Nord Stream 2] doesn’t make sense. We want to see alternative energy sources for Europe other than Russia,” Sen. Ben Cardin, the second-highest-ranking Democrat on the Foreign Relations Committee, told National Journal. “Energy is an important source of power for Russia, and we should take action to minimize those risks.”

European allies are likely eyeing Congress as a key interlocutor in light of Trump’s slew of recent confrontations with NATO member countries. Some experts say the sanctions bill, however, is likely to exacerbate tensions.

“It is a slap in the face obviously at [German Chancellor Angela] Merkel and Germany directly,” said Guy Caruso, the former head of the Energy Department’s Energy Information Administration under George W. Bush. “This would definitely throw a few more rocks in the road.”

European countries are divided on the pipeline and the U.S. could play a constructive role in trying to broker consensus, according to Boersma. “When allies have a difficulty agreeing on something, then what can a third ally do? It can be an honest broker,” he said. “That role, in my view, most politicians in Washington these days don’t play.”

But the bill is also a potentially critical lifeline for those lawmakers who want to pull out all the stops to block the pipeline. At the outset of the Europe trip, Trump maligned the pipeline repeatedly and called Germany “captive” to Russia. Following his summit with Russian President Vladimir Putin, though, Trump walked back that spirited criticism.

“We are going to be selling [liquefied natural gas] and will have to be competing with the pipeline,” Trump said at a press conference with Putin. “I’m not sure necessarily that it’s in the best interest of Germany or not, but that was the decision that they made.”

U.S. policymakers have tried for decades to reduce or eliminate the Kremlin’s gas exports to the European Union. That campaign has failed, and the U.S. is still years away from being able to compete with Russian natural gas in the European theater.

In the meantime, Congress is likely to take Nord Stream 2 head-on.

“This is Congress stepping in, and even if the bill doesn’t pass, we see it as the leading edge of congressional momentum to intervene,” Kevin Book, managing director at the consultancy ClearView Energy Partners LLC, told National Journal. “The passage of CAATSA last year is a pretty good indication that, if Congress is going to go after Nord Stream once when they were concerned about presidential toughness on Russia, then Congress can probably go after Nord Stream 2 a second time.”

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