"US and Germany Agree on Establishment of German-Russian Gas Pipeline 'Nord Stream 2'"

"Allowed Establishment Despite Opposition from Ukraine and Poland"
98% of Establishment Already Completed...Judged Construction Sanctions Ineffective

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] The Biden administration in the United States is reported to have reached a conditional agreement with Germany regarding the 'Nord Stream 2' gas pipeline project between Germany and Russia. The U.S. has opposed the project since the previous Donald Trump administration, citing security risks due to the project excessively increasing the European Union's (EU) dependence on Russian energy.

On the 20th (local time), the Associated Press (AP) cited a senior U.S. official, reporting that the U.S. government has reached a tentative agreement with Germany on the Nord Stream 2 project and will allow the construction of the pipeline. It also stated that the official agreement details are expected to be announced around the 21st.

The U.S. State Department also conveyed a positive atmosphere regarding the negotiations. Ned Price, spokesperson for the U.S. State Department, said at a press briefing that although it is not yet confirmed whether the negotiations have been finalized, Germany has made a positive proposal, and the U.S. expects progress toward achieving their shared goals.

However, the U.S. State Department is reportedly planning to send delegations to Eastern European countries such as Ukraine and Poland, which have consistently opposed the project, to persuade them. These two countries have strongly opposed the project, arguing that it could undermine not only their own security but also the security of Europe as a whole.

In particular, Ukraine has expressed that if the gas transit fee revenue, which amounts to about $2 billion (approximately 2.3 trillion KRW) annually, decreases, it would be difficult to maintain Ukraine's security. Ukraine has been receiving transit fees every time Russia exports gas to Europe through pipelines installed across its territory.

The U.S. government is also reported to have conveyed the concerns of both countries during the negotiations and conditionally allowed the construction to Germany. According to major foreign media, the U.S. side guaranteed Germany compensation for the gas transit fees Ukraine would lose due to the pipeline installation and warned that if Russia uses gas as a political weapon, sanctions on the pipeline could be reconsidered.

Despite security concerns, the Biden administration's decision to allow the pipeline construction is analyzed to be based on the judgment that imposing construction sanctions on a nearly completed pipeline project would have little effect. The AP analyzed, "The pipeline is already 98% complete, and the Biden administration appears to have shifted to conditional approval, judging that sanctioning the construction of a nearly completed pipeline is inefficient."