Biden Shows Putin the Way Forward
In May, the Biden administration announced it would waive sanctions on the operator of the Nord Stream 2 natural gas pipeline, Nord Stream 2 AG, and its Chief Executive Officer, Matthias Warnig, a former East German intelligence officer and Putin’s oldest German friend.
Two days later, the administration announced sanctions on pipe-laying vessels and several public and private entities involved in the project.
Biden’s action reversed the Trump administration policy of threatening strict sanctions on Nord Stream 2 and its participants, such as Allseas, the Swiss-Dutch company that operated the pipe-laying vessel. Reaction from Europe to the Trump sanctions was swift, with German Foreign Minister Heiko Maas decrying the sanctions as “interference in autonomous decisions taken in Europe.”
As a solution, Trump proposed the sale of U.S. liquified natural gas to Germany, but many in Europe and Russia suspected his goal was to unload the glut of U.S. shale gas.
After giving a pass to the managers of Nord Stream 2, Antony Blinken, an apparently confused Secretary of State, declared, “Our opposition to the Nord Stream 2 pipeline is unwavering” and explained the waiver as fulfilling “the president’s pledge to rebuild relationships with our allies and partners in Europe.” The State Department later tut-tutted that Warnig and Nord Stream 2 AG had anyway engaged in “sanctionable activity.”
The Biden administration’s sudden accommodation of Vladimir Putin’s signature project is a break with its previous posture on the matter, though a campaign donation to Biden from a Nord Stream lobbyist probably isn’t what changed the policy.
In February, Biden called Nord Stream 2 a “bad deal for Europe.”
In his January confirmation hearing, Blinken called the pipeline a “bad idea,” and as late as March said, “Any entity involved in the Nord Stream 2 pipeline risks U.S. sanctions and should immediately abandon work on the pipeline.”
In April, the White House considered appointing a special envoy to kill the pipeline.
In May…never mind.
Despite the American declarations, the Ukrainian and Polish governments were clearly worried as in February they issued a joint public statement calling on Biden to “use all means at his disposal to prevent the project from completion.”
Biden’s about-face was met with anger and disappointment in Washington, from Republicans like Senator Ted Cruz who authored much of the recent sanctions legislation, and observers, such as the sanctions-positive Atlantic Council (recipient of money from Ukrainian natural gas company, and Hunter Biden employer, Burisma), which noted: “This week’s decision has inevitably fueled doubts over President Biden’s commitment to stopping the pipeline.”
On the other hand, the German foreign minister, Heiko Maas, applauded the waiver, and called it “constructive,” and Russian Deputy Foreign Minister Sergei Ryabkov said the waiver would be viewed positively in Moscow.
Biden later said the Nord Stream pipeline waiver was granted as the pipeline is “almost completely finished,” neglecting to explain how that was different from his cancellation of the permit for the definitely completely-finished Keystone XL pipeline that was to transport oil from Canada to the U.S. And the waiver came a week after the Colonial Pipeline, which carries 3 million barrels of fuel per day between Texas and New York, was attacked by a Russian criminal gang.
If Biden was hoping to soften up “killer” Putin a day ahead of their meeting in Geneva, it didn’t work as Russian Deputy Foreign Minister Sergei Ryabkov announced, “The Americans must assume that a number of signals from Moscow…will be uncomfortable for them, including in the coming days.” Two of those “signals” might be the formation of 20 new military units in Russia’s west in order to counter what it sees as a growing threat from NATO, and a new national security strategy that includes language on “coercive forceful methods” in response to threats to Russia’s sovereignty.
And that’s not the only important meeting on the horizon. Ukrainian President Volodymyr Zelensky has offered to meet Putin but the Russian leader hasn’t yet consented. Zelensky also asked to meet Biden “at any moment and at any spot on the planet.” When Biden meets Zelensky this summer he should be prepared to explain why Zelensky learned of the Nord Stream waiver from the media rather than a direct call from the American leader. But no matter how many White House pep talks he gets, when Zelensky meets Putin, the Russian will have the upper hand. And Putin wasted no time reminding Kyiv that Ukraine must demonstrate “goodwill” if it wants Russian gas to continue to transit the country to Europe so it can continue to collect the transshipment fees, estimated at $3 billion per year.
This disagreement between the U.S. and Germany over a gas pipeline controlled by Moscow is a replay of the 1981-1982 fight between the Cold War allies when West Germany insisted on importing natural gas from the Soviet Union. In that case, the Reagan administration hit the Soviets and the pipeline suppliers with two rounds of sanctions, which included suspending Aeroflot flights and penalizing the suppliers of compressors and large diameter pipe to the Soviet gas monopoly. Ronald Reagan also authorized a sabotage campaign against the Soviets which caused a gas pipeline explosion so big it was detected from space. (And, like the Polar Bear Expedition, it probably hasn’t been forgotten in Moscow.)
But, in the end, Reagan decided it was more important to preserve the unity of the NATO alliance and he backed down in the face of resistance by West German chancellor, Helmut Kohl.
Biden’s decision shouldn’t have been a surprise.
In 1987, then little-known Antony Blinken wrote Ally Versus Ally: America, Europe, and the Siberian Pipeline which dissected the 1981-1982 pipeline disagreement and argued that the U.S. relationship with NATO allies was more important than attempting to influence Soviet behavior, and that a united alliance would be more effective in meeting “challenges posed by its adversaries” – a policy Blinken and his boss likely feel is still relevant in today’s geopolitical and economic competition with China.
How will Biden’s action help Russia?
Aside from stepping aside as the pipeline is in the final stretch, Biden’s concern with preserving a relationship with an ally will show Russia’s leaders that the smart move isn’t economic relations with America’s enemies but with America’s friends.
The sanctions waiver also demonstrated – again – that sanctions aren’t a moral project to encourage good behavior but a political and economic tool to compel compliance (though, to America compliance is good behavior.) An earlier display of this was President Donald Trump’s removal of Sudan from the list of state sponsors of terrorism when it agreed to normalize relations with Israel.
Germany is a steadfast NATO ally (though a free-rider) and tries to be a global good citizen, but the U.S. still demanded it submit to a policy that was not in Germany’s interest. Though Germany’s leaders are no doubt happy reason finally prevailed, they experienced firsthand the real utility of U.S. sanctions. As a result, the U.S. should expect Germany to be wary the next time the American ambassador breathlessly solicits their support for punitive action against bad men everywhere.
Germany’s skepticism will be fueled by recent reports that Danish and U.S. security services spied on German Chancellor Angela Merkel, and Germany’s then-foreign minister, Frank-Walter Steinmeier, who is now the country’s president. This will make for some awkward moments during Joe Biden’s visit to Europe. Perhaps Vladimir Putin can ease the tension with his rendition of “It Wasn’t Me.”
Shortly before the spy story broke, the European parliament chastised Ireland’s Data Protection Commission for not complying with the European Union General Data Protection Regulation (GDPR). The U.S.-EU data protection mechanism, “Privacy Shield,” was invalidated by the European Court of Justice in July 2020 due to concerns about U.S. surveillance, leaving American businesses, like Facebook, legally exposed for transferring EU personal data from the EU to the U.S. EU and U.S. negotiators are working on a follow-on agreement, but it sure would be nice if the U.S. government had a sympathetic ear in Berlin when the U.S. tech sector starts demanding the Biden administration deliver on all those campaign donations. And Biden’s allies in his security services won’t be happy with a data protection agreement that meets GDPR standards and limits their ability to “collect it all.”
Last week, Putin announced to the St. Petersburg Economic Forum, “The gas pipeline, including the segment under the sea, has already been completed,” and “There are two sections, from the German side and the Russian side – they have to be welded – and then it will be finished” likely “within a month or two.” Putin then posited: “Here’s the decision. Either you buy cheaper, cleaner gas from us, or you buy a product [U.S. shale gas] which is environmentally dubious.”
And in a signal to countries whom the U.S. will flinch from sanctioning, “We are willing to further implement high-tech projects like this with our European partners and partners elsewhere.” For example, a German-Russian project to develop hydrogen from renewable sources as an alternative fuel.
The next day, the German ambassador to Russia declared “our stance on the matter is clear, and it will not change: we are convinced that the energy security of Europe, as well as European energy policy, should be determined by Europeans only, and not by foreigners.”
Americans don’t understand the long, fraught history of Russian-German relations, which “for the past 200 years have been a series of alienations, distinguished for their bitterness, and rapprochements, remarkable for their warmth.”
During the Cold War, West Germany’s Ostpolitik was the attempt to stabilize East-West relations through engagement with the Soviet Union, which eventually took the shape of the Siberian natural gas pipeline – a project that actually originated in the Soviet Union’s proposal of a natural gas pipeline to Italy.
There have been changes in the gas market since 1969, such as online trading, which has eliminated take-or-pay provisions and long-term contracts, and EU energy market liberalization to ensure no single seller can control the market. In addition, energy experts, such as Georgetown University’s Thane Gustafson, have observed that fuel pipelines foster stability and “automatically creates a mutual dependence.” All this was known to Gazprom when it commissioned Nord Stream 2 and it assumed the Americans knew it, too. Therefore, the U.S. sanctions campaign isn’t about Europe’s energy security but is the continuation of the political warfare campaign against Moscow the U.S. conceived in 1948.
At this point, Washington needs a friend in Berlin to help it advocate for securing a data protection deal that doesn’t hurt the U.S. tech sector or intelligence collection efforts; increasing military spending to reach the NATO goal of 2% of GDP; quashing legal challenges to the U.S. use of facilities in Germany to control drone strikes, or to transship weapons and soldiers to conflict zones; opposing China’s human rights violations in Xinjiang and Hong Kong, and theft of technology and intellectual property from the West; and relieving the taxation imposed on U.S. servicemen in Germany by local authorities. (On the last, Berlin may troll Washington by not doing anything, blaming an outbreak of federalism in the Federal Republic.)
Instead, the U.S. side threatened sanctions against European businesses doing business legally in Europe and tried to block the import of natural gas, a fuel the EU admits it needs to achieve its net-zero goal. Washington also retreated when the time came to sanction German companies and government bodies, demonstrating that while it will eagerly sanction the awkward squad of Iran, Syria, and Venezuela, some countries are too important to punish.
So, to the new American administration: Is this what “diplomacy first” looks like?