U.S. to waive sanctions on firm, CEO behind Russia’s Nord Stream 2 pipeline By Reuters

© Reuters. FILE PHOTO: A road sign directs traffic towards the Nord Stream 2 gas line landfall facility entrance in Lubmin, Germany, September 10, 2020. REUTERS/Hannibal Hanschke/File Photo

By Andrea Shalal, Sabine Siebold and Timothy Gardner

WASHINGTON (Reuters) – The Biden administration will waive sanctions on the company behind Russia’s Nord Stream 2 pipeline to Europe and its chief executive, a U.S. source familiar with the plans and Germany’s foreign minister said on Wednesday.

A U.S. State Department report to be delivered to Congress as early as Wednesday concludes that Nord Stream 2 AG and CEO Matthias Warnig, an ally of Russian President Vladimir Putin, engaged in sanctionable activity but that it was in the U.S. national interest to waive the sanctions, the source said.

German Foreign Minister Heiko Maas said the administration had waived the sanctions on those two parties but also imposed sanctions on Russian entities and ships linked to the construction of Nord Stream 2.

“We see this as a constructive step, which we are happy to further discuss with our partners in Washington,” Maas told reporters, adding the Biden administration had not made any promises beyond the sanctions waiver.

The administration under Democratic President Joe Biden still opposed the Nord Stream 2 pipeline but felt it was important to send a signal about its strategic commitment to rebuilding relations with Germany, which were badly damaged under former Republican President Donald Trump, the U.S. source said.

Russia’s state energy company Gazprom (MCX:) and its western partners are racing to finish the line to take Russian gas to Europe via Germany, under the Baltic Sea. The project, now about 95% complete, would bypass Ukraine, depriving it of lucrative transit fees and potentially undermining its struggle against Russian aggression.

Yuriy Vitrenko, the new CEO of Ukraine’s state-owned energy company Naftogaz, said Nord Stream 2 is Russia’s “most malign and dangerous geopolitical project” and that Ukraine would ask Washington to fully apply its laws and impose sanctions to stop the pipeline.

Russian officials on Wednesday signaled that the move could help mend Washington’s fraught ties with Moscow.

But Republicans in Washington criticized the waivers, with Representative August Pfluger adding an amendment to legislation he said would impose sanctions on Russia and prevent the pipeline from completion.

White House spokeswoman Karine Jean-Pierre told reporters aboard Air Force One that the Biden administration remained opposed to the pipeline and declined to comment on the State Department report.

“The Biden administration has been clear that Nord Stream 2 pipeline is a bad deal; it’s a Russian geopolitical project that threatens European energy security, and that of … Ukraine and eastern flank NATO allies and partners.”

Biden’s decision to waive sanctions on Nord Stream 2 AG and its CEO removes one irritant in U.S.-German ties, and U.S. officials hope it provides some leverage to deepen cooperation on broader issues, including China and Russia.

German officials had pressed hard for such an outcome, arguing that the overall relationship was too important to sacrifice over what Berlin has described as a commercial project.

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