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Biden clears way for US sanctions on operator of Russia’s Nord Stream 2 gas pipeline

Biden clears way for US sanctions on operator of Russia’s Nord Stream 2 gas pipeline President Joe Biden. (Yuri Gripas/Abaca Press/TNS)

This article was originally published by Radio Free Europe/Radio Liberty and is reprinted with permission.

U.S. President Joe Biden has directed his administration to impose sanctions on the operator of the Nord Stream 2 natural-gas pipeline in response to Russia’s actions in Ukraine.

Biden announced the move on February 23, saying the United States will join Germany in imposing sanctions on the Baltic Sea pipeline to bring Russian gas to Germany.

“I have directed my administration to impose sanctions on Nord Stream 2 AG and its corporate officers,” Biden said in a statement.

The step is another piece of the initial tranche of U.S. sanctions in response to Russia’s actions in Ukraine, Biden added.

“As I have made clear, we will not hesitate to take further steps if Russia continues to escalate,” he said.

The top executive of the company building Nord Stream 2, Matthias Warnig, is also listed as sanctioned, the Treasury Department said on its website.

Nord Stream 2 AG is a registered Swiss firm whose parent company is the Russian state-owned gas giant Gazprom, which has a majority stake in the project, while Germany’s Wintershall and Uniper groups, joint Dutch-British oil major Shell, France’s Engie, and Austria’s OMV are also participating.

Germany indefinitely suspended the project on February 22 after Russian President Vladimir Putin said he would recognize the independence bids of Moscow-backed separatists who control parts of the Donetsk and Luhansk regions in eastern Ukraine.

The 1,225-kilometer, $11 billion pipeline is completed but had not yet begun operating while it waited for certification from German regulators.

German Chancellor Olaf Scholz said on February 22 that a key document required for the certification of the pipeline would be withdrawn, essentially ending the project for now.

Critics of the pipeline, including Biden and many members of Congress, have said the pipeline will only increase Europe’s dependency on Russian natural gas and undermine Ukraine by depriving it of transit fees collected by existing pipelines that cross its territory.

The pipeline was designed to double the gas-flow capacity from Russia to Germany. German Economy Minister Robert Habeck said Germany would be able to meet its energy needs without Russian gas.

Earlier on February 23, Moscow lashed back angrily against sanctions announced by the United States the previous day, vowing a “strong response” to a series of measures unveiled by Biden against Russian banks and individuals.

“There should be no doubt — sanctions will meet a strong response, not necessarily symmetrical, but well-calibrated and sensitive for the American side,” the Russian Foreign Ministry said in a statement.

Over the past two days, the United States and its Western allies have set a coordinated effort to punish Moscow with sanctions after Putin’s announcement. The move came after Russia amassed more than 150,000 troops on the border with Ukraine, prompting fears of a full-scale invasion.

Fading hopes for a diplomatic solution to the crisis took another blow on February 22 when the White House said that a potential summit between Biden and Russian President Vladimir Putin was off the table for now.

That came after U.S. Secretary of State Antony Blinken said he was calling off his scheduled meeting with Russian Foreign Minister Sergei Lavrov in view of Moscow’s actions against Ukraine.

Other Western allies, including the European Union, Britain, Australia, Canada, and Japan, have also set sanctions against Moscow, often after consultations with Washington.

The United States said it was prepared to respond to further Russian aggression by withholding technology and resources.

“We’re going to cut [Putin] off from Western technology, cut him off from Western financial resources that will be critical for feeding his economy and also to enriching himself,” U.S. Deputy Treasury Secretary Wally Adeyemo told CNBC.

The United States said on February 22 that it would impose its “first tranche” of sanctions on Russia for what Biden said was the beginning of an invasion of Ukraine.

The measures included blocking sanctions on two Russian banks and sanctions to block Moscow’s access to Western financial institutions, Biden said, declaring that Moscow’s actions against Ukraine had violated international law.

The two banks designated are Russia’s Promsvyazbank, the bank of the armed forces, and Kremlin-controlled VEB bank, the nation’s development bank. Together the two banks hold $80 billion in assets, a senior administration official said in a call with reporters after Biden announced the sanctions.

The United States also sanctioned Aleksandr Bortnikov, the head of Russia’s Federal Security Service (FSB); Kremlin First Deputy Chief of Staff Sergei Kirienko; and Promsvyazbank CEO Pyotr Fradkov. Their families are also sanctioned.

The official said that, if the invasion proceeds, Washington is ready to take further action on the largest Russian financial institutions, including Sberbank and VTB, which collectively hold almost $750 billion in assets or more than half of all the assets held by Russian banks.

“This was the beginning of an invasion and this is the beginning of our response. If Putin escalates further, we will escalate further, using both financial sanctions and export controls,” the senior administration official said.
Russia invaded and seized Ukraine’s Crimea region in 2014 and has since aided separatists in eastern Ukraine in their bloody conflict with the government in Kyiv.

Moscow had denied it was planning to invade Ukraine prior to Putin’s order on February 21 to send troops into the separatist areas, saying they were needed to keep the peace and protect civilians — claims the West quickly dismissed.

Ukraine took a series of steps on February 23 to bolster its security, calling up military reservists aged 18-60 and preparing to declare a 30-day state of emergency.

However, the country’s leaders also strived to ensure that calm was maintained, saying there was no need for a general mobilization of troops at this time and vowing not to give up any of its territory.

It also urged its citizens to avoid travel to Russia and for those there to leave “immediately,” citing a possible disruption of consular assistance amid rising tensions.

Ukrainian President Volodymyr Zelenskiy said in comments on February 23 that he and his army were ready to stand against any possible moves by Russia and Russia-backed separatists.

He also said he expects further sanctions on Russia against Ukraine from Kyiv’s Western partners.

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