Donald Trump always insisted on sanctioning the gas pipeline. To that end, he imposed sanctions on Russian and European companies involved in its construction. However, Russian deputy prime minister Alexander Novak has announced that Nord Stream 2 would be built in cooperation with the European nations interested in this gas pipeline project.

Why US Opposes Nord Stream 2

A major energy policy pursued by Russia is to expand the European market and open several routes towards this continent, thereby breaking the Ukrainian soil monopoly. In light of the significance of Europe’s gas market for Russia, which supplies 30% of European gas needs, Moscow embarked on building a new gas pipeline in northern and southern Europe in 2006 and 2009 following the emergence of discrepancies with Ukraine which transits gas to Europe. The Nord Stream 1 gas pipeline became operational in late 2011. Then, Russia’s Gazprom and European firms teamed up to build Nord Stream 2. The gas pipeline project, which has had 95% progress, is 1,230 kilometers long. It is planned to transmit 55 bcm of gas annually from Russia to Germany via the Baltics.

Ever since the second term in office of Barack Obama, the US has shown opposition to the Nord Stream 2 project, demanding it to be halted. The US opposition to the gas pipeline intensified under Trump’s four-year presidency. Trump imposed sanctions on the European companies contributing to the project. Washington has always claimed that this project does not pursue European interests and will make Europe more dependent on Russian energy. But in fact US sanctions against Nord Stream 2 constitute a protective measure whose objective is to create suitable atmosphere for the transmission and sales of US liquefied gas in the European market.

The main reason for the US’s strong opposition to Russian gas exports to Europe is to drive Moscow out of this key market and supply US liquefied gas to Europe. The US is not willing to see Russia find a reliable source of income by selling gas to rich nations in northern Europe. But since US liquefied gas costs much higher than Russian gas, European countries still prefer to purchase Russia’s gas. That explains why the US government is resorting to pressure on Europe.

Biden Challenges

Newly elected US President Joe Biden used to fully reject his predecessor’s policy and always called for improved ties with Europe. Now all eyes are turned to the Nord Stream 2 project. In fact, Biden’s policy vis-à-vis this pipeline can set standards for changes in US approaches towards Europe. However, the Nord Stream 2 issue and US willingness to export gas to Europe would not be easy. Two major challenges are to be taken into consideration:

The first problem pertains to US domestic issues. The US’s new energy policy, which Trump fully backed and which promoted export-oriented policy; remains vital for the coronavirus-stricken US in terms of revenue and job creation. Therefore, Biden could not ignore investments made in the energy sector, or calls a halt to investments just for the sake of the Europeans. The second challenge stems from Russia as a gas exporter. Although Biden is willing to improve US-Europe ties, he is unwilling to give any political or economic concessions to Russia. Therefore, the Biden Administration would be tougher on Russia.

Under such circumstances, Biden would be faced with a clear-cut contradiction. If he decides to step back from imposing sanctions on Nord Stream 2 in favor of his European allies, he would be ignoring domestic investment in the US and would see many jobs lost in the energy sector. Furthermore, it would amount to a US concession to Russia for coming decades.

Europe Perspective

Europe is willing to expand its gas ties with Moscow. Germany, which is the main Russian partner in the Nord Stream 2 project, has firmly opposed US sanctions and continues to call for the construction of the pipeline. However, the Europeans have also their own contradiction. On the one hand, they insist on continued sanctions against Russia in connection with the Ukraine crisis and the so-called occupation of Crimea, while on the other hand they call for improved ties with the US under Biden. However, the Europeans know quite well that Washington’s meddling would inflict significant harms on them and undermine the very existence of the European Union.

Despite all these complications and regardless of Biden’s future position vis-à-vis Nord Stream 2, the project is likely to come online soon. The pipeline is almost complete, while Russia-Europe mutual needs would make them to go along.

By Shuaib Bahman

Courtesy of Iran Petroleum