New sanctions against Nord Stream 2 could mark a win for Ukrainians who lobbied Washington to quash the Russian pipeline
By Brett Forrest
Nov. 29, 2020
The Wall Street Journal
For the past year, U.S. officials and Russia hawks on Capitol Hill have closely watched the peregrinations of a Russian ship, as it sailed from Russia’s Far East around Africa to the Baltic Sea.
The vessel—a nearly 500-foot pipe-layer named the Akademik Cherskiy—is the sole Russian-owned ship capable of completing an $11 billion pipeline. Nord Stream 2 is designed to carry natural gas under the Baltic from Russia to Germany, but its construction has been stalled for a year by the threat of U.S. sanctions.
As the Akademik Cherskiy shuttled between an anchor point off Russia’s Kaliningrad and the German port of Mukran, a staging point for the pipeline, in recent months, U.S. officials readied broader sanctions. Members of Congress agreed this month on measures intended to thwart the Akademik Cherskiy and bury Nord Stream 2.
Should those sanctions prevail, it would likely foil a Kremlin-backed project that the U.S. warned will expand Russia’s influence in Europe. It would also mark a win for a pair of Ukrainian officials who saw the pipeline as a threat to their country and worked behind the scenes in Washington to quash it.
For four years, the Ukrainians—an energy-company executive and a national-security official—tried to persuade the Trump administration and congressional leaders, who they say were at times indifferent. President Trump’s impeachment, initiated after he asked Ukraine’s president to assist with an investigation into Mr. Trump’s then-presumed presidential rival Joe Biden, also set back their efforts.
The Ukrainians’ lobbying and support from Sen. Ted Cruz (R., Texas) and other Russia skeptics in Congress produced the hard-won sanctions that brought work on Nord Stream 2 to a standstill a year ago, roughly 100 miles short of completion. Now, the Ukrainians feel they are on the brink of success.
The new sanctions will be “the final nail into the coffin of this project,” said Vadym Glamazdin, a government-relations official with Ukraine’s national oil-and-gas company, Naftogaz. “When these sanctions are finally voted and become law, there will be no practical way to build this pipeline.”
Both sides are now racing to outflank each other. To finish the pipeline, the Akademik Cherskiy needs to be refitted to handle pipes of greater diameter.
The new sanctions, part of a defense-spending bill, would come into force by the end of the year and target companies that would make those modifications as well as businesses that would insure, test, inspect and certify the pipeline.
A Biden administration could take a more lenient approach. Since the sanctions have broad bipartisan support, it would need to expend political capital to waive them.
The Akademik Cherskiy’s owner, the Russian gas-export monopoly Gazprom, didn’t respond to requests for comment. Earlier this year, Gazprom Chief Executive Alexei Miller said on Russian television that he saw no technological obstacles to completing the pipeline.
Last year then-Russian Energy Minister Alexander Novak told the TASS news agency that Russia would complete the pipeline “with our own funds,” and more recently called the Nord Stream 2 sanctions legislation protectionist.
A spokesman for Nord Stream 2 AG, the Swiss-registered, Russian-owned company building the pipeline, said that sanctions threats “affect a large group of Western contractors and investors.” Those companies and Nord Stream 2, he said, “are convinced that the soonest possible commissioning of the pipeline is in the interest of Europe’s energy security.”
On Saturday, a Nord Stream 2 AG spokesman told German radio station NDR that pipeline construction would restart in early December with a 1.6-mile stretch in German waters.
Until now, the pipeline’s backers have struggled to resume work after that initial battery of sanctions the Ukrainians helped persuade Congress to enact last December.
Norwegian company DNV GL this month suspended its monitoring of the testing and preparation of equipment aboard ships installing the pipeline in response to the threat of sanctions, a spokesman said. Laid alongside the original Nord Stream built a decade ago, the new pipeline would allow Russia to bypass a gas-transit network in Ukraine.
Gazprom annually pays Ukraine $3 billion to tap the system. Kyiv sees the network and the revenue it brings Moscow as a check against Russia, especially after Moscow seized the Ukrainian region of Crimea and fomented rebellion in the country’s east in 2014.
By 2016, when Gazprom pursued plans for Nord Stream 2, Mr. Glamazdin and longtime friend Oleksandr Kharchenko, an official at Ukraine’s National Security and Defense Council, were determined to stop it. They said they sent letters to then-Secretary of State Rex Tillerson and Treasury Secretary Steven Mnuchin, neither of whom replied.
A Washington contact of Mr. Glamazdin introduced him to Daniel Vajdich, a lobbyist who had worked on the Senate Foreign Relations Committee. Mr. Vajdich suggested a change in approach.
While working at the Senate, Mr. Vajdich said he helped draft sanctions in response to Russia’s 2014 actions against Ukraine that obliged Exxon Mobil Corp. to exit a venture with Rosneft, depriving the Russian oil company of critical technology and stalling the project.
“That was the model we applied to Nord Stream 2,” Mr. Vajdich said. “What do the Russians need that they don’t have?”
Messrs. Glamazdin and Kharchenko enlisted Kyiv-based energy think tanks to study Nord Stream 2 for vulnerabilities. In the summer of 2018, a researcher stumbled upon a breakthrough.
On an online energy forum, a Moscow energy expert mentioned that neither the Russian state nor any Russian company owned a vessel that could lay pipe at the diameter and depth of Nord Stream 2.
“It was a moment,” Mr. Kharchenko said.
Since the Baltic seabed still holds unexploded World War II munitions, Denmark prohibits vessels from anchoring in some areas, requiring ships to use an anchorless positioning system.
Gazprom had contracted a Swiss firm, Allseas Group SA, whose ship, the Pioneering Spirit, was capable of laying Nord Stream 2 pipes without anchoring. Mr. Glamazdin said he and his partners decided to “go after pipe-laying vessels.”
In the Trump administration, some officials were pushing to end an exemption for Nord Stream 2 under a sanctions act passed in 2017 that targeted Iran, North Korea and Russia, according to several former administration officials.
Mr. Mnuchin, whose department enforces sanctions, was opposed, these former officials said. “He was a big hang-up at every turning point,” said one.
A Treasury Department spokesman declined to comment.
In December 2018, Mr. Mnuchin pressed the case against sanctions with Mr. Trump on Air Force One during a flight to Argentina, said one of the former officials. He did so again in September 2019, after Polish President Andrzej Duda urged Mr. Trump to sanction the pipeline in a meeting in New York, the official said.
A White House official said, “I‘ve never been a part of a conversation in which the president did not support Nord Stream 2 sanctions.”
Mr. Trump castigated German Chancellor Angela Merkel about Nord Stream 2 in several meetings. He sought to use the threat of sanctions to pressure Germany to boost its contribution to NATO’s budget, said the former officials.
After the poisoning of leading Russian opposition politician Alexei Navalny in August led to calls in Germany to punish Moscow, Ms. Merkel didn’t rule out sanctions on the pipeline, though pressure has since eased. Berlin has said the pipeline would improve Europe’s energy security.
Still, within the Trump administration, some doubted that sanctions could scuttle the pipeline, and they believed pressing to do so would antagonize European allies, the former officials said.
“We kept flip-flopping,” said one. “We didn’t have the ability to do anything coherent.”
The Ukrainians concluded that they would have to turn to Congress. Mr. Vajdich had advised Mr. Cruz on his 2016 presidential campaign and knew him as hawkish on Russia. They went to Mr. Cruz, who then enlisted Sen. Jeanne Shaheen (D., N.H.), also a Kremlin critic, to co-sponsor Nord Stream 2 legislation.
In late-January 2019, a German engineer working on the pipeline said that it would be completed by the end of the year. Mr. Cruz, Ms. Shaheen and staff members drafted a bill to sanction companies assisting Nord Stream 2’s construction, with Allseas as the principal target.
Separate versions passed committees in the Senate and House, but then stalled. Senate Majority Leader Mitch McConnell (R., Ky.) and House Majority Leader Steny Hoyer (D., Md.) each thought the other chamber would never agree on identical legislation, according to congressional aides.
Then in September 2019, the House announced an impeachment inquiry into Mr. Trump. Suddenly, anything related to Ukraine was political, and Nord Stream 2 sanctions risked getting “drawn into the morass of impeachment,” Mr. Cruz said.
In October, Allseas’s Pioneering Spirit fed the pipeline into Danish waters. “It was clear we were running out of time,” Mr. Cruz said.
One option was the National Defense Authorization Act, the annual Pentagon spending bill and last-minute sanctuary for measures that hadn’t elsewhere found a home.
Mr. Cruz and Ms. Shaheen attempted to insert a provision for Nord Stream 2 sanctions into the NDAA. Messrs. Glamazdin and Kharchenko returned to Washington to rally support, stressing to lawmakers the link they saw between Nord Stream 2’s completion and Moscow’s ability to escalate conflict in Ukraine.
“If we lose this shield, we cannot withstand this force,” Mr. Glamazdin said he told lawmakers in meetings. “And no one will come fight for us. No NATO. No U.S. No one.”
The effort hit a roadblock in one committee, congressional aides said, but then was approved by a second, allowing the sanctions’ inclusion in the NDAA. Mr. Trump signed it into law on Dec. 20, 2019.
Allseas announced its exit from Nord Stream 2 less than an hour later, and the Pioneering Spirit sailed away from the pipeline.
“After maybe 24 hours of some celebration,” Mr. Glamazdin said, he and Mr. Kharchenko considered how Russia would attempt to finish the pipeline. They and their congressional allies watched the Akademik Cherskiy as it left Russia’s Far East port of Nakhodka and began its voyage.
In November, Congress approved the new sanctions, for inclusion in the next NDAA. The legislation is due to be approved before the current congressional session ends.
“A pipeline that is 95% complete is a pipeline that is 0% complete,” Mr. Cruz said. “Right now, it’s just a piece of metal at the bottom of the ocean.”