- Russia is building a 1,230km undersea gas pipeline to Germany called Nord Stream 2.
- The US is opposed to the pipeline and Trump sanctioned ships involved in its construction.
- Biden is now waiving sanctions on the Nord Stream 2 AG company and its Putin-allied CEO, Axios said.
- See more stories on Insider’s business page.
The US will not impose sanctions on the company behind the Nord Stream 2 oil pipeline and its CEO, an ally of Russian President Vladimir Putin, Axios reported Tuesday.
The pipeline, running 1,230km under the Baltic Sea between Russia and Germany, has long been criticized by both the Trump and Biden administrations, with opponents saying the pipeline will embolden Russia and destabilize Eastern Europe.
State Department sources told CNN that the department decided that trying to stop the pipeline outright by imposing sanctions on Nord Stream 2 AG, and its CEO Matthias Warnig, would alienate Germany, a key ally in Europe. The final call on what sanctions to issue came from the White House, CNN said.
The move is unexpected given historic US opposition to the project.
Several Russian companies will also be sanctioned, CNN said.
The State Department is issuing sanctions on Nord Stream 2 AG and Warnig, but it is also issuing them a waiver due to US national interests, Axios said.
This means that the company and its leadership will be free to pursue the project in the eyes of Washington, but that several of its contractors will not.
Insider contacted the State Department for comment.
The US’s reticence to enforce sanctions indicates that Russia’s geopolitical gains from the pipeline are worth less than good relations with Germany.
However, in a statement issued Tuesday, secretary of state Anthony Blinken said: “Nord Stream 2 is a bad deal – for Germany, for Ukraine, and for our Central and Eastern European allies and partners.”
In Germany, Chancellor Angela Merkel has come under fire from the US and political opponents for backing the project, especially in the wake of the August 2020 poisoning of Russian opposition leader Alexei Navalny.
Shortly after President Joe Biden’s inauguration in January, European officials told Insider that they expected the US to heap pressure on Merkel to axe the project.