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Germany tried to dissuade the United States from following through on its threat to impose additional sanctions on the Russia-led gas pipeline project Nord Stream 2 by telling the U.S. that it would support the construction of two liquefied natural gas (LNG) terminals with US$1.2 billion (1 billion euro), German weekly Die Zeit reported on Wednesday.
According to Die Zeit’s investigation, German Vice Chancellor and Finance Minister, Olaf Scholz, wrote a letter to U.S. Treasury Secretary Steven Mnuchin in early August, promising a massive increase of public support for the construction of the LNG terminals, including by making 1 billion available, if the United States allowed Nord Stream 2 to be completed unhindered.
Germany, the endpoint of Nord Stream 2, has been looking at the economic benefits of the project, while the U.S., including President Donald Trump, have been threatening sanctions on the project and even on Germany over its support for the project.
The U.S., several European countries, including the Baltic states and Poland, as well as the European Union (EU), have expressed concern about Russia using gas sales and its gas monopoly Gazprom as a political tool.
The United States views Nord Stream 2 as further undermining Europe’s energy security by giving Gazprom another pipeline to ship its natural gas to European markets.
In July, the United States warned companies that were helping Russia with Nord Stream 2 that they should ‘get out now’ or face the consequences, as the Trump Administration steps up efforts to stop the construction of the controversial Russia-led pipeline in Europe.
In recent weeks, German Chancellor Angela Merkel has come under pressure from some of her coalition partners to drop the German support for Nord Stream 2 after the poisoning of Russian opposition leader and Putin critic, Alexei Navalny, who is now being treated in a German hospital.
According to experts who spoke to CNBC earlier this week, Germany is unlikely to pull the plug on the Nord Stream 2 project, at least not yet.
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By Tsvetana Paraskova for Oilprice.com
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Nord Stream 2 involves over 100 companies from twelve European countries and about half of them are from Germany.
US lawmakers are considering further sanctions on the project although, with 2,300 out of 2,460 kilometres of the entire Nord Stream 2 pipeline having already been laid, there is not much time for those to have a significant impact if they are approved.
The United States has failed to derail Russian gas pipelines to Europe since the days of the former Soviet Union. Nord Stream 2 will be no exception.
President Trump’s administration will not fare better that both John F. Kennedy and Ronald Reagan who failed to derail USSR-backed energy-export pipelines such as the Friendship (Druzhba) oil pipeline in the 1960s and the Brotherhood (Bratstvo) gas pipeline in the 1980s respectively.
Those previous attempts not only failed, they raised the hackles of European leaders who accused the United States of interfering in their internal affairs. History is just repeating itself with the same eventual failure.
It is about European sovereignty and that is not understood in Washington. Nord Stream 2 can be delayed and made more expensive, but it can't be stopped. The train is gone. Russia is hoping to complete the project by the end of the year.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London