U.S. to slap sanctions on Nord Stream 2

U.S. to slap sanctions on Nord Stream 2

The Nord Stream 2 pipeline will be put under sanctions by Washington, U.S. Secretary of Energy Rick Perry said.

The politician noted that the U.S. administration could prepare a bill providing for restrictions on Nord Stream 2.

Perry previously warned that not only is the U.S. opposed to Nord Stream 2, it has actually threatened to impose sanctions on European firms that participate in the Russian-sponsored gas pipeline project.

U.S. President Donald Trump has accused Germany of being "captive" to Russia due to its reliance on Russian gas, Interfax recalls.

The advisor on macroeconomics to the CEO of the 'Opening-Broker' brokerage house, economist Sergey Hestanov, speaking to Vestnik Kavkaza, noted that direct U.S. sanctions against the Nord Stream 2 are technically unlikely. "American companies do not participate in the project. At the same time, the strength of the American sanctions is not in bans, but in the so-called secondary sanctions, when companies violating, according to the American leadership, certain bans are prohibited from working with U.S. citizens and organizations. The threat here is that no one wants to lose the U.S. market, and the Russian market is ten times smaller compared to the U.S. market, which is why it is easier for many companies to refuse from cooperation with Russian companies," he said in the first place.

"Theoretically, some companies  involved in Nord Stream 2 may be frightened by U.S. sanctions and leave the project. However, the project has been largely implemented, and the chances of the pipeline being completed are great. The likelihood that these statements will succeed to stop the project is small. But still uncertainty will most likely persist until the very end. You can’t completely exclude the option when the pipeline is built, but gas is not pumped through it - its implementation is no guarantee that the Nord Stream 2 will be fully exploited, since the regulatory restrictions will remain in any case," Sergei Khestanov noted.

Deputy director of energy policy of the Institute of Energy and Finances, Alexey Belogoriev, in turn, expressed confidence that Rick Perry's  statements are of declarative nature. "The U.S. administration is not going to initiate the adoption of such a bill - it is waiting for an initiative on the part of Congress. All known options for sanctions boil down to a ban on any economic and economic links to the Nord Stream-2 operator when supplying equipment, providing services and investing with contracts exceeding $1 million. In fact, this means a ban on any contract work," he recalled.

"The main problem for Washington here is the extraterritoriality of U.S. sanctions: the project is implemented by European companies. Understanding between European politicians and the U.S. administration has not improved since 2017. It is important that any restrictions are dangerous  for the project at the construction stage, and, given the fact that they have not yet succeeded in concluding an agreement with Denmark, there is a risk that construction will be delayed until the end of 2020, which is why the U.S. is expanding its time range," Aleksey Belogoryev pointed out.

"The context is still important here. Rick Perry made this statement at a meeting with Ukrainian politicians. Naturally, the rhetoric changes depending on the audience, and it is clear that American politicians try not to make such statements in Germany," the deputy director of energy policy of the Institute of Energy and Finances added.