German Envoy Sees U.S. Sanctions Likely Over Russia Gas Pipeline

Germany should brace for U.S. sanctions over the Nord Stream 2 gas pipeline project with Russia, signaling an escalation of economic conflict with Europe, according to an envoy of Chancellor Angela Merkel’s government.

Peter Beyer, the German government’s coordinator for trans-Atlantic relations, said in an interview that an official in President Donald Trump’s administration told him at a meeting in Washington last week that sanctions related the Baltic Sea pipeline are likely.

“This is a further burden for the trans-Atlantic relationship,” Beyer told Bloomberg Television on Friday. Nord Stream is meeting resistance across the political spectrum in Washington, including in the U.S. Senate and House of Representatives as well as the White House, he said.

Sharpening U.S.-German conflict over Nord Stream 2, which would expand the direct flow of Russian natural gas to Germany, is adding to points of contention including trade, defense spending and the Iran nuclear accord. Merkel and President Vladimir Putin are expected to discuss the pipeline’s future during a meeting in Sochi, Russia, on Friday.

The U.S. is stepping up opposition to Nord Stream 2, warning publicly that it could trigger sanctions. Sandra Oudkirk, U.S. Deputy Assistant Secretary of State for Energy Diplomacy, said in Berlin that U.S. concerns include security issues, raising the prospect that Russia could install undersea surveillance equipment in the Baltic.

European Companies

U.S. action would put companies in Austria, France, Germany and the Netherlands at risk. Royal Dutch Shell Plc, BASF SE’s Wintershall unit, Uniper SE, OMV AG and Engie SA are partners of Russia’s Gazprom PJSC in the project.

Beyer said the administration official, whom he didn’t name, pointed out that the U.S. has authority to sanction Nord Stream under legislation passed last year targeting Russian energy projects. The Countering America’s Adversaries Through Sanctions Act, or CAATSA, was a response to Russia’s intervention in Ukraine and its suspected U.S. election interference.

German Economy Minister Peter Altmaier, a Merkel ally, told ARD television the U.S. should expect that Europe “will define and fight for our economic interests,” including Nord Stream 2.

Beyer presented a grim picture of relations with the U.S., saying the combination of tensions with the Trump administration is taking a toll.

“It seems to be right now, in a very short period of time, everything comes together,” Beyer said in the interview. “And all taken together, it’s really a big burden for trans-Atlantic relations.”

— With assistance by Guy Johnson, and William Wilkes