U.S. Threatens to Sanction German Firms Constructing Russian Gas Pipeline

January 14, 2019, 10:50 AM UTC

German companies building the $11billion Nord Stream 2 gas pipeline have been warned that they may face sanctions from the United States if they continue the construction project.

Richard Grenell, the American Ambassador to Germany, made the warning in a letter to several German companies working on the pipeline, which will carry gas from Russia to Germany.

The warning led the German newspaper Bild am Sonntag to accuse Grenell of blackmailing the companies, to which the U.S. Embassy replied, “The only thing that could be considered blackmail in this situation would be the Kremlin having leverage over future gas supplies.”

The Nord Stream 2 pipeline is led by the Russian gas company Gazprom, which is also the sole shareholder in the pipeline. When completed, the pipeline will run directly from Russia to Germany, through the Baltic Sea. Proponents of the project say it will bolster the EU’s energy security and climate change goals. Critics argue the pipeline will increase Europe’s dependence on Russia, further destabilize Ukraine by depriving the country of gas-transit fees, and damage the environment.

The companies collaborating with Gazprom to build the pipeline include Uniper, Wintershall, Engie, OMV, and Shell. They could face sanctions under the Countering America’s Adversaries Through Sanctions Act (CAATSA). European leaders say Washington is using the act to influence European foreign and energy policy.

German Chancellor Angela Merkel’s foreign policy spokesperson accused Trump of using the issue to show strength towards Russia. He said, “If the U.S. president thinks he has to publicly show he is getting tough on Russia in view of the many question marks regarding his relationship with Moscow, he should not thereby impair the relationship with his most important ally.”