(Bloomberg) -- The Biden administration is weighing additional sanctions to block construction of the nearly completed Nord Stream 2 pipeline from Russia to Germany, potentially including the project’s parent company Nord Stream 2 AG, according to three people familiar with the matter.
The sanctions would come in the form of an interim report that may also single out an insurance company that has been working with the vessels laying the pipeline in the Baltic Sea as well as other companies providing support vessels and materials to the project, according to the people, who asked not to be identified because of the sensitive nature of the deliberations.
Lawmakers from both parties have been pressing the Biden administration to take stronger action to stop Gazprom (MCX:GAZP) PJSC’s project after a congressionally-mandate report released last month only named one vessel -- the Russian-flagged Fortuna -- as subject to sanctions.
The Treasury Department didn’t immediately respond to a request for comment. The White House pointed to a statement from Secretary of State Antony Blinken that said the administration is closely tracking efforts to complete the pipeline as well as the companies involved in the project.
“The sanctions legislation Congress passed in 2019 and expanded in 2020 has significant support from a bipartisan congressional majority,” Blinken said in the statement. “The Biden Administration is committed to complying with that legislation. The Department reiterates its warning that any entity involved in the Nord Stream 2 pipeline risks U.S. sanctions and should immediately abandon work on the pipeline.”
Blinken said the administration would look at sanctioning Nord Stream 2 AG “very carefully” during a House Foreign Affairs Committing hearing last week.
Why the World Frets Over Russian Nord Stream Pipeline: QuickTake
Senator Ted Cruz, a Texas Republican, said he would remove a hold he had placed on two of President Joe Biden’s nominees after Blinken issued his warning Thursday. Cruz, along with Senator Jeanne Shaheen, a New Hampshire Democrat, was instrumental in passing two rounds of sanctions against the pipeline in the past two defense spending bills.
Cruz said that “in light of the Secretary’s strong declaration,” he was lifting his holds on the nominations of William Burns as director of the Central Intelligence Agency and Brian McKeon as deputy secretary of state.
He said he would continue to block confirmation of Wendy Sherman to be Blinken’s deputy and future State Department nominees “until the full sanctions mandated by Congress are in fact broadly imposed against the ships and companies critical to completing the pipeline.”
Administration officials have said imposing the sanctions isn’t as easy as Republican lawmakers contend because proving violations isn’t clear-cut. And the administration will ultimately have to decide whether sanctioning German entities is worth the inevitable political fallout. German Chancellor Angela Merkel has been a supporter of the project.
There’s concern in the U.S. and some European countries that the pipeline, which is nearly complete, could increase the Kremlin’s leverage over Germany and other North Atlantic Treaty Organization allies.
Senator Bob Menendez, the Democratic chairman of the Senate Foreign Relations Committee, said during a recent hearing that he was encouraging the administration to “accelerate” its efforts on the pipeline, noting the bipartisan support for the sanctions.
©2021 Bloomberg L.P.
