The White House strategy has lately switched to seeking “assurances” from Berlin that it won’t turn a blind eye on potential future Russian attempts to use its energy resources as a punitive tool, with Chancellor Angela Merkel making vague promises that she’ll use European level measures to prevent such a scenario, but any level of details have been lacking. President Biden had said while standing beside her last week: “Chancellor Merkel and I are absolutely united in our conviction that Russia must not be allowed to use energy as a weapon to coerce or threaten its neighbors.” He vowed that “We will be actively acting should Russia not respect this right of Ukraine that it has as a transit country.”
Both sides came away from that White House meeting saying they’d failed to settle their differences, with days later a major US-Germany “deal” being teased which would address Washington’s concerns at a moment the pipeline is widely estimated at 98% complete, with the final construction now nearing the finish line in German territory. The project is itself a ‘done deal’ thus this new agreement seems all about the Biden administration saving political face with East European allies, especially Ukraine, as well as domestically.
Some details of the draft of the deal are emerging Tuesday, which centers on commitments to ensure increased investment in Ukraine’s energy sector – and at the same time a “warning” voiced to Russia that Berlin stands ready to retaliate should it use gas a geopolitical weapon. Recall that Kiev has in effect been bypassed in terms of collecting badly needed transit fees through its territory.
This “retaliation” could include sanctions, according to a draft seen by Bloomberg, which details “The U.S. and Germany are close to a deal on the Nord Stream 2 pipeline that would threaten sanctions and other retaliation if Russia tries to use energy as a weapon against Ukraine, according to a draft text of the deal obtained by Bloomberg News.”
“Under the agreement, Germany would take unspecified national action if Russia commits such actions, a decision that may mark a concession from Chancellor Angela Merkel, who had previously balked at balked at making independent moves against the Kremlin over the gas pipeline that will run from Russia to Germany,” Bloomberg continues.
The draft deal reportedly further commits Berlin to seeking punitive action against Russia at the European level if red lines are crossed – something Germany has been deeply resistant to in the past – given Merkel’s repeat statements that NS2 is all about “business” and thus mixing politics would be detrimental.
But whatever final form the deal takes, it’s likely to still leave NS2 critics unsatisfied. It’s said to include language of Germany “limiting” Russian gas flows into Europe via the pipeline, which seems but a meek and dubious effort at assuaging Washington’s concerns at the most minimal level possible.
Bloomberg details more of what’s in the draft agreement as follows:
Under the draft agreement, the U.S. and Germany would seek to promote investments of as much as $1 billion in a so-called Green Fund to help Ukraine’s transition to cleaner sources of energy. Germany would commit to an initial $175 million investment in the fund, the text says. Germany would also appoint a special envoy – with $70 million of funding – to support bilateral energy projects with Ukraine. Lastly, the agreement would commit Germany to use leverage to extend Ukraine’s gas transit agreement with Russia for as long as 10 years after it expires in 2024. Those negotiations would start no later than Sept. 1.
Ultimately this appears all about making minimal too-little-too-late vague promises to America’s disappointed ally Ukraine. Bloomberg notes that “The agreement is expected to be pinned down in the coming days before Ukraine’s President Volodymyr Zelenskiy makes a U.S. visit.”
So we’ll soon see precisely what kind of consolation prize Zelensky will go to the White House and receive. Despite the Ukrainian president’s publicly voiced “confusion” and “disappointment” over Biden’s NS2 stance, he’ll have little choice but to take whatever German “concessions” are doled out. Whether Germany would ever actually pull the trigger on punishing Russia – it’s new lucrative pipeline partner – is another question.
Tue, 07/20/2021 – 13:00
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Author: Tyler Durden