New U.S. Sanctions Target Russian Company Behind Lucrative Pipeline
WASHINGTON — President Biden said on Wednesday that he would issue economic sanctions on the company behind a new natural gas pipeline between Russia and Germany, the latest in a series of penalties that the White House has promised will continue if Russia escalates hostilities against Ukraine.
The move by Mr. Biden came as administration officials warned that a full-scale military assault could be imminent. But it was also a reversal for the president after he waived sanctions against the pipeline, known as Nord Stream 2, last year despite calls from both Democrats and Republicans to halt the energy project.
“These steps are another piece of our initial tranche of sanctions in response to Russia’s actions in Ukraine,” Mr. Biden said in a statement on Wednesday. “As I have made clear, we will not hesitate to take further steps if Russia continues to escalate.”
Administration officials said Mr. Biden decided it was necessary to move forward with the penalties after Chancellor Olaf Scholz of Germany announced on Tuesday that he would suspend the certification of the pipeline in response to Moscow ordering Russian troops to cross the border into separatist regions in eastern Ukraine that the Kremlin has recognized as independent states.
The new sanctions are against a subsidiary of Gazprom, a Russian company that is controlled by the Kremlin, and they are part of a unified effort by NATO allies meant to stop what Mr. Biden has described as “the beginning of a Russian invasion of Ukraine.”
On Wednesday, the European Union also announced new sanctions on Russia’s defense minister, President Vladimir V. Putin’s chief of staff and high-profile Russians from the media world. On Tuesday, the Biden administration imposed sanctions on two Russian banks and a handful of the country’s elites and cut off the ability of Russia to raise financing in Western markets. The administration said it was preserving the possibility of even greater sanctions if Mr. Putin escalates the conflict by trying to seize more territory in Ukraine — or even the entire country.
The White House did not issue the sanctions against the company behind the gas pipeline earlier because it was unclear whether those measures would halt the project, which was already 90 percent completed when Mr. Biden took office, according to Ned Price, a spokesman for the State Department.
But on Tuesday, Mr. Scholz gave Mr. Biden an opening when he halted the certification of the project.
“So by acting together with the Germans,” Mr. Price said, “we have ensured that this is an $11 billion prize investment that is now a hunk of steel sitting at the bottom of the sea.”
Jen Psaki, the White House press secretary, described the action against the pipeline as part of an attempt to stop an armed conflict.
“What we’re trying to do is prevent a war, prevent devastation on the Ukrainian people,” Ms. Psaki said. Referring to Mr. Putin, she said, “We’re going to continue to make clear that if he continues to escalate, we will as well.”
But there was little sign that the initial sanctions this week had discouraged Mr. Putin from advancing in Ukraine.
The Pentagon issued a dire assessment on Wednesday saying that 80 percent of the 190,000 Russian troops and separatist forces in or near Ukraine were now in combat-ready positions.
The Nord Stream 2 pipeline has caused years of tension between Germany and the United States. Germany has long been hesitant to endanger its energy trade with Russia; Mr. Scholz last month dodged questions of whether he agreed with Mr. Biden’s assertion that the project would be stopped if Russia invaded Ukraine.
Still, Mr. Biden’s move was welcomed by Democrats and Republicans who had for a year called for him to quickly punish Russia and halt the pipeline.
Senator Ted Cruz, Republican of Texas, on Wednesday lifted his objections to 17 of Mr. Biden’s nominees, many of them for State Department positions, now that the president had announced sanctions on the company behind the pipeline.
Mr. Cruz had used Senate procedure to slow down the pace at which the chamber could approve Mr. Biden’s nominations, demanding that the administration impose sanctions on Nord Stream 2.
“Allowing Putin’s Nord Stream 2 to come online would have created multiple cascading and acute security crises for the United States and our European allies for generations to come,” Mr. Cruz said.
But Senator Rob Portman, Republican of Ohio, said the initial economic punishment was “an important first step but does not go far enough.”
“To create an effective deterrent, tougher sanctions must be expanded to other financial institutions and export controls must be implemented,” Mr. Portman said.
Mr. Biden had previously said the pipeline was too advanced to stop. “Nord Stream is 99 percent finished,” he said last year. “The idea that anything was going to be said or done that was going to stop it is not possible.” The construction of the pipeline was completed last year but the project’s approval process had been stalled.
Daleep Singh, a deputy national security adviser, said on Tuesday that shutting down the project would sacrifice “what would have been a cash cow for Russia’s coffers.”
“It’s not just about the money,” Mr. Singh said. “This decision will relieve Russia’s geostrategic chokehold over Europe through its supply of gas, and it’s a major turning point in the world’s energy independence from Russia.”
On Wednesday, Secretary of State Antony J. Blinken and Wendy R. Sherman, the deputy secretary of state, spoke with top European diplomats to coordinate economic sanctions against Russia, the State Department said.
Mr. Price reiterated that the United States was still seeking a diplomatic solution to the Ukraine crisis, in which Russia has recognized the independence of two enclaves that are part of Ukraine and ordered more Russian troops into the areas. Mr. Putin has amassed troops on three sides of Ukraine, and American officials say a full invasion could happen at any time.
Catie Edmondson contributed reporting.
