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Relenting on Russian Gas Line, Biden Builds EU Front Against China

The Biden administration has decided to lift sanctions on a major Russian pipeline to Germany — angering Republicans, mending fences with Berlin and shoring up European support against Beijing.

(CN) — In a move seen as shoring up European support for America's bid to counter the rise of China, U.S. President Joe Biden is removing sanctions on a controversial Russian pipeline to Germany.

The White House announced it was lifting sanctions against Nord Stream 2 AG, the Swiss-based company behind the Nord Stream 2 pipeline project, late Wednesday, while U.S. Secretary of State Antony Blinken met with his Russian counterpart, Foreign Minister Sergei Lavrov, for talks in Iceland over the increasingly disputed Arctic Sea region.

A statement from the State Department says the U.S. is lifting the sanctions put in place by the Trump administration because the White House wants “to rebuild relationships with our allies and partners in Europe.”

Disagreement over the pipeline has driven a wedge in relations between the U.S. and its key ally in Europe, Germany. Much of Germany's political leadership, including Chancellor Angela Merkel, were incensed over the sanctions, accusing the U.S. of interfering with Germany's national interests.

German defenders of the pipeline call it essential for their country's industry and energy needs. Former Chancellor Gerhard Schroder, a Social Democrat who remains influential in Germany, is a strong supporter of the pipeline and even serves as chairman of the shareholders committee for an existing Nord Stream pipeline. The new pipeline is designed to double the amount of Russian gas crossing the Baltic Sea into Germany.

For opponents, however, the pipeline is seen as a buttress of Russia's influence in the European Union, making Germany ever more dependent on Russian natural gas and also strengthening the Kremlin's hand against Ukraine, which serves as a transit point for Russia's massive gas reserves.

In addition to lifting sanctions on Nord Stream 2 AG, a Swiss-based company that owns the pipeline, the U.S. is clearing a related black mark against Nord Stream CEO Matthias Warnig. Warnig is a former East German intelligence officer turned investment banker who is a friend of Russian President Vladimir Putin.

The White House said sanctions will remain in place on Russian vessels and companies involved in finishing work on laying the pipeline, but those sanctions will have limited effect because the Russian companies involved do not rely on the U.S. financial system.

In lifting the sanctions, the White House said it remained opposed to the pipeline.

“We will continue to oppose the completion of this project,” the State Department said in a statement. “Our opposition to the Nord Stream 2 pipeline is unwavering.”

Next U.S. Secretary of State Antony Blinken, left, meets with Russian Foreign Minister Sergey Lavrov, right, at the Harpa Concert Hall in Reykjavik, Iceland, Wednesday, May 19, 2021, on the sidelines of the Arctic Council Ministerial summit. (Saul Loeb/Pool Photo via AP)

In reality, it now seems highly likely that the pipeline will be turned on. Political observers said Biden appears willing to sacrifice the pipeline to gain Germany's support against China.

“The realignment has only one goal: the rivalry with China and the struggle for political leadership in the world,” wrote Stefan Kornelius, the foreign affairs editor at Süddeutsche Zeitung, a major German daily newspaper. He said the pipeline has become a test case for transatlantic relations, even though in his opinion for misguided reasons because the pipeline's geopolitical importance is overstated.

In his analysis, Kornelius said it appears reducing tensions with the EU is now central to Biden's aims to counter China. But he added that Washington will demand the EU and the U.S. become “united against China.”

“Compared to this storm front” of China, he said, Biden saw the conflict over “Nord Stream was harmless.”

There are clear signs that Europe is showing more willingness to join the U.S. against China.

On Thursday, the European Parliament was expected to put the brakes on a deal the EU entered into with China in December to give European companies more access to Chinese markets. The investment deal was criticized by Washington and the subject of intense debate in Europe too.

The deal now faces not getting ratified because the European Parliament is demanding China lift sanctions it imposed on several parliamentarians who are critical of China and accuse it of repressing the Uighur Muslim minority.

Under pressure from the Trump administration, European capitals began to back away from China in recent years. One example of this can be seen in the bans and restrictions now in place across Europe against Huawei, the Chinese tech giant.

Adding to this movement away from China, this week Holger Bingmann, a leading voice of German business as the president of International Chamber of Commerce, suggested it was time for the EU to disengage from China due to its human rights violations against pro-democracy activists in Hong Kong and against Uighur Muslims, and because its anti-competitive model of state-subsidized capitalism has made Chinese companies so advanced that they will no longer rely on European products.

“His comments are significant because Bingmann speaks for German businesses, and because the disengagement he speaks of may not be optional,” said Eurointelligence, a political risk firm based in the United Kingdom, in an analysis.

German Chancellor Angela Merkel adjusts her protective face mask during the weekly cabinet meeting at the Chancellery in Berlin, Germany, Wednesday, May 19, 2021. (Michele Tantussi/Pool via AP)

The shift away from China may accelerate, too, if Germany's Greens party gets into government, as polls suggest it is poised to do this September when Germans vote in national elections. The Greens are much more in line with U.S. interests on foreign policy, taking a hard view of Russia and China.

The lifting of sanctions was a huge relief for the German government, run by Merkel's pro-business center-right Christian Democrats and her coalition partners, the center-left Social Democrats. Both parties have favored treating Russia softly and many of their members argue that trade will bring about positive changes in Russia.

German Foreign Minister Heiko Maas said the lifting of sanctions shows the U.S. values its alliance with Germany.

“It's an expression of the fact that Germany is an important partner for the U.S., one that it can count on in the future,” Maas said.

Naturally, Russia too welcomed the White House's move.

Deputy Foreign Minister Sergei Ryabkov told Russia state media that there was “a chance for a gradual transition toward the normalization of our bilateral ties.”

The reaction in the U.S. was very different and Biden's shift in policy was met with howls of condemnation by Republicans and rebukes from some Democrats.

Jim Risch, the top Republican on the Senate Foreign Relations Committee, called lifting sanctions “a gift to Putin.”

Bob Menendez, a Democrat who heads the Senate Foreign Relations Committee, called on the White House to impose new sanctions. He said he could not understand “how today's decision will advance U.S. efforts to counter Russian aggression in Europe.”

Courthouse News reporter Cain Burdeau is based in the European Union.

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