U.S. House panel passes amendment to stop sanctions waiver on Nord Stream 2

By Timothy Gardner

WASHINGTON (Reuters) – The Biden administration could face pressure to block Russia’s Nord Stream 2 natural gas pipeline after a House of Representatives panel this week passed an amendment seeking to repeal the U.S. State Department’s ability to waive sanctions on the project.

“These sanctions are mandatory not discretionary,” said Representative Marcy Kaptur, a Democrat and a sponsor of the amendment to a foreign aid bill. The House panel passed it unanimously.

The amendment seeks to repeal sanctions waivers in fiscal year 2022. But the pipeline is 95% finished and the bill has a long way to go before becoming law, needing to pass the full House, the Senate, and be signed by President Joe Biden.

In May, the State Department sent to Congress a report that concluded that Nord Stream 2 AG and its CEO, Matthias Warnig, an ally of Russian President Vladimir Putin, engaged in sanctionable activity. But Secretary of State Antony Blinken immediately waived those sanctions, saying it was in the U.S. national interest.

President Joe Biden, a Democrat, has opposed the $11 billion project that would take Russian gas from the Arctic to Germany, saying it is a bad deal for Europe. But Biden also wants to improve ties with Germany, an ally he needs to help deal with broader issues including climate change, the economic recovery and relations with Iran and China. The United States is an exporter of natural gas to Europe in the form of LNG, but Russian gas is cheaper.

Washington fears Russia could use Nord Stream 2 as leverage to weaken European Union states by increasing their dependency on Moscow. The project, now about 95% complete, would bypass Ukraine, depriving it of lucrative transit fees and potentially undermining its struggle against Russian aggression.

A State Department spokesperson said the Biden administration will continue to “examine entities engaged in potentially sanctionable behavior” and work closely with Congress on the issue.

(This story deletes reference to bill needing to pass a second House panel)

(Reporting by Timothy Gardner; Editing by David Gregorio and Alistair Bell)