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Germany and Russia create 'green' foundation that skirts US sanctions to finish Nord Stream pipeline

Randy Mancini 14 Jan 27

A specialist works onboard the Allseas' deep sea pipe laying ship Solitaire to prepare a pipe for Nord Stream 2 pipeline in the Baltic Sea - REUTERS/Stine Jacobsen/File Photo
A specialist works onboard the Allseas' deep sea pipe laying ship Solitaire to prepare a pipe for Nord Stream 2 pipeline in the Baltic Sea - REUTERS/Stine Jacobsen/File Photo

A German state has been accused of using a 'green' foundation backed with Russian money to bypass US sanctions against the completion of the controversial Nord Stream 2 pipeline.

Mecklenburg-Western Pomerania, the northeasternmost state in Germany, set up the Climate and Environmental Protection MV foundation earlier this month claiming its goal was to “further environmental projects in the Baltic Sea region.”

One such project, the state confirmed, would be assisting in the completion of the North Stream 2 gas pipeline, construction of which has been complicated by US sanctions.

But it appears that finishing the gas line is likely to be the foundation’s primary aim.

The Russian state-owned gas company Gazprom gets to choose its chairperson, while funding it with an initial €20 million.

State governor Manuela Schwesig, of the Social Democrats, justified the foundation's involvement in the gas project, saying "we have always taken the view that the Baltic Sea pipeline is part of climate protection."

Speaking to state broadcaster ARD on Sunday, Ms Schwesig said the foundation would “neither build nor operate the pipeline,” but conceded that part of its function would be “providing assistance where US sanctions threaten German companies.”

The US Senate imposed penalties on companies involved in the project at the end of 2019, fearing that the pipeline, which delivers gas directly from the Russian port of Vyborg, would give Moscow too much control over European energy supplies.

The sanctions led Swiss company Allseas to pull out with just 150 kilometers of piping left to lay.

With Russian ships now preparing to lay the last stretch of piping, the foundation is likely to take over logistics work on German soil. This task was previously conducted by a small German harbour which US senators threatened last summer with “crushing legal and economic sanctions.”

A legal assessment obtained by the environmental organisation German Environmental Help concluded that the foundation would get around US sanctions, as these do not target state organisations.

But it also concluded that, if the foundation’s primary aim was financial, it would be an abuse of German charity law.

Politicians have also voiced concerns about Russian influence.

"Ninety nine percent of the text of the statutes is about climate and environmental protection, but 99 percent of the money comes directly from Nord Stream 2 AG, which is owned by Gazprom," said Alexander Graf Lambsdorff of the opposition Free Democrats in a local radio interview.

US President Joe Biden indicated on Tuesday that he would not change the policy of his predecessor of pressuring Berlin to halt construction.

White House press secretary Jen Psaki said Mr Biden "continues to believe that Nord Stream 2 is a bad deal for Europe."

Mr Biden held his first phone call with Chancellor Angela Merkel on Monday, but read-outs of the conversation published by both sides suggest that Nord Stream 2 did not come up.

Mr Biden also spoke to Russian President Vladmitir Putin this week, but Nord Stream 2 was also not mentioned in the read-out of the conversation.

Ms Merkel has vowed to complete the project, hinting that she would only be prepared to talk if the US also put its energy imports from Russia “on the table.”

But the recent incarceration of Russian opposition leader Alexei Navalny, coupled with a desire to reset relations with Washington after four tricky years, have increased pressure in Germany for her to change her course.

The European parliament also voted last week in favour of a resolution which demands an immediate stop to the construction as a consequence of Mr Navalny’s arrest.