Pompeo's pipeline sanctions threat prompts calls for retaliation from German businesses
Lucy Hough

German business leaders are preparing to retaliate as the US threatens new sanctions on those involved in the construction of the Nord Stream 2 pipeline. 

The brewing trade dispute comes amid worsening diplomatic tensions between the US and Germany. 

Work has begun constructing over 1200km of pipeline under the Baltic Sea, which will double the supply of natural gas direct from Russia to Germany. But there are still 80 km to go. Construction work was suspended in December 2019 when Swiss pipe-laying company Allseas withdrew its services due to the first wave of US sanctions. 

The US has now threatened further penalties on European investors and businesses involved in the $11billion project, amid fears of Russian influence. 


Mike Pompeo, US Secretary of State said on July 15th:  "This action puts investments or other activities that are related to these Russian energy export pipelines at risk of US sanctions. It's a clear warning to companies aiding and abetting Russia's malign influence projects will not be tolerated. Get out now or risk the consequences."

Construction is being led by Russian gas giant Gazprom, with the participation of more than 200 firms from across Europe. Washington fears Russian dominance of energy supply in Europe could tip into political capital.. 

The threat of fresh sanctions on those involved in the project has been condemned this side of the Atlantic. German business representatives have rejected what they see as US interference into sovereign energy policy.

Michael Harms, Managing Director of the German Eastern Business Association, told CGTN "we are very critical of new sanctions against Nord Stream 2. If the sanctions are adopted, more than 120 companies from 12 countries involved will be hurt.  The non-functioning of the pipeline will mean we have to write off all the investment, which would be a tragedy for those businesses.” 

There are now calls for German countermeasures, which could range from compensation to local firms, to protective retaliatory sanctions. 

Plans to ban exported gas derived from fracking are being explored, which would apply to most of the gas shipped from the US. 

Whilst analysts say the threat of further sanctions could further delay the project and increase costs, most expect Russian gas to start flowing in spite of deepening transatlantic tensions.  Gazprom has been working on a plan to complete the remaining work on the pipeline, with the project said to be at 94% completion. A Danish agency said in early July it would grant permission for construction work to go ahead with other pipe-laying vessels in the mostly Danish waters.