Energy, Europe, New in Lobbying

Russia pipeline foes downplay EU opposition to US sanctions

Critics of Russia’s gas pipeline to Germany are scrambling to downplay reports of united European support for the project as they look to the US to help kill it.

Yorktown Solutions, which represents the Ukrainian gas industry, jumped into action following news reports that 24 members of the European Union had formally challenged Washington’s growing use of sanctions during a video-conference earlier this month. The reports in Politico Europe and other publications said the threat of sanctions against European companies helping to build the Nord Stream 2 pipeline between Russia and Germany came up in the Aug. 12 call.

In response, Yorktown President Daniel Vajdich emailed a tweet from the Estonian ambassador to Washington, Jonatan Vseviov, flatly denying that participants in the call had officially taken a stance against US sanctions targeting Nord Stream 2. Estonia is one of several European countries that oppose the $11 billion project to carry Russian gas under the Baltic Sea, thereby bypassing Ukraine and its transit fees.

In the Aug. 20 email disclosed under the Foreign Agents Registration Act (FARA), Vajdich denounced what he called “intentional media manipulation” by proponents of the project.

“Based on our conversations with EU member-states present at the video-conference,” he wrote, “only a handful of countries spoke at the meeting, which was an ‘informal call’ to “discuss a number of issues, including Iran, Venezuela, and Cuba.” He also shared a Russian newspaper report on the Russian Navy accompanying pipe-laying ships in the Baltic Sea, underscoring that the Kremlin is behind the project.

Vajdich’s “email was sent to relevant stakeholders both inside and outside of government,” Yorktown Vice-President Jonathan Gregory told Foreign Lobby Report in an interview over email. Asked about any other examples of European opposition, Yorktown pointed to a tweet from Polish Ambassador Piotr Wilczek responding to Vseviov.

“There is a conscious campaign to depict Nord Stream 2 as a ‘European project’ in order to undercut bipartisan efforts to impose further sanctions making the pipeline’s completion impossible,” Gregory said.

“Nothing could be further from the truth,” he added. “The pipeline is 100% owned by Russia. For the Kremlin, its rationale is entirely geopolitical and non-commercial. Nord Stream 2 replicates existing gas transit infrastructure in Central & Eastern Europe, which operates at only half its overall capacity. The sole purpose of Nord Stream 2 is for Russia to end its reliance on these countries for transiting gas to lucrative European markets, shifting the balance of power in Moscow’s favor and making them more vulnerable to Kremlin influence.”

“There is a conscious campaign to depict Nord Stream 2 as a ‘European project’ in order to undercut bipartisan efforts to impose further sanctions making the pipeline’s completion impossible.”

Yorktown Solutions Vice-President Jonathan Gregory

The Donald Trump administration and a bipartisan majority in Congress shares that view.

US lawmakers expanded existing sanctions to companies that support pipe-laying activities along with insurance and underwriting services as part of their annual defense authorization bill, Foreign Policy reported earlier this month. But the House and Senate versions of the bill are not expected to be reconciled and signed into law until December.

In the meantime, the pipeline builders are rushing to complete the remaining 6 % of the project. They are backed by at least three different lobbying firms — BGR Government Affairs, Roberti Global and (until its termination on March 31) Sweeney & Associates — which together spent almost $1.7 million in the first half of the year.

Yorktown for its part signed a year-long, $960,000 contract with the Federation of Employers of the Oil and Gas Industry of Ukraine in January. Vajdich and Gregory are registered on the account, whose priorities include “efficiently addressing threats posed by the Nord Stream 2 project” and “fully integrating the Ukrainian gas market with the energy market of the EU, supporting the implementation of the gas market reform in Ukraine and attracting foreign investments to the Ukrainian oil and gas markets.”

The firm is backed by Republican hawks in Congress who have threatened “crushing legal and economic sanctions” against the operator of the German port of Murkan, which is helping Russia build the final sections of the pipeline. The German government in turn has complained to Secretary of State Mike Pompeo about the US threats.