US declares Russia's prized Nord Stream 2 pipeline 'dead'

President Joe Biden's targeting of Nord Stream 2 adds to Western sanctions announced on Feb 22, 2022. PHOTO: REUTERS

WASHINGTON (AFP) - The United States declared the Kremlin's prize geopolitical energy project, Nord Stream 2, "dead" on Wednesday (Feb 23) after the latest sanctions imposed in retaliation for what the West says is Russia's start to an invasion of Ukraine.

The escalation in US and European blows against the Russian economy came as Washington declared Russia to be on the cusp of sending troops into Ukraine, where President Vladimir Putin has already ordered his troops to conduct "peacekeeping" in two separatist enclaves.

President Joe Biden's targeting of Nord Stream 2 - one of energy-rich Russia's highest-profile initiatives - adds to Western sanctions announced on Tuesday against two Russian banks, Moscow's sovereign debt, several oligarchs and other measures.

Western capitals hope the threats of economic damage are so great that they will hold Mr Putin back from sending a huge military force camped next to Ukraine to invade beyond the borders of the two enclaves, which are already outside the Ukrainian government's control.

At the White House, press secretary Jen Psaki kicked off her daily briefing with a chart depicting current severe weaknesses in Russia's economy, stressing this was before "the bite" of sanctions.

"This is just the beginning," she said. "This is a vicious feedback loop that will get more severe if Mr Putin doesn't de-escalate. So, as he's looking at the impact on his own economy, on his rich and wealthy oligarch friends, and on the people of Russia, these are the facts."

Mega project 'not happening'

Built to funnel Russian natural gas to Germany under the Baltic sea - bypassing the current overland route that traverses Ukraine - Nord Stream 2 has long been controversial. It is completely built, but has not been put in use and for now at least it will not be.

Although the pipeline is seen as an efficient way to supply energy to the European Union, which depends heavily on Moscow, critics always warned that it would tighten Russia's strategic grip on European nations, while deliberately weakening Ukraine.

Mr Biden's decision reverses his earlier caution on the controversy. He had previously prevented sanctions against the pipeline, arguing that construction was already more than 90 per cent complete by the time he took office and that close ally Germany was keen for the project to be completed.

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However, with Russia shocking the world by massing troops on Ukraine's border and Western leaders saying an invasion is effectively under way, both Berlin and Washington are now on the same page.

Germany decided on Tuesday to withhold certification for completing the project and Mr Biden on Wednesday announced that he had directed his administration "to impose sanctions on Nord Stream 2 AG and its corporate officers".

State Department spokesman Ned Price said: "By acting together with the Germans how we did, when we did, and the way in which we did, we have ensured that this is an US$11 billion (S$15 billion) prize investment that is now a hunk of steel, sitting at the bottom of the sea."

Ms Psaki used the same image, when asked whether Nord Stream 2 was simply shelved temporarily or being scrapped for good.

"Currently, it's dead at the bottom of the sea," she said. "It is not happening, it is not moving forward... That is where it stands."

Doubts over Russian plans

US and European Union officials say more oligarchs, much bigger banks and potentially severe export controls on high-tech components to Russia are in the crosshairs if Mr Putin does not de-escalate.

"No financial institution is safe," Ms Psaki said, adding that sanctions on Mr Putin personally are also "on the table". But complicating the task for Western capitals is continuing uncertainty about Mr Putin's intentions.

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Pentagon spokesman John Kirby said that in addition to the continuing build-up of tens of thousands of Russian troops and equipment right on the Ukrainian border, "we certainly believe that additional Russian military forces are moving into" the separatist areas of eastern Ukraine.

However, he said "we can't confirm with any great specificity, the numbers and what the formations are, what the capabilities are".

The US believes "we are potentially close to some sort of action", Mr Kirby said. "Again, what that action is going to be and exactly on what timeline, we can't be sure."

So far, the threats of US sanctions have had no visible effect on Mr Putin, but Ms Psaki said the measures are "meant to have a deterrent impact".

Mr Putin will "feel the weight of being a pariah in the global community", she said.

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