Merkel Says U.S. Pipeline Sanctions Not Legally Justifiable

Merkel Says U.S. Nord Stream Sanctions Not Legally Justifiable

Chancellor Angela Merkel decried new U.S. sanctions against the Nord Stream 2 pipeline as “not compatible” with Germany’s interpretation of legal standards and called on the project to be completed.

“We will act in this context,” Merkel said in Berlin on Wednesday as lawmakers queried her in Germany’s lower house, or Bundestag.

The comments add to growing tension over the 1,200-kilometer (745-mile) Baltic undersea pipeline designed to pump Russian gas directly to Germany, which President Donald Trump has assailed as a conduit for “billions” of dollars flowing to Vladimir Putin.

Germany is preparing to take action if the U.S. follows through on threats to kill off Nord Stream with additional sanctions, officials familiar with the discussions have said. Merkel’s government is considering pressing for coordinated action on the European Union level, they said.

The project has triggered deep division between EU member states. But German officials say that the prospect of a direct U.S. intervention in the 27-member bloc’s energy interests could prompt a collective response.

The EU’s High Representative, Josep Borrell, said the bloc was preparing a “reinforced sanctions mechanism” to respond to U.S. measures.

The instrument “will improve Europe’s resilience, faced with the effects of the extraterritorial application of sanctions imposed by third countries,” Borrell’s office said on June 25 in response to a European Parliament query. EU-wide sanctions need unanimous approval by all 27 member states.

A German Economy Ministry paper seen by Bloomberg News said such measures by the U.S. would be a “novelty” and could hit significantly more German and European companies and banks as well as state agencies.

Nord Stream, owned by Gazprom PJSC, has been a longstanding target for Trump. He told a rally last moth in Tulsa, Oklahoma that Germany is “delinquent” on defense spending while it dispatches riches to Putin.

Merkel said that the “construction process will be made more difficult” with additional sanctions after U.S. measures signed by Trump in December targeted pipe-laying vessels, throwing completion of the project into disarray.

©2020 Bloomberg L.P.