Germany has created a fund to circumvent sanctions against Nord Stream 2

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Germany has opened the cards. The government of the federal state of Mecklenburg-Vorpommern has created a fund through which European companies will work with Nord Stream 2. It will not fall under U.S. sanctions, as it is not a commercial enterprise.

The parliament of the federal state of Mecklenburg-Vorpommern has approved the regional government’s proposal to create a “Climate and Environment Fund”. By a majority vote, deputies approved the initiative in a special session held today, January 7.

“The state parliament has cleared the way for the creation of a state environmental fund that will also support the completion of the controversial Nord Stream 2 gas pipeline in the Baltic Sea. The public interest fund is designed to assist environmental, nature, and climate projects. The fund plans to purchase components and equipment necessary for the completion of the Nord Stream 2 gas pipeline. The aim is to avoid, if possible, the threat of U.S. sanctions against companies involved in the construction of the pipeline,” reads the website of the Parliament of the federal state of Mecklenburg-Vorpommern.
Earlier, the regional government said the foundation could contribute through its own business operations to the completion of the Nord Stream 2 gas pipeline in the Baltic Sea. According to the government’s website, Erwin Selling, the former state prime minister, will become the honorary chairman of the fund. The authorized capital of the fund will amount to 20.2 million euros, out of which the operator of Nord Stream 2 AG will contribute 20 million euros and the federal state will contribute 200 thousand euros.
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“I am very pleased that we have acquired Nord Stream 2 AG as a partner for this project. Germany has decided to phase out nuclear and coal-fired power. That is why we are continuing to develop renewable energies in Mecklenburg-Vorpommern. We are pioneers in Germany. And we rely on gas from the Baltic Sea pipeline (as a source for stable power generation against the backdrop of unsustainable RES generation). This is the only way to make the energy transition in Germany a success,” said Christian Pegel, Minister of Energy, Infrastructure, and Digitalization of the German state of Mecklenburg-Vorpommern.
The website of the state parliament says that the operator of Nord Stream 2 has already welcomed the creation of the fund. German media reported that he may allocate 60 million euros for the fund’s activities.

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As media reported, the essence of the idea is that the fund should establish a commercial enterprise, the products, and services of which should be used only to complete the construction of the pipeline. Thus, German companies could provide their services to Nord Stream 2 through the fund and its company. From a technical point of view, the companies would not interact with the project of the Baltic pipeline and would not be subject to U.S. sanctions, the German tabloid Bild noted.

Earlier, Mecklenburg-Vorpommern Prime Minister Manuela Schweizig had openly advocated for the end of Nord Stream-2 even in the midst of the Navalny poisoning story. For example, she wrote a letter to U.S. senators in response to their threats to Sassnitz burgomaster Frank Kracht over Nord Stream 2 and traveled to Mukran port to reassure her employees.

In January 2021, the U.S. imposed new sanctions against Nord Stream 2. They relate to the retrofitting of Nord Stream 2 vessels, their insurance, and reinsurance. Also, Washington, though this year’s defense budget law, banned companies that inspect, test, and certify the pipeline from participating in the project. The text of the law says it applies only to commercial entities but does not apply to government agencies.

Just over 150 kilometers of the pipeline remain to be laid in the Baltic Sea. In order to continue the work, Gazprom has assembled a fleet of Russian ships. Work on the longest section in Denmark is scheduled to resume in mid-January.