WASHINGTON—United States Senator Bill Hagerty (R-TN), a member of the Senate Banking Committee, joined his GOP colleagues on the committee in sending a letter informing Treasury Secretary Janet Yellen of Republicans’ intent to oppose two Treasury nominees until the Biden Administration imposes mandatory sanctions on Nord Stream II AG (NS2AG).
“Until the administration complies with Section 228 of CAATSA, or adequately addresses the absence of penalties on NS2AG, we intend to oppose [Treasury] nominees Brian Nelson and Elizabeth Rosenberg should a markup be scheduled for them at the Senate Committee on Banking, Housing, and Urban Affairs,” the senators wrote.
Last week, President Biden reversed longstanding U.S. policy on Nord Stream II and announced the U.S. and Germany reached a deal to allow for the completion of the pipeline. While Secretary of State Anthony Blinken waived NS2AG sanctions under the Protecting Europe’s Energy Security Act (PEESA) in May 2021, the administration has not imposed mandatory sanctions on NS2AG under Section 228 of the Countering America’s Adversaries Through Sanctions Act (CAATSA). Section 228 requires the President to sanction any foreign entity that knowingly facilitates a significant transaction for, or on behalf of, any person that is already under Russia-related sanctions.
In May 2021, a State Department report found that NS2AG has “facilitated transactions” for the construction of the pipeline. Publicly available information further suggests that NS2AG has facilitated these significant transactions on behalf of numerous sanctioned Russian entities, including Gazprom (the owner of NS2AG), the pipe-laying ship Fortuna (which continues to lay pipe today), and JSC Sovfracht (which has boasted publicly about providing equipment for the Nord Stream II project).
“The State Department’s own PEESA findings to Congress, combined with NS2AG’s apparent ongoing involvement with sanctioned Russian entities, strongly suggests there is evidence that NS2AG has facilitated significant transactions for, or on behalf of, one or more previously-sanctioned entities,” the senators asserted.
The full letter can be found here and below:
Dear Secretary Yellen:
The Nord Stream II natural gas pipeline directly harms the national security interests of the United States and our allies and partners. If completed, this project will increase Vladimir Putin’s malign influence over Europe, destabilize Ukraine’s fragile security, and encourage further Russian aggression. That is why the United States, during both the Obama and Trump administrations, has strongly opposed Nord Stream II. Opposition has also been broad and bipartisan in Congress.
Unfortunately, President Biden has unwisely reversed longstanding U.S. policy on Nord Stream II. In May 2021, after the State Department adhered to the requirements of the Protecting Europe’s Energy Security Act (PEESA) by sanctioning Nord Stream II AG (NS2AG), the project company established to plan and build the pipeline, Secretary Blinken unjustifiably waived that sanction. His decision, while legal, overrode the judgement of his own State Department, which sanctioned NS2AG because it “knowingly facilitated deceptive or structured transactions to provide . . . vessels for the construction of [the Nord Stream II pipeline].”
However, PEESA is not the only law that requires sanctions on NS2AG. Section 228 of the Countering America’s Adversaries Through Sanctions Act (CAATSA), which passed Congress with near unanimous support, requires the president to sanction any foreign entity that knowingly facilitates a significant transaction for, or on behalf of, any person that is already under Russia related sanctions. The State Department’s own PEESA findings to Congress, combined with NS2AG’s apparent ongoing involvement with sanctioned Russian entities, strongly suggests there is evidence that NS2AG has facilitated significant transactions for, or on behalf of, one or more previously-sanctioned entities
For example, the sanctioned Russian-energy company Gazprom wholly owns NS2AG and the Nord Stream II pipeline. The sanctioned Russian pipe-laying vessel Fortuna appears to continue its work on the pipeline’s construction. The sanctioned Russian ship-operator LLC Koksokhimtrans was reportedly brought into the Nord Stream II project for the sole purpose of evading U.S. sanctions. The CEO of the aforementioned Russian shipper is allegedly the sanctioned Russian Loginov Ilya Alekseevich. The sanctioned Russian shipping company CJSC Sovmortrans, itself a part of the sanctioned Russian shipping conglomerate Sovfracht Sovmortrans Group, appears to have set up the Nord Stream II ship-operator LLC Mortransservice. And according to an alleged Ukrainian intelligence assessment, LLC Mortransservice received the pipe-laying vessel Akademik Cherskiy from the sanctioned Russian Gazprom subsidiary, Gazprom Flot. Yet, the Biden administration has failed to comply with Section 228 of CAATSA by foregoing sanctions on NS2AG.
Until the administration complies with Section 228 of CAATSA, or adequately addresses the absence of penalties on NS2AG, we intend to oppose Department of the Treasury (Treasury) nominees Brian Nelson and Elizabeth Rosenberg should a markup be scheduled for them at the
Senate Committee on Banking, Housing, and Urban Affairs. As you know, Mr. Nelson and Ms.
Rosenberg have been nominated for senior Treasury positions responsible for overseeing sanctions implementation.
We urge you to reverse course on Nord Stream II and join us in Congress’ long-standing defense of European allies and partners from malign Russian aggression. Thank you for considering this urgent national security matter.
Sincerely,