U.S. reimposes sanctions on Nord Stream 2 over Russia's aggression

President Biden said Wednesday he will reverse last year's decision to waive sanctions on the entity and corporate officers behind the Nord Stream 2 pipeline, a day after Germany froze certification of the Kremlin-backed project.

Why it matters: It's an escalation in the U.S. sanctions response to what the administration has called the "the beginning of a Russian invasion" of Ukraine, and delivers a fresh blow to an $11 billion pipeline that has proven to be a massive headache for President Biden ever since he waived sanctions last May.

Construction of the Russia-to-Germany pipeline was nearly completed by that point, and Biden believed allowing it to proceed would help repair U.S. relations with Berlin damaged under former President Trump.
On Tuesday, German Chancellor Olaf Scholz surprised critics by suspending its certification and declaring that "the situation has fundamentally changed" due to Russia's aggression — though some suspected that the process could be revived down the line.
What they're saying: "Yesterday, after further close consultations between our two governments, Germany announced that it would halt certification of the pipeline. Today, I have directed my administration to impose sanctions on Nord Stream 2 AG and its corporate officers," Biden said in a statement.

"These steps are another piece of our initial tranche of sanctions in response to Russia’s actions in Ukraine. As I have made clear, we will not hesitate to take further steps if Russia continues to escalate."
Zoom in: Nord Stream 2 AG, the operator of the pipeline, is a wholly owned subsidiary of Russia's state-owned energy giant Gazprom. The company's CEO, Matthias Warning, is a close Putin ally and former German Stasi officer.

The big picture: Consecutive U.S. administrations have opposed Nord Stream 2 because it would increase Europe's reliance on Russian gas, which President Vladimir Putin has in the past exploited as a geopolitical weapon.

Ukraine also views the pipeline as an "existential threat" in part because it would deprive the country of billions of dollars in gas-transit fees, and has intensely lobbied the U.S. and Germany to put a stop to it.
Both the U.S. and German governments have faced significant pressure to end the pipeline as punishment for a Russian invasion of Ukraine, which Biden publicly committed to doing at a press conference with Scholz earlier this month.
Between the lines: Sen. Ted Cruz (R-Texas) led a blockade against dozens of Biden's State Department nominees for six months in protest of the decision to waive sanctions.

Sanctions on Nord Stream 2 had previously garnered overwhelming bipartisan support, but the Biden administration repeatedly lobbied Democrats to vote against them for the sake of preserving "trans-Atlantic unity."
On Wednesday, Cruz announced he would lift his holds: "President Biden made the right decision today. Allowing Putin's Nord Stream 2 to come online would have created multiple, cascading, and acute security crises for the United States and our European allies for generations to come," he said.