Nord Stream 2 Among Sticking Points in U.S. Senate’s Ukraine Debate

(Bloomberg) -- Pre-emptive sanctions against Russia and the fate of the Nord Stream 2 pipeline have emerged as two sticking points in Senate negotiations over a new package of penalties in response to Russian President Vladimir Putin's aggressive posture toward Ukraine.

“It's 95% done, but it's always the last 5% that are the toughest,” Democratic Senator Chris Murphy, a member of the Foreign Relations Committee, said. “I think there's still questions about the Nord Stream 2 language and the balance of sanctions applied immediately versus sanctions to be applied after an invasion.”

Senate Foreign Relations Chair Bob Menendez, who has been working on the package with GOP Senator James Risch, said lawmakers were working to “fine tune” provisions for sanctions on Russia before any invasion of Ukraine and for using the gas pipeline from Russia to Germany as leverage.

Menendez, a New Jersey Democrat, said the Biden administration is “not enthralled” with the idea of imposing sanctions before Russia acts, as several Republicans have suggested. He said he told officials that “a strong bipartisan response is something that strengthens their hand and they should be open to it.”

“I am hopeful that we can get a strong bipartisan sanctions bill to the floor relatively soon,” Senate Majority Leader Chuck Schumer told reporters. 

Senate Minority Leader Mitch McConnell said Tuesday sanctions against Russia before any invasion would be more effective than sanctions after the fact. But Senator Mark Warner, the chairman of the Intelligence Committee, warned against imposing sanctions on Russia before any invasion takes place, arguing that it may only further embolden Putin to take action.

“This is a delicate time,” the Virginia Democrat said on Bloomberg Television's “Balance of Power.” “We definitely need the strongest sanctions ever should Russia invade.”

Russia has repeatedly denied it plans to attack Ukraine, but Putin has demanded security guarantees, including that NATO close its doors to new members in the region and not deploy offensive weapons near his borders.

Menendez has shortened the list of potential pre-emptive sanctions, limiting it to a small number of financial institutions, entities and individuals either associated with the Russian military or working to destabilize Ukraine, according to a person familiar with the negotiations.

On Nord Stream 2, Democrats and Republicans are trying to find language that will make clear their opposition to the pipeline without disrupting the U.S. relationship with ally Germany, which supports the project. Negotiators are trying to find middle ground between a Menendez proposal that would impose sanctions on the pipeline after an invasion and one proposed by GOP Senator Ted Cruz that would have imposed sanctions immediately.

Any potential solution would likely include measures that affect the timing and sequencing of sanctions as well as the potential for waivers in case the president needs more discretion to apply them, according to a person familiar with the matter.

Murphy, of Connecticut, said Schumer told a small group of senators Tuesday morning that he would be willing to put the bill on the Senate floor for a vote if the two parties can come to an agreement.

“I think we'll end up with something on a bipartisan basis,” said Republican Senator Rob Portman of Ohio, a member of the Ukraine caucus who recently traveled to the country to meet with President Volodymyr Zelenskiy. “What Russia is already doing is considered to be subject to sanctions now, and should they make a big mistake and actually invade Ukraine the consequences would be devastating.”

Texas Republican Senator John Cornyn said his proposal for a WWII-style “lend-lease” program to provide Ukraine with weapons and other material without cost is also being considered to be part of the package. He said the measure would give the Biden administration “more flexibility and more efficiency when it comes to being that arsenal of democracy for Ukraine.”

“In some cases, like the loan of equipment, the United States could eventually retain end use,” Cornyn said in a statement. “In others, this would make clear we would support grants or emergency aid where we would not recover the funding or assets sent to our allies.”

The measure, which has bipartisan support, would also make any cyber attack against major critical infrastructure in Ukraine by Russia an “armed attack” and would remain in place until Russia reduces troops levels around Ukraine to their pre-March 2021 levels.

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