The European Commission doesn’t like the Nord Stream 2 gas pipeline. But it also doesn’t like the idea of the U.S. imposing sanctions to stop the Russia-backed project.

That’s creating an awkward snarl of conflicting lobbying and policy efforts that undermines action to block U.S. measures — as happened when a U.S. Senate committee this week backed sanctions.

In Brussels, the Commission and the Nord Stream 2 company are at loggerheads over new EU gas rules that the Gazprom-led project is trying to dodge.

In Washington, EU diplomats are lobbying hard to make sure the U.S. won’t slap sanctions on companies helping build the pipeline. Those companies are European and sanctions would worsen commercial tensions between the Trump administration and the EU.

But it’s tough for the EU to push a unified Nord Stream policy because member countries are deeply divided over the project.

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The Washington efforts of EU diplomats, who represent the entire bloc, are challenged by countries like Poland lobbying in favor of sanctions, while countries like Germany, a supporter of the project, lobby against.

“We are not happy at all about this because this is exactly what we should not do as the EU,” Klaus-Dieter Borchardt, the deputy director general of the Commission’s energy department, told POLITICO. “It’s not good for the European Union because we should speak with one voice.”

More Russian gas

Nord Stream 2 is meant to run 1,200 kilometres from Russia to Germany, carrying 55 billion cubic meters of gas a year and doubling the capacity of the existing Nord Stream 1 pipeline.

Russia’s Gazprom is the sole shareholder of the project but has financial backing from five Western European companies — Austria’s OMV, Anglo-Dutch Shell, France’s Engie, and Germany’s Uniper and Wintershall. Italy’s Saipem and Swiss-based Allseas are helping with pipe-laying.

Proponents say the project makes economic sense and the EU will need the gas. But its construction has come under fire from the U.S. and many Central and Eastern European countries, worried the pipeline would boost the Kremlin’s influence and allow Russia to end gas transit via cash-strapped Ukraine.

The U.S. Senate foreign relations committee this week backed a bill that would sanction individuals and companies assisting in the construction of Russia-backed natural gas export pipelines. That would target Nord Stream 2 as well as TurkStream, a separate project bringing gas to Turkey and later the EU.

A similar bill passed the Democrat-led House committee on foreign affairs. It’s not yet clear if and when the bills will be brought to the floor of the Senate and the House.

U.S. President Donald Trump has repeatedly slammed Nord Stream 2 and criticized Germany for supporting it, saying in June that he’s considering sanctions.

This is one case where the EU is at least partly on board with Trump.

The Commission wasn’t able to block the project. However, it did secure a change to the bloc’s gas rules to make sure Nord Stream 2 would fall under the EU’s regulatory umbrella. That’s not enough to stop the pipeline, but complying with the rules would be complicated and expensive, which is why Nord Stream 2 has filed a lawsuit against the Commission at the European Court of Justice. It wants to avoid the rules, while the Commission insists they should apply.

But creating problems for Gazprom isn’t the same as imposing sanctions against European companies — and that’s where Brussels and Washington part ways.

“This is clearly our preferred way of dealing with projects being built on the EU territory rather than unilateral sanctions being imposed by a third country with extra-territorial effect,” an EU official said.

Sanctions would hit EU-U.S. trade relations hard. Tensions are already high following Trump’s recent threat to impose tariffs on French wine in retaliation for France’s digital services tax. Crushing U.S. sanctions against Iran and pressure on Europe to cut business contact with Tehran have further soured relations.

Talk and action

If Congress passes U.S. sanctions against Nord Stream 2, what will matter is whether they are binding on Trump, said Brenda Shaffer, adjunct professor at Georgetown University’s Center for Eurasian, Russian and East European Studies.

“Members of Congress love foreign policy related sanctions that are non-binding — it gives them the chance to come to their constituents and show them that they are tough … without complicating U.S. foreign policy,” she said. “The current committee approval does increase the degree of uncertainty for the involved companies and will add to the list of issues of dispute between Berlin and Washington, but so far, is not a concrete change.”

Shell, Engie and other European energy companies in favor of the pipeline have also been wooing the White House, hiring U.S. lobbying firm McLarty Inbound, according to industry sources and lobbying disclosure forms.

Asked in a recent interview with POLITICO if he has thought about pulling out of the Nord Stream 2 project, Shell CEO Ben van Beurden said his company is “contractually committed to follow through on the partnership agreement and that’s what we’re going to do.”

But if the U.S. imposes sanctions, Shell would have no alternative but to comply, he said.

“The only mandate I have is to invest with care and do the right thing for our shareholders,” van Beurden said. “And if one country or other feels that we should not do this then they have to make it illegal. And then I have no choice, and I will wholeheartedly comply with those sanctions. But only because it’s an obligation to comply with the law.”

OMV said in a statement it sees Nord Stream 2 “as an economic project that is important both for the security of supply and competitiveness of Europe,” but does not want to comment on the sanctions threat.

A spokesman for pipe-laying company Allseas said the company does “not speculate on potential impacts of proposed sanctions.”

Paola Tamma, Ben Lefebvre and Anthony Adragna contributed reporting.