I hate to say “I told you so,” but, “I told you so.”  There will be no sanctions on the Nordstream 2 pipeline.  The reason is because sanctions won’t stop the project at this point.

Sputnik is reporting that the U.S. has told the German Economic Ministry there will be no sanctions on Russian pipeline projects.

If true then this is an indication that just about reached the peak of Trump’s full-court press on the economic health of the planet through financial control.   I’ve been steadfast in my position that sanctions are not only an act of war but also, ultimately, have limits.

And once those limits are reached all that is left is the face-saving.  And since the first rule of being a politician is never back down no major policy can be reversed without a means to save face.

Look at the situation Angela Merkel is facing in Germany.  She can’t cave on Nordstream 2 because she will look like a weak U.S. quisling (which she is).  She can’t reverse sanctions on Russia over Crimea because there has been no movement towards implementing the Minsk II accord.   And she can’t back down over her immigration policy because it would betray the people who put her in power — the Soros Set.

Trump has used this to pressure her ruthlessly on trade issues and NATO funding.

As for Trump, he’s not said much directly about Nordstream 2.  Members of his administration have, especially State Department Spokesperson Heather Nauert.   They are the ones who would have to eat crow over Nordstream 2, not Trump.

Trump has made it clear he doesn’t like the project but I think that’s more about his desire to bring Germany low rather than stifle Russia.  The worry is that Germany, through Nordstream 2 and no more supply coming from Ukraine, would then control eastern European politics by having control of their gas supplies.

This, I believe, is now the main focus for Poland in their fight to retain some semblance of sovereignty from the EU.  This is why Poland continues to overpay for Qatari and U.S. LNG as well as invest in a new pipeline from Norway.

But, that said, Trump knows that Europe’s future gas market is big enough to ensure, if indirectly, a market for U.S. LNG.  So, Russia’s dominance in Europe is not something he can compete with in the long run.

Implications

This statement by Germany has a number of potential implications. It may be nothing more than an attempt to undermine Trump’s position before his July 16th summit with Putin.

But, I don’t think so.  With Sweden issuing the last necessary permit for the construction of Nordstream 2 there is little way to stop the pipeline from being built.  Most of the pipe has been produced along with the infrastructure.  All that’s left is the actual putting the pieces together.

I think this is another pre-summit diplomatic offering by Trump ahead of his meeting with Putin.  The other was cutting the Al-Qaeda-linked groups free in Dara’a while the Russians and Syrian Arab Army retake the territory up to the Golan Heights.

It may also signify that Trump was never serious about stopping Nordstream 2 while other factions within the Administration were.  Remember, the biggest question in geopolitics today is just how much control does Donald Trump actually have over the policies of his administration?

We know he has virtually no control over the statements made by various officials who constantly run their mouths to back him into corners or undermine his negotiating position.

So, at the end of the day the First Rule of Trump applies, react to what he does not what he says.  Speech is a negotiating tactic for him.  And right now, he has not moved further on sanctions to stop Nordstream 2. With his long-desired summit with Putin now on the table it makes zero sense to throw down the gauntlet over it now.

Remember, also, that one of the outstanding issues between the U.S., Germany and Russia is gas transit through Ukraine starting in 2020.  The current agreement between Gazprom and Naftogaz ends next year and a new contract between them is not a done deal given the hostility of the Poroshenko regime.

The U.S. has tried to gain leverage over Gazprom to scuttle Nordstream 2 for three years now and all of those attempts have failed.  Gazprom has settled its anti-trust dispute with the EU, won legal challenges created by Ukraine and overcome political hurdles created by Poland.

Putin and Merkel met twice recently and discussed the future of gas transit through Ukraine among other things.  If Trump is willing to give up stopping Nordstream 2 then it may be that there is a new deal for Ukraine’s future in the works which ensures multiple gas supply routes for eastern Europe going forward.

The last piece to this puzzle is that the massive Grogingen gas field which has been the Netherlands’ greatest asset is drying up faster than expected.  Those volumes will have to be replaced placing even greater importance on Nordstream 2.

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