The United States today imposed sanctions under the Protecting Europe's Energy Security Act (PEESA) of 2019 on a Russian-flagged vessel and an entity linked to the controversial Nord Stream 2 pipeline that was built to transport natural gas from Russia to Germany. Cyprus-based Transadria, Ltd. and the transport vessel Marlin have both been sanctioned under Executive Order (EO) 13049, but notably, Nord Stream 2 AG—the Gazprom-owned, Switzerland-based company has still escaped sanctions, per the agreement the United States made with Germany in July, according to Secretary of State Tony Blinken.
"Even as the Administration continues to oppose the Nord Stream 2 pipeline, including via our sanctions, we continue to work with Germany and other allies and partners to reduce the risks posed by the pipeline to Ukraine and frontline NATO and EU countries and to push back against harmful Russian activities, including in the energy sphere," Blinken said.
Needless to say, I’m not a fan of this decision, especially since Russia is becoming more and more aggressive, amassing troops on the border with Ukraine, and possibly helping Belarussian dictator Lukashenko orchestrate the migrant crisis on the border with Poland and Lithuania, ostensibly to divert NATO attention from its activities near Ukraine. I will be fair and say that I have not seen any reporting to confirm Russia’s involvement in the Belarus migrant crisis, but Moscow is definitely supporting Lukashenko, and the timing is certainly auspicious.
So what do today’s Nord Stream 2 designations accomplish? It seems like nothing much, other than messaging and lip service to PEESA. They won’t stop the project; the Biden administration is simply complying with the legislation, which “directs the President to impose visa- and asset-blocking sanctions on any foreign person that knowingly provides pipe-laying vessels for constructing a Russian-origin energy export pipeline that makes landfall in Germany or Turkey.”
"Today's designations will do absolutely nothing to stop Nord Stream 2," said Rep. Michael McCaul of Texas, the leading Republican on the House Foreign Affairs Committee. "I urge the Senate to adopt my bipartisan NDAA amendment with Representative Marcy Kaptur that expands Nord Stream 2 sanctions. We must act now to ensure gas never flows through this Russian malign influence project."
Transadria is registered in Cyprus—a jurisdiction known for sketchy Russian shell company activity. ΣΤΕΛΙΟΣ ΜΙΧΑΗΛ (Mikhail Stelios) is listed as Director, and according to a Russian business site, is also the director and secretary of the entity listed as secretary for Transadria—Steme Secretarial, Ltd. Stelios also seems to be linked to a number of apparent shell companies, including Steme Directors, as well as S.M The Leader of Grocery, Ltd., S.M The Huge Equipment Store, Ltd., S.M The Giant Car Autotrader, Ltd., and other suspicious Cypriot entities—many of which share contact information and are part of the same network, according to their social media pages. This Mikhail Stelios seems to have quite the ego, judging by the names of his companies.
Steme Secretarial apparently shares an address in Cyprus with two other entities: Teladeno Ltd. and Staloma Ltd. with Steme Secretarial and Steme Directors listed as secretary and director respectively for the latter, and Steme Secretarial listed as secretary and a Russian individual named Sergey Rusakov as director for the former.
So, as we can see the Russian connection is rich in these entities, and I’m fairly sure the designation of Transadria or the Marlin will not do much. The pipeline is already built, and it is awaiting certification and approval from the German government, making the Russians shrug off the latest designations. The certification is delayed, albeit not for long, according to analysts, after European energy prices soared and Germany’s energy regulator halted the certification process because of Nord Stream 2’s refusal to form a subsidiary to secure an operating license.
The Biden Administration needs to stop fiddling around with inconsequential designations, meant as a box-checking exercise to appease Congress. This is not a sign of US commitment to hold Russia accountable for anything. It is lip service, and the Russians know it.
I suspect this is why Moscow is getting more and more overtly aggressive. The Kremlin understands that it has the White House stuck between a rock and a hard place in its desire for increased cohesion with NATO allies and its determination to stop Russian antagonism and expansion.
My view is that Russia appreciates strength. Putin respects toughness. And the more we fail to put real pressure on Moscow, the more Putin will push.
Sanction Nord Stream 2; after all, that is the promise we made if Russia started using gas deliveries as a bludgeon against Ukraine and the EU. That’s already happening.
Target sovereign debt.
And start designating the Navalny 35 under Global Magnitsky for corruption, kleptocracy, and human rights violations. Those individuals are close to Putin. They have billions in asset hidden abroad. Enough is enough. Freeze their assets, and with a number of them acting as Putin’s wallets, helping obscure the sources of wealth, we might actually see some results.
Sanctioning a shell company in Cyprus sends the wrong message.