Uriel Araujo, researcher with a focus on international and ethnic conflicts.

The Russian-German Nord Stream 2 pipeline under construction has been facing opposition from different actors within the US and also from Poland and Ukraine. It is a system of natural gas pipelines running under the Baltic Sea from Russia to Germany. Washington’s narrative has been that the Kremlin seeks to use energy as a geopolitical weapon while the US is trying to promote a secure energy future for Ukraine and the EU. The truth is that Washington has a veiled interest in selling its own (more expensive) liquefied natural gas to Europe and, as part of a commercial and geopolitical dispute, has thus adopted several legislative measures over the years to impose sanctions on companies involved in the pipeline project.

However, in May it was reported that Wasington was in fact relinquishing such sanctions against Nord Stream AG - the consortium that is building and operating the submarine pipelines - in a kind of realistic turn so as to not escalate tensions with such an important ally as Germany. But the plot thickens: the US Secretary of State Antony Blinken, on August 10, appointed Amos Hochstein as the US Senior Advisor for Energy Security, with a focus on reducing the “risks” Nord Stream 2 poses, from an American perspective.

Hochstein is a former diplomat, lobbyist, businessman and also an energy and national security expert who has served in the former US President Barack Obama administration at the State Department. He also worked as a very close advisor to then Vice-President Joe Biden. Furthermore, Hochstein was a member of Naftogaz's supervisory board (from 2017 to October 2020), the largest national gas and oil company of Ukraine. And here is the problem, as we shall see below.

In April the White House was in talks to appoint Hochstein for - supposedly - no other purpose than to halt the Nord Stream 2 pipeline project - even though it was already 96 per cent completed. Biden’s administration in fact has been suffering pressure from both Republican and Democrat political figures to do so. Republican Senator Ted Cruz, for one, has called for the US government to come up with a sanctions package against any entities involved in the project. It is a complicated move for Washington, which needs to oppose Moscow's energy projects but also must enhance its relationship with Germany.

Nord Stream 2 is, in all likelihood, a done deal. Hochstein’s appointment is but a move to appease political figures domestically and a nod to the pressure campaign from Congress. However this could also bring further problems for the current US administration, which already has to worry about the Hunter Biden’s scandal. After all, Hochstein himself is the target of serious corruption accusations.

Andrii Derkach, a member of the Ukrainian Parliament, claimed that a corruption ring within Naftogaz earned at least $ 1 billion by selling Russian gas to Ukrainians under the guise of European gas. Derkach’s testimony, among other things, includes supposedly leaked audio records of then Obama’s Vice President Joe Biden (the current US President) offering the then Ukrainian President Petro Poroshenko a billion dollars as part of a negotiation to dismiss the Prosecutor General of Ukraine Viktor Shokin who was investigating the business activities of Joe Biden’ son, Hunter Biden, in Ukraine.

Furthermore, Derkach also claimed, at an Interfax-Ukraine news agency  press conference, that Hochstein, while at Naftogaz's supervisory board, was certainly aware of the Russian gas scam. Part of this money went to American companies, which thus have a veiled interest in covering it up.

According to documents leaked from the National Anti-Corruption Bureau of Ukraine (NABU), the illegal enrichment scheme worked thusly: Russian gas crossed Ukraine, going through the pipe for merely one and a half kilometres to Slovakia and, no stop, returned to Ukraine, now disguised as European gas. In Slovakia, shell companies added their interest.

This way, Ukraine, for over 5 years overpaid about $ 1.5 billion for the so-called European gas, and most of this money, it is alleged, went to certain Naftogaz officials. The largest importer involved in the scheme, according to Derkach,  is the Energy Resources of Ukraine (ERU) Group of Companies, which is registered both in Ukraine and in tax havens, and is headed by Andriy Favorov - also in charge of the Naftogaz Integrated Gas Business Division. Part of the company’s profit went into offshore accounts. For example, Derkach mentioned, in 2019, that about $ 13.1 million were transferred to ERU MANAGEMENT SERVICES LLC’s bank account (from July 21, 2016 to June 23, 2017).

In this complex case, American geopolitical interests seem to intertwine with private interests and a potentially catastrophic corruption scandal involving US President Biden’s family and his  protégé Amos Hochstein, whose appointment in all likelihood is mostly an attempt at damage control. Nord Stream 2 will not be halted: sanctioning Germany (and thus alienating it) at this point would make no sense. But we should expect more accusations and pieces of evidence to surface pertaining to American interests in Ukraine and this may place Biden in a very difficult position.