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Then-Vice President Biden with Hochstein at the Caribbean Energy Security Summit in 2015. Photo: Brendan Smialowski/AFP via Getty Images

President Biden has appointed close former adviser Amos Hochstein as a State Department energy envoy charged with implementing a U.S.-Germany deal allowing the Nord Stream 2 pipeline to be completed, sources familiar with the decision tell Axios.

Why it matters: Hochstein has been a leading voice against Nord Stream 2, a strategic and financial priority for the Kremlin that will allow Russia to bypass Ukraine and deliver gas directly to the heart of Europe.

  • The appointment — which will not require Senate confirmation — lends the credibility of a prominent Russia hawk to a Biden decision that's drawn intense criticism in Eastern Europe and on Capitol Hill, including from some Democrats.
  • Implementing the pipeline deal will be an immediate priority for Hochstein, who's known by key players in Eastern Europe as "Biden's guy."
  • Hochstein also will serve a broader global energy role in the Biden administration. He declined to comment for this story.

Behind the scenes: Sources who know Hochstein are surprised he'd agree to take a job that seems in such inherent conflict with his reputation and stance that the pipeline is "the existential crisis facing Ukraine."

  • "They're trying to hide this terrible deal behind his credibility in the hopes it will make people forget just how bad this deal is," said a source who's worked with Hochstein on energy matters and respects him as a staunch pipeline opponent.
  • A source close to the process and to Ukrainian President Volodymyr Zelensky told Axios: "The hope in Kyiv is that [Hochstein's appointment] is recognition that the policy to date has not been a success and that this appointment results in a real course improvement and is not window dressing."

The other side: A source familiar with the process told Axios that "it's frankly good to have someone who is deeply suspicious of the project and of Russian intentions because he will push hard to execute an effective strategy to manage the threat."

  • A Biden official said the appointment has been in the works for some time, and disputed the notion that it's a "course correction" in response to outrage over the deal.
  • Politico first reported, in April, that Hochstein was under consideration for a special envoy role to help kill Nord Stream 2. But that was before Biden made the decision to waive sanctions and allow the pipeline to move forward in the interests of improving the U.S. relationship with Germany.
  • The Biden official added that Hochstein's experience would be valuable for implementing the deal and that Germany had established its own envoy for him to deal directly with. Hochstein joins an administration that's light on experience in global energy negotiations.

The backstory: Hochstein served as the State Department's special envoy for international energy affairs from 2014 to 2017, overseeing U.S. energy foreign policy engagement and advising Biden on global energy issues.

  • He was appointed to the supervisory board of the Ukrainian gas company Naftogaz in 2017, working on anti-corruption reforms at a state-owned energy giant notorious for being plundered by oligarchs.
  • During former President Trump's first impeachment hearings, then-National Security Council official Fiona Hill testified that Hochstein was one of the people who first alerted her to the extent of Trump's shadow policy led by Rudy Giuliani.
  • Hochstein announced in an October 2020 op-ed he would resign from the Naftogaz board, citing the Ukrainian government's backsliding on corruption.
  • People in Zelensky's orbit were initially concerned about Hochstein's appointment. But on Sunday a source close to the Ukrainian president told Axios: "Despite the op-ed the Ukrainians remain open-minded about Amos and do not doubt his good faith."

The big picture: The Biden administration has condemned Nord Stream 2 — which could be completed in the coming months — as "a Kremlin geopolitical project that threatens European energy security," but has also called it a "fait accompli."

  • Construction was suspended in December 2019 after the Trump administration imposed congressionally mandated sanctions, but deep-sea pipe-laying resumed after Biden took office.
  • Biden has defended his deal with Germany, announced last month, by emphasizing the importance of repairing the relationship with Berlin after it deteriorated under Trump.
  • Another Biden official described it as making "the best out of a bad situation that we inherited from the previous administration."
  • Under the terms of the agreement, Germany committed to taking action if Russia tries to "use energy as a weapon," using "all available leverage" to ensure Russia continues paying Ukraine transit fees; and launching a "green fund" to help Ukraine modernize its energy sector.

Bottom line: Hochstein has his work cut out for him. Ukrainians and other Eastern Europeans have cast the deal as woefully inadequate.

  • The foreign ministers of Ukraine and Poland condemned it within hours of its announcement, saying it creates a "political, military and energy threat."
  • Senate Foreign Relations Committee Chairman Bob Menendez (D-N.J.) is among the prominent Democrats who have trashed the deal. And the committee's ranking member, James Risch (R-ID), called it "another major victory for Putin."

Go deeper

Sep 10, 2021 - World

Inside Biden's call with Xi

Biden and Xi in 2013. Photo: Lintao Zhang/Getty Images

President Biden used a call with Xi Jinping on Thursday night to test whether personal diplomacy with the Chinese leader can make more progress than the meetings among subordinates, who have been snubbing and rebuffing Biden's aides.

Driving the news: The call was the first between Biden and Xi in seven months. Since Biden's election they had only spoken once previously, on Feb. 10.

Special Envoy for Haiti resigns over deportation of migrants and asylum-seekers

Daniel Foote testifies during a Senate Foreign Relations Committee hearing on May 26, 2016. Photo: Drew Angerer/Getty Images

The Special Envoy for Haiti on Wednesday resigned from his position, writing in his resignation letter obtained by PBS that he "will not be associated with the United States inhumane, counterproductive decision to deport thousands of Haitian refugees."

Why it matters: Ambassador Daniel Foote's resignation comes amid heightened anger over the treatment of Haitian migrants and asylum-seekers living in a temporary encampment in Del Rio, Texas — especially after images surfaced of Border Patrol agents whipping at the migrants from horseback.

First-time homebuyers shrink as prices spike

Data: National Association of Realtors; Chart: Axios Visuals

Home sales cooled as prices continued to heat up in August.

Driving the news: The share of first-time existing homebuyers (29%) last month was the smallest in two years, according to new data from the National Association of Realtors.

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