Germany eyes Nord Stream 2 sanctions if Russia invades Ukraine

0

Germany would consider halting Nord Stream 2, the pipeline that will bring Russian gas to Europe, as part of a package of sanctions imposed on Moscow if it invaded Ukraine, according to people with knowledge of Berlin’s position.

Germany’s new chancellor Olaf Scholz is broadly supportive of the infrastructure project, as was his predecessor in the role, Angela Merkel. But the west has a broad palette of options for responding to a potential Russian invasion of Ukraine and stopping Nord Stream 2 is one of them, the people said.

They were speaking after US president Joe Biden used a two-hour call with his Russian counterpart Vladimir Putin on Tuesday to warn him of “strong economic and other measures” if he sends troops into Ukraine.

The Biden administration believes Russia, which has amassed up to 175,000 troops on its border with Ukraine, could be planning to invade its western neighbour “as soon as early 2022”.

The dispatch of thousands of Russian troops into Ukraine would represent a huge escalation of a conflict that began with Moscow’s annexation of Crimea in 2014, which quickly spread to Donbas, an eastern region of Ukraine that was seized by pro-Russian separatists, and has already claimed more than 14,000 lives.

Russia denies any involvement in Donbas but has supplied troops, logistics and material support to the armed separatists operating there, according to western governments.

The US is considering imposing a package of sanctions that would include financial measures such as blocking the conversion of roubles into dollars and further targeting Russian oligarchs. But it has also made it clear to Germany that it would want to see Nord Stream 2 halted, too.

The US has long opposed the project, which connects Russia to Germany bypassing Ukraine, saying it would increase Europe’s reliance on Russian energy and also expand Moscow’s ability to put pressure on its neighbours.

After months of bickering over the pipeline, the US and Germany reached a deal in May under which the US agreed not to impose sanctions on the project. But the agreement also said that Germany would impose sanctions on Moscow to limit its energy export capabilities “should Russia attempt to use energy as a weapon or commit further aggressive acts against Ukraine”.

Germany was largely supportive of Nord Stream 2 under Merkel. But the new coalition led by Scholz includes the Greens, who have long opposed the pipeline. Concern has grown in Russia that the Greens, who have now taken charge of the German foreign ministry, will block the project, say current and former officials in Moscow.

Asked at a press conference on Tuesday about the situation on the Russian-Ukrainian border, Scholz said Germany was watching the Russian troop movements “with great concern”, adding it “would be a completely unacceptable situation if Ukraine were to be threatened”. But asked if he would pull the plug on Nord Stream 2 if Russia invaded Ukraine, Scholz demurred.

US officials have said that Scholz cannot be seen to be yielding to US pressure on the pipeline so soon after being elected chancellor. However, they believe that he is broadly supportive of US objectives to exert pressure on Putin to prevent an invasion.

Construction of Nord Stream 2 is complete but the pipeline but has not yet started pumping gas. It is currently being certified by Germany’s energy regulator, although it announced last month that it had “temporarily suspended” the process.

The regulator said it could not yet approve the project, led by Russia’s Gazprom, because its owners had chosen to create a German subsidiary that had not been set up according to German law.

Amid soaring gas prices in Europe, some western officials have criticised Gazprom, Russia’s state-owned gas monopoly, for not alleviating pressure on energy markets by increasing the volumes of gas it sells through spot trading.

Putin denies using energy as a weapon, but has said the only way Russia can increase its gas output to Europe is if Germany approves the pipeline.

Twice weekly newsletter

Energy is the world’s indispensable business and Energy Source is its newsletter. Every Tuesday and Thursday, direct to your inbox, Energy Source brings you essential news, forward-thinking analysis and insider intelligence. Sign up here.

Leave A Reply

Your email address will not be published.