Stock Groups

Analysis-In Ukraine crisis, Germany faces tough decisions over gas pipeline -Breaking

[ad_1]

2/2
© Reuters. FILE PHOTO : A pipe from the Chelyabinsk pipe roll plant, Chelyabinsk in Russia shows the logo for Nord Stream 2’s gas pipeline project. This was taken February 26, 2020. REUTERS/Maxim Shemetov/File Photo

2/2

Sarah Marsh and Joseph Nasr

BERLIN, (Reuters) – Germany might find itself in a losing situation if Russia invades Ukraine. It would be Berlin’s biggest gas supplier and its greatest security allies.

Chancellor Olaf Scholz could be subject to pressure from America and Western Allies to end any invading force by stopping Nord Stream 2 from Russia to Germany from going into operation.

It would be a risky move that could lead to an increase in European gas prices. The dearth in Russian gas has led to high energy costs in Europe.

Price increases have hit businesses and consumers in the region. This includes the poor German workers Scholz’s Social Democrats, (SPD), who depend on to cast their votes.

“Germany is between a rock and a hard place,” said Marcel Dirsus, Non-Resident Fellow at the Institute for Security Policy at Kiel University.

“The Scholz government wants to keep the Americans happy because they are Germany’s most important allies outside of Europe. But they don’t want to annoy the Russians either. This is difficult.

Russia has massed troops https://www.reuters.com/world/blinken-arrives-berlin-ukraine-talks-with-european-allies-2022-01-20 near its border with Ukraine and demanded security guarantees from the West, but denies it plans to invade its former Soviet neighbour.

A Russian invasion could trigger additional international sanctions. Nord Stream 2 is widely considered the best way to pressure Moscow.

Scholz was elected chancellor after Angela Merkel’s resignation. However, there are disagreements among his coalition partners about the extent of German sanctions against Nord Stream 2 if Russia invades Ukraine.

As opposed to fossil fuels, the Greens want to cancel the project. The Greens also wish to signal Russian President Vladimir Putin that undemocratic and military actions abroad will not be supported by gas contracts.

Pro-business Free Democrats (FDP), have indicated that they favor a more aggressive approach to Russia.

Scholz is hopeful of finding a compromise to satisfy both his coalition partners, and top members of his party like Defence Minister Christine Lambrecht. Christine Lambrecht said that Nord Stream 2 -which runs under the Baltic Sea but bypasses Ukrainian territory – should not be dragged in the Ukraine crisis.

MORATORIUM?

Scholz, the EU’s largest economy and most populous country is at risk of becoming divided. He could also look weak if he doesn’t show strong leadership during this crisis.

Gwendolyn Sass, senior fellow at Carnegie Europe said that Scholz seems too passive and uninterested, and suggested that he could take on more responsibility in the EU.

SPD considers itself the natural heir of Germany’s pioneering Ostpolitik policy, which opened the country up to Soviet Union during the 1970s. Other European nations want Germany to be more involved in projecting Europe’s influence, and protecting eastern neighbours who are afraid of Russian aggression.

Thorsten Benner, Global Public Policy Institute (GPPi), said that Scholz might be able to see the opinion polls showing around 60% support Nord Stream 2.

Benner said that Scholz is concerned about fairness because the U.S. is a large importer Russian crude, and has not committed to stopping its imports. Germany however is likely to pull out Nord Stream 2.”

In December, energy prices in Germany rose 69% over December 2020. Russian military intervention in Ukraine could push them higher.

We would experience wild increases in gasoline prices in the event of an invasion. All bets are off,” said Hanns Koenig, an energy analyst with Aurora Energy Research.

The government will then be under pressure to give subsidies to low-income Germans or manufacturers that depend on gas production. This could increase the public debt already stressed by the coronavirus epidemic.

Some European lawmakers believe Russia could do more to lower prices in Europe and reduce consumer bills. They also accuse Moscow of manipulating the energy situation for political ends.

Koenig stated that the flows from Russia have fallen to an unprecedented low level. Russia prioritizes the routes it controls and sends less to them through these than in the past.

Russia denies manipulating supplies, and Russian Foreign Minister Sergei Lavrov told visiting German Foreign Minister Annalena Baerbock this week that Western attempts to politicise the Nord Stream 2 project would be “counter-productive”.

Dirsus stated that Scholz would not kill the project, but could place a moratorium in case of invasion.

He said, “It will serve to signal the Americans and allies that Germany has responded to their request but also send an indication to Russia that they could revive the project.”

[ad_2]