A employee adjusts a pipeline valve on the Gazprom PJSC Slavyanskaya compressor station, the start line of the Nord Stream 2 fuel pipeline, in Ust-Luga, Russia, on Thursday, Jan. 28, 2021.
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Russia will lose tens of billions of {dollars} if a pipeline mission to move fuel to Germany is deserted — and that menace is one thing that Europe can use to strain Moscow, in line with a former German ambassador to the U.S.
“I think the pipeline represents a major item of leverage for us, if we handle it smartly,” stated Wolfgang Ischinger, who is now chairman of the Munich Security Conference.
Nord Stream 2 is a fuel pipeline from Russia to Germany that can carry 55 billion cubic meters of pure fuel to Europe yearly if permitted by regulators. It is contentious as a result of it bypasses nations like Ukraine and Poland, who vocally oppose it, and the mission has been caught up in geopolitical debate.
Meanwhile, the U.S. and its European allies have been alarmed by a buildup of Russian troops on the border of Ukraine, with many experts afraid that Moscow will invade its neighbor.
Some European leaders have instructed that the pipeline should be added to a potential sanctions list against Russia.
‘Item of leverage’
There’s no approach that Russia desires its conventional income supply to be hit, Ischinger instructed CNBC’s Hadley Gamble on Tuesday.
“If we have to shut down this pipeline project, Russia will definitely lose, you know, tens of billions of dollars or euros going forward,” he stated. “That cannot be in the interest of Russia at all.”
Around 43% of Europe’s total gas imports come from Russia, in line with Eurostat. It will be “painful” for Europe to restrict fuel from Russia and there could be extra power shortages, but Moscow ought to anticipate Europe to retaliate if navy actions escalate, Ischinger stated.
“It is an item of leverage. I think Russia definitely has an interest to continue its income sources from providing gas and oil … to its western European partners,” he stated. “We need to handle it carefully, but smartly.”
Bolder phrases from Germany
Key to observe is the shift in political tone coming from Germany, the Nord Stream 2 pipeline’s closing vacation spot. Former Chancellor Angela Merkel, who stepped down in December after 16 years in energy and had a hotter relationship with Russia President Vladimir Putin than a lot of her Western counterparts, supported the pipeline and in early 2021 described U.S. sanctions on it as “not OK.”
Germany’s new management has taken a considerably completely different place. The nation’s new Foreign Minister Annalena Baerbock has stated Germany can’t approve the pipeline in its present kind, saying in December that “as things stand, this pipeline cannot be approved as it is.”
“Asserting rather than implying its foreign policy leverage on the issue is a sea change from the approach we saw taken under Merkel, and Baerbock is perceived as keen to shake up Germany foreign policy making,” stated Maximilian Hess, fellow at Foreign Policy Research Institute. Baerbock has additionally cited issues over Ukraine and EU power regulation that Hess says “will appeal to the pipeline’s critics in Washington and the EU’s east.”
The place is not finalized, although, as it’s not but clear the place the remainder of the German authorities stands on the matter. “Uncertainty remains over potential pushback from German industry and the coalition’s unity on the issue,” Hess added, “which they avoided directly mentioning in the coalition program.”
— CNBC’s Silvia Amaro and Holly Ellyatt contributed to this report.