In recent days, it has become evident that Dr Angela Merkel plans to stand firm with regards to the Nord Stream 2 gas-line that is currently being constructed, despite the recent poisoning of Alexei Navalny. The pipeline has been in construction since 2018 and runs under the Baltic Sea from Russia to Germany and pipes natural gas.
Nord Stream 2
It is part of Germany’s attempt to transition entirely to renewable energy sources, a plan known as Energiewende, and has come at a cost of $11 billion.
Were the pipeline to be cancelled, the alternative would be natural gas from the USA derived from fracking, an alternative that is less beneficial economically and ecologically for Germany.
There has been political pressure put on Dr Merkel from various people, including Donald Trump, who said:
‘Germany is totally controlled by Russia… So we’re supposed to protect you against Russia, and you pay billions of dollars to Russia, and I think that’s very inappropriate… With an abundance of American natural gas available, our European allies no longer need to be vulnerable to unfriendly energy suppliers either… We urge our friends in Europe to use America’s vast supply and achieve true energy security.’
US Sanctions
In December, the USA announced that it would impose sanctions on any company working on the pipeline. This resulted in the Swiss-owned contractor AllSeas pulling out of the project, with the pipeline still 6% from completion.
Following this move, Gazprom – the Russian energy company behind the pipeline – brought in their own pipe-laying ship, the Akademik Chersiky, to complete the project, which then resulted in US Republican Senators Tom Cotton, Ted Cruz and Ron Johnson writing to the industrial operators on Germany’s Mukran port (where the Akademik Chersiky would dock) warning them not to assist the ship.
Were the pipeline to be completed, Moscow would be the beneficiaries of significant political and economic clout, a fact that has concerned the governments of France, Austria, and Poland.
Poland has just fined Gazprom $59 million for failing to cooperate with their investigation into the pipeline, and there has also been concern at home in Germany regarding what sanctions would mean for trans-Atlantists keen to develop relations with the USA.
And so the world waits for Dr Merkel’s decision, with the energy markets sure to display a significant reaction to her decision whichever way it goes.