Analysis: Scholz’s orange light for Nord Stream 2
German Chancellor Olaf Scholz’s decision to suspend the approval process for Nord Stream 2 following Russia’s decision to instigate conflict in Ukraine was both an emphatic display of solidarity with the West, and also a canny political move, reflecting the savviness of Angela Merkel’s successor.
The choice allowed him to present a united front with the UK – which has targeted five Russian banks and the assets of three high net worth individuals already – and the US, with President Joe Biden previously warning the pipeline would not go ahead if Russia invades Ukraine.
However, while Scholz said he has withdrawn the necessary documents for the pipeline’s approval process in light of recent developments, the realities around Nord Stream 2 are long-standing and pre-date the current crisis.
The £8.4bn pipeline has already been constructed and, if given the green light, would double Russian gas exports to Germany – providing 55bn cubic meters of gas every year.
With the continent struggling to stave off blackouts last winter, and being effectively bailed out by a flotilla of US tankers over Christmas and again in recent weeks amid deepening tensions with the Kremlin, the value of such a supply stream is obvious.
This is not only because European and UK gas benchmarks have both spiked ten per cent following the decision, with prices already historically high; it is also because Germany has phased down its nuclear power capabilities as part of its green energy plans. As a result, this has increased its vulnerability to market shocks. It would not be cynical to suggest the measure could be a temporary one, and that when the current crisis comes to a resolution – no matter how ugly – that Germany could eventually approve the pipeline.