After Russian President Vladimir Putin had recognized the Donetsk People’s Republic and Luhansk People’s Republic as independent and sovereign states in violation of international law, Germany has responded by halting the certification process of the Nord Stream 2 gas pipeline. Germany is Russia’s biggest gas customer.

“It is important to launch new sanctions now in order to prevent an escalation and a disaster,” Scholz stated. “These are difficult hours for Europe, and almost 80 years after the end of the Second World War, we might see a new war in Eastern Europe,” he continued. He further went on to say that this suspension of the certification process was necessary to send a clear signal to Moscow, punishing the mobilization of troops into Donetsk and Luhansk, regions of which are part of Ukraine but was recognized by Russia.

Nord Stream 2 gas pipeline illustration from Al Jazeera (Al Jazeera). Source:
Nord Stream 2 gas pipeline illustration from Al Jazeera (Al Jazeera)

The proposed Nord Stream 2 gas pipeline was notably completed last September. However, its certification has been put on hold by German regulators. Germany’s western allies, namely the United States, the United Kingdom, and Ukraine itself, have opposed the pipeline since 2015 as it increases the influence of the Kremlin across Europe. Without the certification, the pipeline cannot pump and supply gas across the Baltic Sea, reducing Russia’s $1 Billion dollar a day revenue stream from oil and gas exports.

The $11 billion gas pipeline is owned by Russia’s state-owned energy giant, Gazprom, which has the capacity to deliver 55 billion cubic meters of gas per year, with Germany benefitting most from the pipeline as a source of natural gas for as many as 26 million German homes and would make up more than 50% of Germany’s annual consumption worth over $15 billion.

Starting point of the Nord Stream 2 gas pipeline located in Ust-Luga, Russia (2021) (Andrey Rudakov/Bloomberg via The New York Times)

With energy being a major political issue in Europe and where Russia is the biggest gas supplier in central and eastern Europe, the gas pipeline is one of the bargaining chips Germany has to keep Russia at bay. However, this comes with the consequence of alienating Russia from Germany, setting gas prices higher for other countries reliant on Russia for their energy supply due to transportation costs, bringing Europe to a possible energy crisis. The pipeline itself saves Germany about $1 billion to $2 billion a year as it would save them transit through Ukraine.

Russia’s energy minister Nikolay Shulginov stated that Europe would not be able to source natural gas from anywhere else if the pipeline was discontinued and if countries were to boycott Russian natural gas. Furthermore, Deputy Chairman of Russia’s Security Council Dmitry Medvedev, in retaliation to Germany’s sanction, tweeted: