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Germany halts Nord Stream 2, fear of gas disruptions and high energy prices remain

Russian President Vladimir Putin has officially recognised the so-called Donetsk and Luhansk People’s Republics in the Donbas region of eastern Ukraine as independent.

In a long address to the Nation, President Putin referred to modern Ukraine as a country that “was entirely created by Russia.”

nord stream 2
Source: Kremlin.

“Ukraine is not just a neighbouring country for us,” he said. “It is an inalienable part of our own history, culture and spiritual space.”

After recalling Russia’s history, beginning from 1917, President Putin endorsed the Executive Orders recognising the Donetsk and Luhansk People’s Republics, followed by two treaties of Friendship, Cooperation and Mutual Assistance signed by heads of the People’s Republics, Denis Pushilin and Leonid Pasechnik.

Worldwide condemn of Putin’s decision

Harsh condemns immediately arrived from all over the world. Stéphane Dujarric, Spokesman for the United Nations Secretary-General considered the decision of the Russian Federation to be a violation of the territorial integrity and sovereignty of Ukraine and inconsistent with the principles of the Charter of the United Nations.

Ukraine’s Minister for Foreign Affairs Dmytro Kuleba insisted on “application against Russia of harsh sanctions to send a clear signal of inadmissibility of further escalation.”

“We agreed on the need to immediately impose sanctions for another act of aggression against Ukraine,” said President Volodymyr Zelenskyy. “These sanctions should include a complete halt to Nord Stream 2.”

Halting Nord Stream 2

Indeed, when talking about possible sanctions, already at the end of January had emerged the possibility to halt the Nord Stream 2 pipeline, the controversial project which Russia deeply cares about. Nord Stream 2 was supposed to transport natural gas over some 1,230 kilometres from the world’s largest gas reserves in Russia through the Baltic Sea. In November 2021, Germany’s Federal Network Agency (BNetzA) had suspended the certification procedure for its operator as it did not meet the criteria for an independent transmission system operator, specifically the condition that the operator must be organised in a legal form under German law.

Now, German Chancellor Olaf Scholz has decided to stop the progression of the pipeline, a decision welcomed by other leaders.

“I welcome Germany’s move to suspend the certification of Nord Stream 2,” tweeted Minister Kuleba. “This is a morally, politically and practically correct step in the current circumstances. True leadership means tough decisions in difficult times. Germany’s move proves just that.”

Also, Jen Psaki, the White House Press Secretary has reminded that the US president Joe Biden had made clear that if Russia invaded Ukraine, “we would act with Germany to ensure Nord Stream 2 does not move forward. We have been in close consultations with Germany overnight and welcome their announcement. We will be following up with our own measures today.”

The Russian response: record-high energy prices to increase even further

The Deputy Chairman of Russia’s Security Council, Dmitry Medvedev has also responded to Germany’s decision, warning about a further increase in energy prices.

“Welcome to the brave new world where Europeans are very soon going to pay 2.000 euros for 1.000 cubic metres of natural gas,” he tweeted.

And we are actually already seeing some signs: global markets tumbled and crude oil prices surged to 99 US dollars per barrel on Tuesday. Now, both investors and consumers fear that Russia might respond by completely halting gas flows to Europe, bringing consumers’ bills to rise even more than they already have.

The President of the European Commission Ursula von der Leyen had assured on 16 February that according to the models on gas supply, the EU is “on the safe side”, as “several countries are ready to step up their exports of LNG.”

Also, Vice Chairman of IHS Markit Daniel Yergin stated that in January, “for the first time ever, US exports of liquefied natural gas to Europe exceeded Russia’s pipeline deliveries.”

However, despite these optimistic statements, many fears remain while waiting for the Russian response.

Photo: Germany’s federal government.

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