As the world transitions out of the COVID-19 pandemic and works towards rebuilding its economy, a growing conflict between Russia and Ukraine has reached the boiling point.
Since 2014, Russian separatist forces in the Donbas region have fought against the Ukrainian military for independence. On Feb 21, 2022, Russian President Vladimir Putin announced that Russia will acknowledge the independence of the breakaway states Donetsk and Luhansk in Ukraine’s Donbas region.
Putin then ordered troops to mobilize the breakaway regions and conduct “special operations” in Ukraine.
As a result, the US has placed economic sanctions against Russia which can affect energy and precious metal supplies. Then, Germany suspended the certification of a new gas pipeline: the Nord Stream 2.
What is Nord Stream 2?
The Nord Stream 2 is a natural gas pipeline that runs 764 miles long under the baltic sea, between Russia and Germany. The pipeline runs parallel to its sister pipeline, the Nord Stream.
The Nord Stream was commissioned in 2011 and currently sends 55 billion cubic meters of natural gas to Germany each year. Nord Stream 2 would double that figure and heat 26 million homes, relieving Germany and other European countries of higher gas prices.
The Nord Stream is currently filled with gas and is waiting for German approval.
Why did Germany Block Nord Stream 2?
German Chancellor Olaf Scholz decided to suspend the certification of the Nord Stream 2 pipeline under pressure from fellow EU members and the US. NATO partners believe Russia is using natural gas and oil as leverage against Europe to further its goals with Ukraine.
Scholz says that the blocking of the new pipeline will hurt Russia financially. Economists would disagree and point out Germany’s heavy reliance on Russian fuel as a detriment to the country.
Why does Germany need Russian Energy?
Germany needs energy and Russia is willing to sell at the right price.
Twenty years ago, Germany decided to end all nuclear power and considerably lower its coal usage for energy. Another detriment to the country is that less than half of Germany’s energy usage comes from renewable energy sources.
Since Germany does not produce natural gas or oil, it must import more than half its energy from abroad. Russia naturally became a partner, since Russia has provided fuel to Europe for many years, building multiple pipelines that run from Russia to Europe.
Now, Germany faces a big problem: an energy crisis.
In 2021, governments around the world reversed the COVID-19 pandemic shutdowns.
As a result, manufacturing restarted and increased the demand for energy. This occurred at a time when energy producers operated at lower levels. Germany is one of the countries facing the biggest threat from the energy crisis.
The Russian government understands Germany’s predicament and has put Germany in an unfortunate situation. Any sanctions aimed at Russia would actually hurt Germany more than Russia due to its reliance on its natural gas.
Calls to Shutdown Nord Stream 1
After the complete Russian invasion of Ukraine on Feb. 24, the US and EU decided to increase sanctions on Russia. UK Prime Minister Boris Johnson called for the complete shutdown of Nord Stream 1. Scholz disagreed, angering many member nations.
A shutdown of Nord Stream 1 would devastate the German economy.
How can Germany sanction Russia without suffering the worst of the blow? One takeaway the Germans have learned from this crisis is not to fully depend on an adversary for their energy needs.