Germany expects US sanctions to slightly delay Russian pipeline

The US sanctions slapped on a controversial Russian gas pipeline to Europe will likely delay the project by several months but it will still be completed next year, a top German official said Monday

Germany expects US sanctions to slightly delay Russian pipeline
The Nord Stream 2 construction. Photo: DPA

The sanctions “will postpone the completion” of the undersea pipeline, said Peter Beyer, Chancellor Angela Merkel's transatlantic coordinator.

“But I expect the pipeline to be finished in the second half of 2020,” he told German public radio Deutschlandfunk.

The Nord Stream 2 pipeline was initially slated for completion in early 2020 with a view to being operational in mid-2020.

Moscow likewise insisted the US sanctions would not derail the project as it threatened Washington with retaliation.

“Such sanctions are unacceptable for us, and we are confident that such measures won't prevent finishing the construction of such an important project,” Kremlin spokesman Dmitry Peskov told reporters.

“In any case, we won't leave such steps unanswered,” he said.

“As to when and how this will be done, this will depend on Russia's national interest.”

READ ALSO: Germany, EU fume at Russian 'interference' over Russian gas pipeline

Both Moscow and Berlin have reacted furiously to the sanctions imposed by Washington on Friday over the €9.5 billion pipeline under the Baltic Sea.

The American announcement of asset freezes and visa bans targeting companies involved in the project immediately led to Swiss pipe-laying contractor Allseas halting its work on the remaining stretches.

But Beyer said “alternative” solutions could be found to finish the project that would however “cause delays and be more expensive”.

He also reiterated Germany's criticism of the US move, saying “that's not how you treat friends”.

Merkel's spokeswoman Ulrike Demmer at the weekend slammed the sanctions as “an interference in our internal affairs”.

'More expensive'

The United States has long opposed Nord Stream 2, saying the pipeline would give Russia too much influence over security and economic issues in western Europe.

The project aims to double Russia's natural gas deliveries to Germany and is set to transport 55 billion cubic metres of gas to Europe's top economy per year.

It would also allow Russia to reroute supplies from overland pipes running through Ukraine, with Kiev expressing concerns this would deprive them of vital leverage over its giant neighbour.

Some critics however have pointed out that Washington's resistance to Nord Stream 2 comes as the US is trying to sell more of its liquefied natural gas (LNG) to Europe.

Switching to more American LNG “would be considerably more expensive for German consumers,” Beyer said.

More than 80 percent of the Nord Stream 2 project has already been completed, half of it financed by Russia's state-owned Gazprom and half by five European companies.

The European Union has joined the chorus of condemnation over the US penalties, saying the bloc opposed “sanctions against European companies engaged in legal activities”.

But the project has divided the EU, with Poland and some Baltic nations also viewing the pipeline with suspicion over fears Moscow could use it to exert political pressure.

In Berlin, Merkel's spokeswoman Demmer said “further discussions are being held” with different parties to find a solution.

“And we will continue to express our view that we don't condone such extra-territorial sanctions,” she added.

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EU ministers urge unity after Germany’s energy ‘bazooka’

EU finance ministers on Monday pleaded for unity after Germany announced a €200 billion plan to help German households and businesses pay for high energy prices, amid accusations that the EU's biggest economy was acting alone.

EU ministers urge unity after Germany's energy 'bazooka'

Europe is struggling with historically high energy prices as it faces an early autumn cold snap and a coming winter almost certainly to be endured without crucial Russian gas supplies because of the war in Ukraine.

Many EU countries have announced national programmes to shield consumers from the high prices. But Germany went the furthest on Friday when it announced its mammoth plan, which will see help pouring to Germans for two years.

Arriving to talk with his eurozone counterparts, German Finance Minister Christian Lindner insisted the spending was “proportionate” to the size of Germany’s economy and said his goal was to use as little of the money as possible.

READ ALSO: Germany to spend €200 billion to cap soaring energy costs

But Germany’s largesse rankled several EU capitals, some of which feared their industries could take severe blows while Germany’s sits protected, deforming the EU’s single market.

Outgoing Italian prime minister Mario Draghi has slammed Berlin for its lack of solidarity and coordination with EU partners.

French Finance Minister Bruno Le Maire, without directly criticizing Berlin, called on partners to agree a common strategy against the price shock and for countries to refrain from going it alone.

“The more this strategy is coordinated, united, the better it is for all of us,” he said.

Risk to ‘European unity’

Others pointed to the unprecedented solidarity shown in the Covid-19 crisis in which the 27 EU nations, against all expectations, approved a jointly financed €750 billion recovery plan.

“Solidarity is not only on the German shoulders, I think this is something that we have to deliver at European level,” said EU economics affairs commissioner Paolo Gentiloni.

“We have very good examples from the previous crisis on how solidarity can react to a crisis and also reassure financial markets. I think that this is our goal,” he said.

While a Covid-style recovery plan is not in the cards for now, Le Maire said €200 billion in loans and €20 billion in aid should be devoted to REPowerEU, a programme to help countries break their dependence on Russian gas.

READ ALSO: Will Germany set a gas price cap – and how would it work?

Bruegel, a highly influential think tank in Brussels, called the German plan a spending “bazooka” that many EU countries were unable to match, creating a potential source of animosity.

“If the German gas price brake gives German business a much better chance to survive the crisis than, say, Italian business, economic divergences in the EU could be deepened, and European unity on Russia undermined,” it said in a blog.