Why Germany pipes down when talk turns to Nord Stream 2 sanctions

To many of Germany’s allies, Chancellor Olaf Scholz’s refusal to state plainly what appears obvious — that Russia would lose a new gas pipeline to Germany if it invades Ukraine — is utterly baffling. 

Even some within his own governing coalition are flummoxed. 

“There is no reasonable explanation for this,” said Reinhard Bütikofer, a European Parliament lawmaker who used to co-chair the German Greens, one of three parties in Scholz’s government. 

But others say the reasons lie in diplomatic tactics, domestic party politics and legal concerns. Taken together, they make the Russia-to-Germany pipeline, dubbed Nord Stream 2, a different issue for the German chancellor than for any other world leader.

On the diplomatic front, the German government says it wants to keep Russia guessing about potential punishments. And within Scholz’s Social Democrats (SPD), several senior politicians are also staunch pipeline advocates, complicating the matter for the chancellor. Then there’s the legal component — politically interfering in a regulatory decision could expose the government to court challenges and steep payouts.

The reasons are not likely to satisfy critics, nor provide a complete answer. But they do help explain why Scholz has doggedly stuck to his line, despite rising global admonitions. He even awkwardly stuck to it Monday, exposing a gap between himself and U.S. President Joe Biden during a White House appearance meant to demonstrate unity. 

“We will bring an end to it,” Biden said, unequivocally stating the U.S. position on Nord Stream 2’s fate should Russia invade Ukraine.

Scholz, for his part, seemed to indicate Berlin was on the same page — but couldn’t bring himself to actually say it. “You can be sure that there will be no measures where we act differently,” he said.

Rising pressure

For years, Berlin has sought to downplay the political dimension of Nord Stream 2. 

But that approach has grown increasingly difficult as Russia massed troops along the Ukrainian border, refusing to back down unless NATO rolls back its presence in Eastern Europe — a nonstarter for the military alliance.

The standoff has led to a scramble among Western leaders to coordinate on a slate of punishing sanctions they would impose should Moscow move its troops into Ukraine. 

On many countries’ lists: Killing Nord Stream 2. 

Scores of Western countries, including the U.S. and Ukraine, have long opposed the project over concerns it will make Europe too reliant on Russian gas. And Russia’s saber-rattling has created yet another reason to put it back on the chopping block. But as consensus formed around including Nord Stream 2 in any sanctions package, German leaders remained vague about the matter. 

Scholz eventually conceded that Nord Stream 2 would be on the table, but never definitively committed to killing it should Russia launch an attack. 

The issue jumped into the global spotlight on Monday during the meeting in Washington between Scholz and Biden. Scholz’s refusal to match Biden’s stance reverberated across the Atlantic. 

In Ukraine, President Volodymyr Zelenskiy canceled a meeting with German Foreign Minister Annalena Baerbock planned for Tuesday — reportedly due to outrage over the German government’s muddled position.

Bütikofer was particularly critical about Scholz’s performance next to Biden.

“At this press conference, Scholz missed the last opportunity to make clear that Germany itself is in a position to draw appropriate consequences,” the senior Green politician said. 

Criticism also rolled in from the German opposition.

“By not stating the obvious about the consequences for Nord Stream 2, the chancellor creates a negative effect: Speculation about Germany’s position is given further room,” said Norbert Röttgen, a foreign policy-focused lawmaker from the center-right Christian Democratic Union (CDU).

Scholz did get the chance to explain his position privately over dinner Monday night with several U.S. senators. The U.S. politicians left convinced Scholz was aligned with Biden, just constrained by Germany’s peculiar politics.

“German politics are funny,” said Sen. Chris Murphy, a Democrat like Biden. “They can’t say things out loud and on the fly like we can. They form a coalition and they stick to the agreements they made, which means he has less wiggle room.”

It’s certainly not the last time Scholz will be pressed to discuss the issue with foreign politicians. He’s slated to head next week to Moscow and Kyiv, trying to both deflate military tensions and walk his Nord Stream 2 tightrope.

Party politics, legal concerns

On Tuesday, a German official sought to defend the Scholz position, arguing that Germany had a long-standing tradition of not revealing the potential sanctions it is planning for Moscow. 

Instead, it has tried to simply say that Russia would pay a massive price for invading Ukraine.

“The chancellor has repeatedly made clear that, if it comes to an attack, all options are on the table. He’s spoken of severe costs for Russia,” the official said.

Yet there are also indications that other factors may play a role in Scholz’s hesitance to spell out clear consequences, such as party politics and legal concerns.

Within the Social Democrats, there are some senior pro-pipeline politicians — notably including Defense Minister Christine Lambrecht. The party’s secretary-general, Kevin Kühnert, is also a big pipeline backer, as is Manuela Schwesig, premier of the northern state of Mecklenburg-Vorpommern. 

Then there’s the biggest champion of them all — former SPD Chancellor Gerhard Schröder, who has close Russia links. The world got a sharp reminder of those connections last Friday when it was announced Schröder had been nominated to the board of directors at Gazprom, the state-owned Russian energy company behind Nord Stream 2.

Economics also plays a role.

Receiving Russian gas through a direct pipeline would have a financial advantage for Germany and other Western European countries, since they wouldn’t have to pay transit fees to intermediate countries like Ukraine. Berlin has said it wants to keep receiving part of its gas supplies via Ukraine in order to support the country, but critics have questioned how long such an arrangement might last.

More broadly, Scholz and Baerbock have said Germany needs Russian gas during the transition from coal and nuclear energy to renewables.

Then there’s the regulatory component, which could get messy in the coming months. 

Nord Stream 2 has been finalized, but it is still awaiting approval by German regulators — a process that is currently on hold for technical reasons. During this time period, Berlin would be risking a lot should it interfere politically and stop the project. If a judge finds the halt unjustified, for instance, it could result in legal challenges and steep penalties for the government. 

“It has always been a consideration of the federal government — and in my opinion quite rightly — that they do not want to be liable for damages,” Bütikofer said, suggesting this could be a reason for Scholz’s careful wording.

However, Bütikofer pointed to European Commission President Ursula von der Leyen’s recent comments that Russia was using gas deliveries “as leverage” against the EU. Those remarks, he argued, could indicate Nord Stream 2 is no longer compatible with European energy laws. 

“If the pipeline does not comply with European energy rules, we are not liable for damages if it is not connected to the grid,” he said.

The CDU’s Röttgen predicted Scholz will again feel the heat over his reluctant messaging on Nord Stream 2 when he receives leaders from the three Baltic countries — Lithuania, Estonia and Latvia — in the chancellery this Thursday.

“The Baltic states have always been against this project and feel threatened as small countries and former Soviet republics,” he said. “There’s a clear expectation for Berlin to take a clearer position in the face of the Russian threat.”

America Hernandez contributed reporting from Brussels, Andrew Desiderio contributed reporting from Washington, D.C.

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