(Bloomberg) – Chancellor Angela Merkel reinforced her vow to push for additional sanctions against Russia if the Kremlin uses the Nord Stream 2 gas pipeline linking Russia to Germany as a “weapon.”
The comments came two days after President Vladimir Putin raised the stakes in mounting tension over energy with the EU. Putin imposed conditions on any extension of a gas-transit agreement with Ukraine, an economic lifeline for the former Soviet republic threatened by the Baltic sea pipeline that circumvents Ukraine.
“We made clear that we will take action in a European framework toward further sanctions if the suspicion gains traction that the pipeline is being used as a weapon,” Merkel said at a press conference in Ukraine’s capital Kyiv on Sunday after meeting President Volodymyr Zelenskiy. The gas-transit accord must be extended beyond 2024 “as quickly as possible,” she said.
The Ukrainian leader, who called Nord Stream 2 a “dangerous geopolitical weapon,” said commitments tied to the contract extension were too vague and that he wanted more solid guarantees.
“Among all countries, Ukraine faces the main risks caused by the completion of Nord Stream 2,” Zelenskiy said.
Nord Stream 2 lies at the center of geopolitical turmoil, with the U.S. and many EU member states decrying the project as one that gives the Kremlin too much leverage — raising Europe’s dependence on Russian energy and weaponizing gas flow in a way that could cripple the Ukrainian economy.
Merkel in July finalized an agreement with U.S. President Joe Biden, who pledged to back off threats of stiff sanctions if Germany committed to take action in the face of malign Russian activity. Germany also pledged assistance to Ukraine to develop renewable energy.
Unfinished Business
Merkel, who visited Moscow on Friday, is making what’s likely her final visits to Russia and Ukraine as chancellor. She’s leaving behind an unfinished legacy after spending much of her political capital to end a conflict in eastern Ukraine and dial back tensions over her support for the Baltic Sea pipeline.
At a press conference on Friday with Putin that put the tensions between the two leaders on display, the Russian president ratcheted up tensions by laying out conditions, saying any extension would depend on further demand from Europe. Merkel responded on Sunday by saying that the EU would still rely on Russian exports well beyond 2024.
Supplies to the region have been cut twice during in the past 15 years at times of peak demand because of financial and political disputes between the two former Soviet allies.
In an effort to help Ukraine to become more independent of Russian gas flows, Ukraine’s energy company Naftogaz and Germany’s RWE agreed to jointly develop green hydrogen production, storage and transportation.
The announcement on Sunday came after the U.S. and Germany agreed in July to promote investments of at least $1 billion in a so-called Green Fund to help Ukraine’s transition to cleaner sources of energy. The fund would also be a way to compensate Kyiv — which collects transit fees on gas flowing through its territory — for losses it will have after Nord Stream 2 starts flowing Russian gas directly to Germany.
