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Nord Stream pipeline uncertainty leaves Germany and Europe staring down barrel of discontent and recession

There is a tense day ahead for just about everyone in Germany. Europe’s richest nation is counting down the hours until it finds out if Vladimir Putin has turned off its gas supply.

For the past week and a half, the Nord Stream pipeline, which brings natural gas from Russia into Germany, has been closed for annual maintenance.

It was only running at 40% capacity anyway, which the operator, Gazprom, blamed on a faulty turbine.

In theory, that should now be in the process of being fixed. After a lengthy diplomatic row over whether pragmatism trumped sanctions, the replacement turbine is being shipped to Russia from Canada, despite protests from the Ukrainian government.

But is maintenance really the issue here?

In reality this is about whether Russia continues selling energy to Europe at the same time as Europe is backing Ukraine’s war effort.

And viewed through that prism, pragmatism works both ways.

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The Russian president is well aware that if he chooses to stop supplying Europe with natural gas, he can cause a lot of pain.

And so, like an anxious householder cautiously turning on his tap to see if the plumber really has fixed the leak, Europe will wait and see what happens.

Will Nord Stream come back to life or will the Russians decide to leave it switched off, weaponising energy?

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2:28

Fears as Nord Stream shut for repairs

Turning off the gas tap would certainly drive up prices in Germany and beyond, causing economic damage and worsening already tight household finances.

What’s more, Germany, whose gas stores are less than two-thirds full, would rapidly find itself having to choose between rationing the supply to industry, to households, or simply everyone.

At one end of the scale, that might mean limits on air conditioning; at the other, factories being forced to shut their doors.

Little wonder that Germany’s mighty, and hugely influential, industrial sector, is already pressuring politicians to withdraw rules that prioritise private citizens at times of energy shortages.

That spectre of social and industrial chaos might sound tempting to many in the Kremlin.

But, then again, selling fossil fuels, including natural gas, is how Russia earns a great deal of money. Even if Europe is rapidly trying to find new supplies, cutting the supply now might just hurt the Russian economy just as much as it would wound Europe’s.

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2:56

Ukraine crisis: Germany caught in NATO crossfire

The truth is that nobody seems to know what is going to happen. Germany’s government seems anxious; neighbouring Austria, which is even more dependent on Russia for its gas supply, appears to be far more relaxed.

The European Commission, meanwhile, delivered a particularly downbeat assessment about the prospect of Nord Stream being turned on again.

“We don’t expect that it will come back,” said Johannes Hahn, the Budget Commissioner.

“We are working on the assumption that it doesn’t return to operation and, in that case, certain additional measures need to be taken.”

That is a hint towards the Commission’s own package of proposals for reducing energy consumption – limits on heating and cooling and, perhaps, interventions in the commercial energy market.

And yet just as the EU says that, so a well-placed diplomat, from a major EU country, tells me that he is expecting Nord Stream to be turned back on, but at an even lower capacity than it is running now.

“Putin needs a break-even point between maximising the pain to Europe by pushing the gas price higher, but also earning the cash Russia needs to keep functioning,” he tells me.

Read more:
Russia weaponises gas supply to ‘spread chaos’

Germans warned to prepare for possible gas shortage

And, of course, this isn’t just about Nord Stream. There are other pipelines bringing gas from Russia into Europe.

Of them, I’m told that diplomats are particularly concerned about the continuity of supply from the Druzhba pipeline, the longest in the world, which also supplies Germany, as well as Poland, Hungary, Slovakia, Austria and the Czech Republic.

“It is a question of how much pain Putin wants to cause us, compared to how much pain he is prepared to absorb himself,” according to one diplomat.

Confronted by all this uncertainty, Germany, and much of the rest of Europe, is urgently looking for other ways of sourcing energy.

In Germany, which is in the final stage of closing its last nuclear power plants, the choices are very limited so inevitably, this rich, sophisticated nation will turn back to coal to cover its needs.

But even that may not be enough to avert an energy shortage that could push Europe towards discontent and recession.

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