There's growing U.S. pressure on Germany to rethink its support for the almost completed Russia-backed Nord Stream 2 pipeline project. But that could open Germany to legal, financial and political problems.
Germany has said the 1,230-kilometer pipeline to send an extra 55 billion cubic meters of Russian gas annually, under the Baltic Sea, is just a commercial venture, not political. But German Chancellor Angela Merkel clouded the project two weeks ago by saying there was a possibility of halting the pipeline: "I have not yet formed a final judgment on this."
What can Germany do to block the completion of the pipeline by the Nord Stream 2 company, with headquarters in Switzerland, but wholly owned by Russia's majority-state-owned Gazprom?
-- Two German authorities issued construction permits to Nord Stream 2.
The permits could be revoked. But revoking them for political reasons would allow Switzerland-based Nord Stream 2 AG to sue Germany under the Energy Charter Treaty, which both countries signed. The treaty is meant to protect investments, such as the pipeline, by ensuring approved projects aren't halted by unpredictable political policy changes.
Damages from litigation could equal the €9.5 billion cost of the almost completed pipeline. Lost profits could be added to the damages.
-- Deutsche Umwelthilfe, a non-government non-profit organization (NGO), has sued to have the operating permit issued by the Stralsund Mining Authority reviewed on climate grounds. It claims methane leaks contributing to global warming will be significantly higher than previously thought.
-- Germany's Foreign Trade and Payments Act would allow a a new national law restricting Russian gas imports.
-- U.S. sanctions are being used to stifle the project. In December 2019, they scared Swiss-Dutch company Allseas off from laying the remaining 150 kilometers to finish the pipeline. German politicians are angry over the US sanction's encroachment on German and EU sovereignty.
-- The European Council could vote unanimously to enact sanctions, if Germany changes it's pro-pipeline position. German-Finnish utility Uniper, Germany’s Wintershall, Austria’s OMV, France’s Engie and British-Dutch Shell each have €950 million invested in the pipeline.
-- With no action by Germany, or the EU, Nord Stream 2 has to find a company willing to violate U.S. sanctions by doing the final inspection. Gazprom also has to comply with the EU's second amended Gas Directive to remove its gas-selling operations from the running of the pipeline — something that will be judged by Germany's energy regulator.
What a mess !