Sanctions against Russia
76 Commons Library Research Briefing, 22 March 2023
The seizure of Russian assets to pay for reconstruction is examined in Library
briefing: Post conflict reconstruction assistance to Ukraine.
4.5 A halt to Nord Stream 2
Nord Stream 2 (NS2) is a natural gas pipeline that directly connects Russia to
Germany, via the Baltic Sea. It was launched in 2015 by Nord Stream 2 AG, a
subsidiary of the Russian state-controlled company Gazprom.
The direct supply of gas to Europe via Nord Stream 2 would allow Russia to
largely bypass Ukraine, which is currently a major transit country of Russian
gas pipelines into Europe. Transit fees are thought to account for almost 3%
of Ukraine's GDP, bringing an expected revenue of $2-3 billion annually over
the next five years. The Ukrainian Government described NS2 as akin to an
"economic and energy blockade".
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Opposition to the pipeline had been fierce with critics viewing it as a political
project of the Kremlin and part of a broader geopolitical strategy to
undermine the West. This is because it increases European reliance on
Russian gas supplies and potentially gives Russia leverage over security of
supply. Russia said NS2 was "strictly a commercial project".
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Among the economic and financial sanctions being discussed by Western
allies was the potential halt of the Nord Stream 2 project.
Initially there was some ambiguity over whether allies would be united in
taking this step. Several senior figures in the new coalition government,
including Chancellor Scholz and the German Defence Minister, Christine
Lambrecht, had previously argued that it should not be linked to Russian-
Ukrainian tensions.
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Under pressure from allies, however, the German
Government appeared to shift position and at the end of January 2022 said
that, in the event of Russian military action in Ukraine "nothing would be off
the table, including Nord Stream 2".
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Considered an "ultimate sanction", few expected Nord Stream 2 to be among
initial sanctions measures announced. However, on 22 February, and in
response to Russia's recognition of the LPR and DPR and its deployment of
"peacekeeping" forces, Chancellor Scholz announced that the certification
process for Nord Stream 2 would be halted "for the time being" and that "the
geopolitical situation makes a reassessment of Nord Stream 2 imperative".
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Radio Free Europe, "Merkel: New pipeline impossible without clarity for Ukraine", 10 April 2018
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President of Russia, 15 February 2022
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See The Financial Ties, "Germany's Russia problem: Ukraine crisis tests new Government", 31
January 2022 and Politico, "Russian test for Scholz: Ukraine crisis exposes divisions in Berlin",
17
January 2022
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Twitter, German Ambassador to the United States, 26 January 2022
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Federal Ministry for Economic Affairs and Climate Action, Press release, 22 February 2022
