Germany Responds to Russia, Halting Nord Stream 2 Pipeline

BERLIN — As recently as December, Olaf Scholz, the German chancellor, considered the new natural gas pipeline connecting Russia to the German seacoast a strictly “private-sector project” that had no role in political discussions.

Last month, Mr. Scholz demurred when asked if he would echo President Biden’s assertion that the Nord Stream 2 project would be stopped if Russia invaded Ukraine.

But mere hours after President Vladimir V. Putin ordered Russian armed forces to cross the border into separatist regions in eastern Ukraine, Mr. Scholz made clear that he was willing to sacrifice the project. This, when Germany is facing its worst energy crunch since the 1970s, and with business leaders warning that the high price of fuel could threaten the industrial prowess of Europe’s largest economy.

“The situation today is fundamentally different,” Mr. Scholz told reporters early Tuesday. “That’s why, in view of the latest developments, we also have to reassess this situation. By the way, that includes Nord Stream 2.”

For years, Germany has refused to endanger its energy trade with Russia when responding to Moscow’s worst excesses because it was reliant on Russian natural gas to keep its homes warm and factories running. In 2014, after Russia’s annexation of Crimea, Berlin ensured that its purchases of gas would not be disrupted by any sanctions against Russia.

The suddenness of Tuesday’s move by Mr. Scholz was remarkable, some political observers said.

“I think Moscow did not expect that it would happen so quickly,” said Janis Kluge, a senior associate with the German Institute for International and Security Affairs.

“This is really something that was basically unthinkable just a few weeks ago,” she said. “The die-hard narrative in German business and politics has always been that gas deliveries from Russia will always be there through any crisis.”

Started under Mr. Scholz’s predecessor, Angela Merkel, the pipeline has provoked tensions between Germany and its partners in Europe and the United States. Senator Ted Cruz of Texas and others in Washington had sought for years to halt its construction, which was finally completed late last year.

Since November, the pipeline’s approval process has been stalled, awaiting the creation of a German-based subsidiary for compliance with European laws.

Mr. Scholz said he had ordered his economy minister, Robert Habeck, to withdraw the paperwork that deemed the pipeline a necessary part of Germany’s energy supply.

“Nord Stream 2 cannot go into operation without this certification,” Mr. Scholz said. The approval process will now be scrapped, and the economy ministry would have to review it anew before the project can ever go ahead.

Throughout the weeks of discussion of possible sanctions against Russia, Mr. Scholz had remained steadfast in his refusal to discuss his plans for the $11 billion pipeline, wanting to keep the Kremlin guessing about how Berlin might respond to Russian transgressions.

Germany’s attitude changed after months of dwindling gas stores from its longtime supplier.

Since late November, Russia has been unwilling to sell Germany any natural gas beyond the amounts agreed to in longstanding contracts, despite the record-high price of natural gas on the spot market. It has also allowed the levels of natural gas in the storage facilities that Gazprom owns in Germany to dip to record lows.

Some officials in the Kremlin derided the German decision.

“Well then,” Dmitri A. Medvedev, vice chairman of the Russian security council, said on Twitter. “Welcome to the new world in which Europeans will soon pay 2,000 euro per 1,000 cubic meters of gas!” (That’s roughly double the current rate.)

That assertion “is complete nonsense,” Ursula von der Leyen, president of the European Commission, responded on CNN.

Dmitri Peskov, a spokesman for Mr. Putin, said Russia regretted Berlin’s move, stressing Moscow’s view that the project “has nothing to do with politics.”

“This is a purely economical, commercial project which, on top of mutual benefit, is meant to be a stabilizing factor for European gas market,” he said.

Ms. Merkel frequently used the same words to describe project, and for weeks it looked as if Mr. Scholz had no intention of altering that position. But his three-way government — which includes the liberal Free Democratic Party and the environment-conscious Greens, as well as his center-left Social Democrats — has focused on repositioning Germany’s energy policy and emphasized reducing the country’s dependence on Russian natural gas.

Jen Psaki, the White House press secretary, said the German chancellor’s decision had been made in conjunction with Mr. Biden, who for weeks has been insisting in public that any move by Russia toward Ukraine would effectively end the pipeline.

“We have been in close consultations with Germany overnight and welcome their announcement,” Ms. Psaki said over Twitter.

Many European political observers also welcomed Mr. Scholz’s decision as a chance to reset the German-Russian energy partnership, which since the days of the Cold War has been untouchable in terms of foreign policy.

“For me, this is real leadership at a crucial moment,” said Jana Puglierin, the head of the European Council on Foreign Relations in Berlin.

The response from the country’s industries, many of which have already been forced to scale back production because of the high cost of energy, was more muted.

The main lobby organization representing German industry, B.D.I., had warned on Monday that the spiraling energy costs “threaten to crush the economy.”

The association declined to comment on Tuesday.

But Mr. Habeck, a member of the Greens party, emphasized that a military conflict would force the cost of energy to climb further. “I want to stress that war drives up prices,” he said.

The German Eastern Business Association, which represents companies that do business in Russia and other countries in Eastern Europe, urged Mr. Scholz and the European Union “to act prudently.”

“Common interests can serve here as a lever for understanding,” said Oliver Hermes, chairman of the association. “The doors to dialogue must not be definitively slammed shut.”

Wintershall Dea, a German oil company that was one of five European firms that provided financial backing for half the cost of the Nord Stream 2 project, also warned of the far-reaching economic consequences that a military clash between Russia and Ukraine would have, reverberating well beyond the energy sphere.

“In addition to causing terrible human suffering, an escalation would set back our entire continent by years,” a spokesman said. “And, with it, the European and Russian economies. When considering economic consequences, it is misguided to focus solely on the topic of natural gas supplies and pipelines.”