LONDON — A Russian natural gas pipeline to Germany was delayed Tuesday as the United States and its allies threatened far-reaching sanctions to punish President Vladimir Putin after he ordered troops into Ukraine.
German Chancellor Olaf Scholz took the first steps to suspend the certification process for the Nord Stream 2 pipeline, which would bring natural gas into Europe. It has been built but is not yet operational.
“It is important to launch new sanctions now in order to prevent an escalation and a disaster,” Scholz said at a news conference in Berlin. “These are difficult hours for Europe and almost 80 years after the end of the Second World War, we might see a new war in Eastern Europe.”
He added that it was necessary to “send a clear signal to Moscow that such actions won’t remain without consequences.”
Putin formally recognized the independence of two Moscow-backed breakaway regions in the eastern part of the country on Monday, before ordering to send in troops. The moves were widely seen as a dramatic provocation after weeks of warnings from the U.S. that Russia was trying to create a pretext to invade its neighbor.
Germany relies on Russia for about a third of its natural gas. The 764-mile-long pipeline would double Russia’s gas exporting capacity to Europe via the Baltic Sea and allow Moscow to circumvent Ukraine.
The U.S. welcomed Germany's move, with White House press secretary Jen Psaki tweeting that the U.S. “will be following up with our own measures today.”
“We have been in close consultations with Germany overnight and welcome their announcement,” she tweeted.
Ukrainian Foreign Minister Dmytro Kuleba also applauded the move, saying in a tweet that it was “a morally, politically and practically correct step in the current circumstances.”
“True leadership means tough decisions in difficult times. Germany’s move proves just that,” he added.
Former Russian President Dmitry Medvedev, who is now deputy chair of Russia’s Security Council, struck out against the move on social media in a tweet sent in both English and German.
“Welcome to the brave new world where Europeans are very soon going to pay 2,000 euros for 1.000 cubic meters of natural gas!” he wrote. (Two thousand euros is equivalent to around $2,267.)
The Ukrainian government would lose out on a substantial amount of revenue because of the new pipeline and has called it an “existential threat” to its security.
At a new conference earlier this month with Biden, Scholz declined to take a firm stance on the fate of Nord Stream 2, telling reporters that Germany was “acting together” with its allies.
Construction on the $11 billion pipeline project began five years ago, but progress stalled at the end of 2019 when then-President Donald Trump imposed sanctions on companies and individuals involved in laying the pipeline.
Russia’s energy minister, Nikolay Shulginov, said Europe would not be able to replace the large volumes of Russian natural gas with liquefied natural gas from other countries, according to Reuters.
Financial markets reacted to Putin's moves on Ukraine with oil prices surging at one point to their highest level since 2014 on worries that Russia’s energy exports could be disrupted because of sanctions. Supplies are already tight as demand recovers from the pandemic, and that’s led to higher prices in recent months.
Russia is one of the world’s largest producers of petroleum and natural gas, and Europe is heavily reliant on imports from Russia for its energy supply.
Putin's decision also made markets shudder, with stock indexes tumbling Tuesday morning in the U.K. before recovering slightly, while in China and Hong Kong markets dropped. The biggest stock market losses were in Russia, where the MOEX index was down 5 percent Tuesday after losing nearly 11 percent on Monday.
Currencies were also volatile, with the euro rising versus the dollar, after it had fallen earlier to its lowest in more than a week. The ruble, Russia’s currency, was 2.5 percent lower.