Anil Sasi is National Business Editor with the Indian Express and writes on business and finance issues. He has worked with The Hindu Business Line and Business Standard and is an alumnus of Delhi University. ... Read More
As the US and the EU nations mount a series of punitive measures against Russia, there is indelible evidence of an about-face in the stance of one key Nato member — Germany. There are at least three major decisions over the past one week where Berlin has clearly marked a sharp reversal of its earlier stated positions, largely to accommodate the growing pressure from the allies as Russia moves its offensive deeper into Ukraine. Germany’s coming on board has been a central factor in the evolving united western front against Moscow — both on economic sanctions and the other punitive measures.
Turnaround on the SWIFT ban proposal: The US and EU Saturday moved to partially cut off a number of Russian banks from the main international payment gateway, SWIFT, alongside a freeze on the assets of Russia’s central bank. While the intention of the moves is to “further isolate Russia from the international financial system”, Germany is learnt to have been a fence-sitter on the move to invoke the SWIFT ban. Berlin had been reluctant to support other EU countries in banning Russia from the SWIFT financial system because it believed that by doing so, there could be major collateral damage in Germany for businesses that work with Russia or for gas deliveries that come from Russia to Germany. Reports suggest that the “targeted sanctions” are a halfway house, primarily on account of the objections that Germany had raised against full scale sanctions. But the fact that sanctions have been initiated indicates that Germany has decisively come on board, partly to accommodate the pressure from its Nato allies amid the fresh Russian onslaught on Kyiv.
Reversal of policy on arms supply: On Saturday, Germany reversed a historic policy of not sending weapons to conflict zones. The decision was a sudden change in stance, coming after Berlin held on to its initial refusal to send weapons to support Ukraine in the early days of the conflict. Berlin has, on Saturday, agreed to a major armaments delivery, including anti-tank weapons surface to air missiles and rocket-propelled grenades. Significantly, the policy shift brings Germany in line with other Nato allies on the issue of supplying weapons. From Germany’s perspective, this is one of the most significant shifts in foreign policy in years because Berlin had had a long-standing policy of not sending weapons to crisis zones because of its own historic past. As per the decision taken on Saturday, the German government has said it will send weapons to Ukraine, both directly from its own borders but also indirectly through countries such as the Netherlands and Estonia. From its own stockpile, the German government is slated to send 1,000 anti-tank weapons and 500 Stinger anti-aircraft defense systems. Berlin has also authorised the Netherlands to send Ukraine 400 rocket-propelled grenade launchers and asked Estonia it send nine howitzer artillery guns. While the move is largely symbolic, it does send out a clear signal.
Rethink on Nord Stream 2: The third major area where Germany has yielded is on the future of the Nord Stream 2 gas pipeline, where Berlin changed its stance early last week and put the certification of the pipeline project on hold. The $11-billion gas pipeline had already driven a wedge between Germany and the US, but with Russia moving into Ukraine last week, Berlin was forced to act on the pipeline. The project, owned by Russia’s state-owned Gazprom, runs from western Siberia to Germany, doubling the capacity of the already-in-use Nord Stream 1 pipeline. It also bypasses the pipeline that ran through Ukraine in a way that will have an impact on Kyiv. German regulators had not issued the final legal clearances Gazprom needs to commence operations and the move by Berlin now puts the certification of the pipeline project on indefinite hold.
Before Berlin took a final position on Nord Stream 2, the views within the German government appeared to be sharply divided on the issue of the pipeline. German foreign minister Annalena Baerbock had made it very clear that she thought Nord Stream 2 “should be on the table” if the Russians attacked Ukraine, earlier, in December, while the current chancellor and SPD leader Olaf Scholz had earlier promised that his government would “do everything” to prevent Russia from using Nord Stream 2 to cripple Ukraine’s economy.
His predecessor, Angela Merkel, however, had fended off demand last year from German lawmakers to drop the project after the poisoning of Russian opposition leader Alexey Navalny in 2020. And on the other side, the pipeline’s backers include Gerhard Schroeder of Scholz’s own SPD Party, who was Germany’s chancellor before Merkel. Schroeder holds key posts at Russian state oil company Rosneft and Nord Stream and has defended Nord Stream 2 in interviews and had praised Scholz for his “patience”.
Given the pulls and pressure within Germany, it was not an easy option for. the US to simply talk Berlin out of the pipeline that is ready to be commissioned, amid a continuing energy shortage in Germany. The halting of I the certification process again marks a big shift in Berlin’s stated position.
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