How Russia's pipeline politics could split the alliance around Ukraine

Germany's upcoming decision on whether to certify the controversial Russian-owned Nord Stream 2 pipeline is rapidly emerging as a key element in high-stakes diplomatic efforts to dissuade Moscow from invading Ukraine.

Delaying or cancelling the $11 billion project would have a significant impact on the Russian economy, depriving it of $3 billion US in annual revenue.

It also could serve to divide Ukraine's allies as Russia continues to increase the pressure on the former Soviet bloc state.

Nord Stream 2 gives the new government of German Chancellor Olaf Scholz "some leverage" over Moscow, said Matthew Schmidt, an associate professor and national security expert at the University of New Haven, Connecticut. 

"They can exert leverage in a way that works in concert with the rest of NATO," he said. "If they do it in a way that doesn't work in concert with NATO, then that could be a problem. They could put NATO in a bind."

During a recent meeting with NATO Secretary General Jens Stoltenberg, Scholz hinted that his country could reconsider the project "if there is a military intervention against Ukraine."

But the German government is under enormous pressure to relieve soaring natural gas prices — and Nord Stream 2 could end up heating up to 26 million homes in the country.

Holding out approval until there's a peaceful resolution to the standoff over Ukraine would allow Russia to walk away with a win, said Schmidt. He said the U.S. did much the same thing to end the 1962 Cuban missile crisis when it withdrew its missiles from Turkey.

Schmidt said he believes Germany will hold on to the "pipeline card until the very end."

In the meantime, Nord Stream 2 remains a source of division and irritation among Germany's allies.

The pipeline is at the centre of a longstanding disagreement between the United States and Germany. Almost four years ago, then-U.S. president Donald Trump opened up a NATO leaders' summit by attacking the project, warning it would make Germany a "captive" to Russian economic interests.

Nord Stream 2 was pulled back to the centre of allied politics earlier this month when Republicans in Washington pushed a bill that would have imposed sanctions on businesses involved in the project — despite President Joe Biden's warning that such sanctions would have harmed relations with Germany at a critical juncture. Senate Democrats defeated the bill.

Ukraine stands to lose significant transit revenue when an existing Russian pipeline crossing its territory is shut down to make way for Nord Stream 2. Kyiv lobbied the U.S. Senate to impose the sanctions, while Germany argued against them.

Germany also has irritated Ukraine by blocking the sale of some defensive weapons to the government in Kyiv, which has been desperately canvassing the international arms market for high-tech systems to counter a possible invasion.