The Tarbabys Blog

Associated Press

EXPLAINER: What is the Russia-Europe Nord Stream 2 pipeline?

David McHugh – February 22, 2022

FRANKFURT, Germany (AP) — German Chancellor Olaf Scholz has suspended the certification process for the Nord Stream 2 natural gas pipeline after Russia recognized separatist-held regions in eastern Ukraine.

The undersea pipeline directly links Russian gas to Europe via Germany and is complete but not yet operating. It has become a major target as Western governments try to exert leverage on Russia to deter further military moves against its neighbor.

Here are key things to understand about the pipeline:

WHAT IS NORD STREAM 2?

It’s a 1,230-kilometer-long (764-mile-long) natural gas pipeline under the Baltic Sea, running from Russia to Germany’s Baltic coast.

It runs parallel to an earlier Nord Stream pipeline and would double its capacity, to 110 billion cubic meters of gas a year. It means Gazprom can send gas to Europe’s pipeline system without using existing pipelines running through Ukraine and Poland.

The pipeline has been filled with gas but had been awaiting approval by Germany and the European Commission.

HOW IS SCHOLZ BLOCKING THE PIPELINE?

Germany’s utility regulator was reviewing the pipeline for compliance with European regulations on fair competition. It’s that approval process that Scholz said Tuesday that he was suspending.

Germany was required to submit a report on how the pipeline would affect energy security, and Scholz said that report was being withdrawn.

WHY IS SCHOLZ TAKING ACTION NOW?

Scholz, who took power in December, backed the project as finance minister for his predecessor, Angela Merkel, and his Social Democratic Party supported it. As Russia massed troops near Ukraine’s border, Scholz avoided referring to Nord Stream 2 specifically even as U.S. officials said it would not move forward if Russia invaded.

But Scholz warned that Russia would face “severe consequences” and that sanctions must be ready ahead of time. Germany had agreed with the U.S. to act against Nord Stream 2 if Russia used gas as a weapon or attacked Ukraine.

The chancellor said Tuesday that Russia recognizing the independence of rebel-held areas in Ukraine marked a “serious break of international law” and that it was necessary to “send a clear signal to Moscow that such actions won’t remain without consequences.”

WHY DOES RUSSIA WANT THE PIPELINE?

State-owned gas giant Gazprom says it will meet Europe’s growing need for affordable natural gas and complement existing pipelines through Belarus and Ukraine.

Nord Stream 2 would offer an alternative to Ukraine’s aging system that Gazprom says needs refurbishment, lower costs by saving transit fees paid to Ukraine, and avoid episodes like brief 2006 and 2009 gas cutoffs over price and payment disputes between Russia and Ukraine.

Europe is a key market for Gazprom, whose sales support the Russian government budget. Europe needs gas because it’s replacing decommissioned coal and nuclear plants before renewable energy sources such as wind and solar are sufficiently built up.

WHY IS THE U.S. AGAINST NORD STREAM 2?

The White House was in “close consultations with Germany” and welcomed their announcement, press secretary Jen Psaki tweeted Tuesday.

The U.S., European NATO allies such as Poland, and Ukraine have opposed the project going back before the Biden administration, saying it increases Europe’s dependence on Russian gas and gives Russia the possibility of using gas as a geopolitical weapon. Europe imports most of its gas and gets roughly 40% of its supply from Russia.

The pipeline, which went forward under Merkel, has been an irritant in U.S.-German relations. Biden waived sanctions against the pipeline’s operator when it was almost complete in return for an agreement from Germany to take action against Russia if it used gas as a weapon or attacks Ukraine.

In Congress, Republicans and Democrats — in a rare bit of agreement — have long objected to Nord Stream 2.

WILL SUSPENDING NORD STREAM 2 MAKE EUROPEANS FREEZE THIS WINTER?

No. Even before Scholz’s move, regulators made clear the approval process could not be completed in the first half of the year. That means the pipeline was not going to help meet heating and electricity needs this winter as the continent faces a gas shortage.

The winter shortage has continued to feed concerns about relying on Russian gas. Russia held back from short-term gas sales — even though it fulfilled long-term contracts with European customers — and failed to fill its underground storage in Europe.

Russian President Vladimir Putin has said the shortage underlines the need to quickly approve Nord Stream 2, increasing concerns about Russia using gas to gain leverage over Europe.

COULD RUSSIA CUT OFF GAS TO EUROPE IN RETALIATION?

While Europe needs Russian gas, Gazprom also needs the European market. That interdependence is why many think Russia won’t cut off supplies to Europe, and Russian officials have underlined they have no intention to do that.

Meanwhile, the Ukraine crisis, on top of the winter shortage, is has already given European governments more reason to find their gas somewhere else, such as through liquefied natural gas, or LNG, brought by ship from the U.S., Algeria and other places.

Former Russian President Dmitry Medvedev, who is now deputy chair of Russia’s Security Council, tweeted his displeasure after Germany suspended Nord Stream 2: “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!”

The spot market gas price in Europe was 829 euros ($940) per thousand cubic meters Tuesday. It was 1,743 euros (nearly $2,000) in late December amid jitters over the Ukraine crisis, and prices have since fallen as Europe has secured more LNG.

Associated Press writers Vladimir Isachenkov in Moscow, Geir Moulson and Frank Jordans in Berlin, and Lisa Mascaro and Ellen Knickmeyer in Washington contributed.

Business Insider

Supreme Court Justice Clarence Thomas’ wife had ties to January 6 rally organizers and efforts to overturn the 2020 election: report

Oma Seddiq – February 22, 2022

• Ginni Thomas had ties to organizers of a January 6, 2021, rally, The New York Times reported.
• The Times also reported on her connections with people who sought to overturn the 2020 election.
• Thomas served on the board of a conservative group that pushed members to challenge the results.

Supreme Court Justice Clarence Thomas’ wife, Virginia “Ginni” Thomas, had ties to organizers of the January 6, 2021, rallies in support of President Donald Trump as well as to efforts to subvert the 2020 election results, according to a New York Times Magazine report published Tuesday.

The Times revealed details about Thomas’ role, which had been previously unreported. The Washington Post reported last month that Thomas shared a Facebook post on January 6 before the violence broke out. “LOVE MAGA people!!!! GOD BLESS EACH OF YOU STANDING UP OR PRAYING.” she wrote.

Thomas, a longtime conservative activist, played a peacemaking role among rally organizers “so that there wouldn’t be any division around January 6,” Dustin Stockton, who helped organize the Ellipse rally, told The Times. The rally on the Ellipse, just south of the White House, took place shortly before a crowd of Trump supporters descended on the Capitol, clashed with law enforcement, and interrupted the 2020 election certification.

“The way it was presented to me was that Ginni was uniting these different factions around a singular mission on January 6,” Stockton said. The Times noted that other rally organizers disputed Stockton’s account about Thomas but did not offer specifics.

Thomas also served on the advisory board of Turning Point USA, a conservative nonprofit that sponsored the event and provided buses for rallygoers on January 6, The Times reported.

Thomas is also connected with people who sought to undo the 2020 election results. John Eastman, the lawyer who wrote a memo on how Vice President Mike Pence could overturn the election results, previously clerked for Clarence Thomas at the Supreme Court and is a close friend to the couple, according to The Times.

Steve Bannon, a onetime White House chief strategist for Trump, also endorsed efforts to challenge the election results. Ginni Thomas founded a group called Groundswell with Bannon’s support, The Times reported.

Thomas also served on the board of the Council for National Policy’s political arm, CNP Action, which circulated a document titled “Election Results and Legal Battles: What Now?” after the presidential election, according to The Times. The document urged members to call on Republican state lawmakers to challenge the 2020 election results.

In December 2020, CNP Action shared a newsletter with a report called “Five States and the Election Irregularities and Issues,” featuring five swing states where Trump had been attempting to overturn the results. The newsletter pointed to “historical, legal precedent for Congress to count a slate of electors different from that certified by the Governor of the state,” according to The Times.

Insider

Top Russian official taunts Europe with sky-high gas prices after Germany axes Nord Stream 2 pipeline

Natalie Musumeci, John Haltiwanger – February 22, 2022

• The deputy chair of Russia’s security council taunted Europe with higher gas prices on Tuesday.
• He made the comment after Germany put a stop to the Nord Stream 2 pipeline.
• Germany halted the pipeline amid Russia’s decision to order troops into eastern Ukraine.

A top Russian government official on Tuesday taunted Europe with sky-high gas prices after Germany put a stop to the Nord Stream 2 pipeline amid Russia’s decision to order troops into eastern Ukraine.

“German Chancellor Olaf Scholz has issued an order to halt the process of certifying the Nord Stream 2 gas pipeline,” Dmitry Medvedev, a former Russian president and the deputy chair of Russia’s security council, said in a tweet.

“Well. Welcome to the brave new world where Europeans are very soon going to pay €2.000 for 1.000 cubic meters of natural gas!” he added.

Germany on Tuesday scrapped plans for Nord Stream 2 — an undersea pipeline that would carry natural gas from Russia to Europe — in response to Russian President Vladimir Putin’s recognizing the independence of two separatist regions in eastern Ukraine.

In an interview with CNN, Jonathan Finer, a deputy US national security advisor, described Russia’s latest moves as “the beginning of an invasion” of Ukraine.

Nord Stream 2 is highly controversial; the Ukrainian government and lawmakers on both sides of the aisle in Washington have opposed it. Critics have contended that Nord Stream 2 would give Russia far too much leverage over Europe. The pipeline also bypasses Ukraine, depriving it of billions in gas transit fees.

Nord Stream 2 was not yet operational — it was waiting on German certification.

For months Germany had tiptoed around committing to halting the pipeline if Russia took action against Ukraine. But President Joe Biden earlier this month said that if Russia invaded Ukraine there would “no longer be a Nord Stream 2.”

The White House applauded Germany’s swift reaction to Russia’s actions.

Biden “made clear that if Russia invaded Ukraine, we would act with Germany to ensure Nord Stream 2 does not move forward,” Jen Psaki, the White House press secretary, said in a tweet on Tuesday. “We have been in close consultations with Germany overnight and welcome their announcement. We will be following up with our own measures today.”

MSNBC – MaddowBlog

Why Putin didn’t invade Ukraine during the last U.S. administration

Why didn’t Russia invade Ukraine during Trump’s term? Perhaps because Putin was so pleased to see Trump pursuing goals in line with Moscow’s agenda.

By Steve Benen – February 22, 2022 

After the National Archives confirmed on Friday that Donald Trump brought classified national security documents to Mar-a-Lago, the former president issued a long, rambling response, insisting the controversy was unimportant. But toward the end of the written tirade, the Republican added an unrelated thought, seemingly in passing.

Trump was apparently trying to argue that he didn’t have time to worry about tasks such as presidential records keeping. He was, Trump added, “too busy making sure Russia didn’t attack Ukraine.”

How subtle. The former president wants the public to know Vladimir Putin didn’t invade Ukraine during his term — unlike the current U.S. president.

There’s been plenty of related chatter of late in Republican circles. Putin targeted Georgia during George W. Bush’s tenure, Crimea during Barack Obama’s terms, and all of Ukraine after Joe Biden became president, but the Russian autocrat’s ambitions were restrained during Trump’s time in the White House. This, the right tells us, should be seen as proof of … something.

National Review’s Rich Lowry made the case via Twitter last night, “The sheer unpredictably of Trump, his anger at being defied or disrespected, his willingness to take the occasional big risk (the Soleimani strike), all had to make Putin frightened or wary of him in a way that he simply isn’t of Joe Biden.”

That’s certainly one way of looking at recent events, though it’s probably not the best way.

It’s important to acknowledge what motivates the Russian leader. The Atlantic’s Anne Applebaum summarized matters nicely a few weeks ago:

[Putin] wants to put so much strain on Western and democratic institutions, especially the European Union and NATO, that they break up. He wants to keep dictators in power wherever he can, in Syria, Venezuela, and Iran. He wants to undermine America, to shrink American influence, to remove the power of the democracy rhetoric that so many people in his part of the world still associate with America. He wants America itself to fail.

It led The Washington Post’s Jennifer Rubin to add yesterday, “Trump’s foreign policy sought to do much of what Putin wants to achieve, including intimidating Ukraine by withholding vital defensive weapons.”

Quite right. Putin wanted to undermine the NATO alliance, and Trump undermined the NATO alliance. Putin wanted to weaken the E.U., and Trump made little effort to express his disdain for the E.U. Putin wanted to weaken the U.S. political system, and Trump was unnervingly aggressive in trying to weaken the U.S. political system.

Putin wanted to hurt Ukraine, and Trump launched an extortion scheme that threatened to hurt Ukraine.

Why didn’t the Russian leader deploy troops into Ukraine during Trump’s term? Perhaps because Putin was so pleased with an American president who pursued goals in line with Moscow’s agenda.

Had Putin launched an invasion, it risked upsetting the course he was already delighted to see. Why would the Russian leader get in the way of the progress Trump was already delivering?

Steve Benen is a producer for “The Rachel Maddow Show,” the editor of MaddowBlog and an MSNBC political contributor. He’s also the bestselling author of “The Impostors: How Republicans Quit Governing and Seized American Politics.”

Daily Beast

Putin Rival Dishes on How to Deal With the Spiraling President

Noga Tarnopolsky – February 22, 2022

JERUSALEM—Former Polish President Aleksander Kwaśniewski has sat across a table from Vladimir Putin on dozens of occasions. Having traded jabs with the Russian president through countless conflicts during his 10-year-long-tenure—most notably when he helped Ukraine get rid of a pro-Russia president who came to power after an allegedly fraudulent election—Kwaśniewski has never been known to back down from a face-off with Putin.

Now, with the Russian president on the verge of launching a full-scale invasion of Ukraine that could spark a devastating war, Kwaśniewski has some thoughts on how to manage the latest round of aggression from Moscow. And it involves doing exactly the opposite of what Putin has demanded of the U.S. and NATO.

The U.S. Finally Cuts the Crap and Calls It a Russian Invasion

NATO should immediately accept Ukraine as a full member, Kwaśniewski, who was the president of Poland from 1995-2005, told The Daily Beast while on a visit to Jerusalem.

“If Putin can decide in one night that Donetsk and Luhansk are no longer part of Ukraine, why can we not decide that Ukraine is a member of NATO?,” he said after meeting with Israeli leaders at the Conference of Presidents of Major American Jewish Organizations, which he attended following the Munich Security Conference. “For me the real test will be the question of NATO. Ukraine—even a partial, divided Ukraine—must become a member of NATO now, not next week,” he added, alluding to Donetsk and Luhansk, the two Ukrainian provinces that have been de facto annexed by Russia.

For months, Vladimir Putin has been aggressively pushing for guarantees from NATO that Ukraine be barred from the alliance, using Western leaders’ refusal to cede to that demand as justification for Moscow’s continued military escalations. Ukrainian president Volodymyr Zelensky, meanwhile, has remained firm in his stance that his country should have the right to join the alliance as a member state, with all the security perks that come with it.

On Tuesday, the international military alliance did not address the possibility of upgrading Ukraine’s status, but in a press conference NATO chief Jens Stoltenberg acknowledged that “every indication is that Russia continues to plan for a full-scale attack on Ukraine… More and more of the forces are moving out of the camps and are in combat formations and ready to strike.”

As the world eyes Ukraine’s borders for signs of a full-scale invasion that Kwaśniewski believes is Putin’s “next likely step,” other skilled observers of Putin warn that he has already launched something just as dire: an endless multi-level onslaught that hovers just beneath the Biden administration’s benchmark for direct military intervention.

With Ukraine nearly encircled by Russian forces, two provinces declared “independent” and regular cyber attacks, “they want to make our lives impossible so we agree that anything is better than this—even their takeover,” said Ruslan Kavatsiuk, a former adviser to Ukrainian army chief of staff Viktor Muzhenko, who as an officer fought against the Russian forces in the region of Donbass, in 2014.

Kremlin TV Asks ‘Where’s the Champagne?’ as Ukraine’s Kids Are Prepped for War

“They want to crack our minds,” Kavatsiuk told The Daily Beast. “Their main problem is that they are afraid about entering without the population’s agreement. They want us to say ‘we can’t survive like this, give us anything else, even you.’’”

Nonetheless, Kavatsiuk, who has allegedly learned that he’s on a Russian kill list should the Ukrainian government be overthrown by Russian forces, added that no “other military has killed more Russian soldiers than the Ukrainian armed forces.” When Russia invaded Crimea, he said, Russian forces were stopped even by an overpowered Ukrainian military. “They didn’t stop at Crimea because they felt like it.”

Ukraine has long held the imaginations of ambitious Russian leaders and of dissenters dreaming of freedom from the Russian yoke. Natan Sharansky, a native of Donetsk and its most famous dissident, who spent nine years in Soviet prisons in the 1980s, recalled in an interview with The Daily Beast conversations about Ukraine with fellow convicts. “In our scenarios, once the Soviet Union fell Ukraine would become independent, and would quickly become a country like France… Ukraine has great potential as a democracy and for Putin, the main concern is that Ukraine is the principal stumbling block preventing him from restoring the Soviet empire.”

“The more their direction is towards the west and NATO, the more Putin thinks ‘we want our lands back,’” he added.

Putin, he believes, had good reason for hope following the fiasco of President Obama’s 2013 abandonment of his red line against the use of chemical weapons in Syria, which opened the door to Russia’s reemergence as a diplomatic actor in the Middle East.

“Obama demonstrated incredible weakness when he did what he did with Syrian chemical weapons, Assad survived and the Russians built their bases,” Sharansky, who became an Israeli politician after his release, said. “It was a mistake that Israel took this so quietly.” Remarking on his country’s predicament, Israeli foreign minister Yair Lapid said on Monday that “Russia is our neighbor to the north.”

A year later, Putin annexed the Crimean peninsula, part of Ukraine, to Russia through a silent invasion of un-uniformed soldiers. The West imposed sanctions on Russia. “It was clear the West was not going to do anything to stop him, Sharansky said. “He wanted Crimea for a long time, and it was a difficult decision for him, but the weakness of an American president who did not hold to his own word made it much easier.”

Putin, Kavatsiuk says, miscalculated the support he enjoys in Ukraine by assuming that Russian speakers—a group including every Ukrainian over the age of 30, who lived under Soviet domination—would support his endeavor to annex part or all of Ukraine to a greater Russia.

Kavatsiuk, who is deputy CEO of Kyiv’s Babyn Yar Holocaust Memorial Center, said that some natively Russian-speaking Ukrainians switch to Ukrainian when traveling abroad so as not to be perceived as Russians.

“The language is not an issue,” he said. “The question is are you pro-European Union or pro-Russia? Do you want to be part of the free world or part of a country that is one big Guantanamo prison? We choose freedom and democracy day after day, again and again, we choose democracy because it is part of our DNA,” he said.

Photos Show Russian Troops Creeping Closer to Ukraine from Forest Hideout

A recent poll conducted by the Ilko Kucheriv Democratic Initiatives Foundation, an independent think tank, showed that 78 percent of Ukrainians consider Ukrainian their mother tongue, versus 18 percent whose native language is Russian.

While foreign embassies have fled the capital city of Kyiv, a move Kavatsiuk calls “cowardly,” Ukrainian citizens remain subject to an extraordinary psychological and economic assault. Many with family in the western part of the country are trying to find refuge among relatives.

“Psychologically, how long can people live under such pressure?” Kwaśniewski asked, recalling his visit, less than a week ago, to Dnipro, Ukraine’s fourth largest city in the nation’s endangered east, which is only 160 miles from the city of Donetsk. “I saw very, very serious citizens. They don’t smile. They are prepared to fight. Putin may have underestimated their will.”

The New York Times

Why Ukraine Is Different

David Leonhardt – February 21, 2022

There have been dozens of wars in the almost 80 years since World War II ended. But if Russia invades Ukraine in the coming days, it will be different from almost all of them. It will be another sign that the world may be entering an alarming new era in which authoritarianism is on the rise.

Here are the two main ways that a war in Ukraine would be distinct.

1. Regional dominance

A Russian invasion of Ukraine seems likely to involve one of the world’s largest militaries launching an unprovoked ground invasion of a neighboring country. The apparent goal would be an expansion of regional dominance, either through annexation or the establishment of a puppet government.

Few other conflicts since World War II fit this description. Some of the closest analogies are the Soviet Union’s invasion of Afghanistan in the 1970s, Czechoslovakia in the 1960s and Hungary in the 1950s — as well as Vladimir Putin’s 2014 annexation of Crimea. The U.S., for its part, invaded Panama in the 1980s and used the CIA to overthrow an elected government in Guatemala in the 1950s. Of course, it also launched several faraway wars, in Iraq, Vietnam and elsewhere.

But the world’s most powerful countries have rarely used force to expand their boundaries or set up client states in their region. Instead, they have generally abided by the treaties and international rules established in the 1940s. The phrase “Pax Americana” describes this stability.

The relative peace has had enormous benefits. Living standards have surged, with people living longer, healthier and more comfortable lives on average than their ancestors. In recent decades, the largest gains have come in lower-income countries. The decline in warfare has played a central role: By the start of this century, the rate at which people were dying in armed conflicts had fallen to the lowest level in recorded history, as Joshua Goldstein, Steven Pinker and other scholars have noted.

A Russian invasion of Ukraine would look like the kind of war that has been largely absent in the past 80 years and that was once common. It would involve a powerful nation setting out to expand its regional dominance by taking over a neighbor. A war like this — a voluntary war of aggression — would be a sign that Putin believed that Pax Americana was over and that the U.S., the European Union and their allies had become too weak to exact painful consequences.

As Anne Applebaum has written in The Atlantic, Putin and his inner circle are part of a new breed of autocrats, along with the rulers of China, Iran and Venezuela: “people who aren’t interested in treaties and documents, people who only respect hard power.”

This is why many people in Taiwan find the situation in Ukraine to be chilling, as my New York Times colleagues Steven Lee Myers and Amy Qin have explained. “If the Western powers fail to respond to Russia, they do embolden the Chinese thinking regarding action on Taiwan,” said Lai I-chung, a Taiwanese official with ties to its leaders. If the world is entering an era in which countries again make decisions based, above all, on what their military power allows them to do, it would be a big change.

2. Democratic recession

Political scientists have been warning for several years that democracy is in decline around the world. Larry Diamond of Stanford University has described the trend as a “democratic recession.”

Freedom House, which tracks every country in the world, reports that global political freedom has declined every year since 2006. Last year, Freedom House concluded, “the countries experiencing deterioration outnumbered those with improvements by the largest margin recorded since the negative trend began.”

A Russian takeover of Ukraine would contribute to this democratic recession in a new way: An autocracy would be taking over a democracy by force.

Ukraine is a largely democratic nation of more than 40 million people, with a pro-Western president, Volodymyr Zelenskyy, who in 2019 won 73% of the vote in the election’s final round. That victory and recent polls both indicate that most Ukrainians want to live in a country that resembles the European nations to its west — and the U.S. — more than it resembles Russia.

But Putin and his inner circle believe that liberal democracies are in decline, a view that Xi Jinping and other top Chinese officials share.

They know that the U.S. and Europe are now struggling to lift living standards for much of their populations. Putin and Xi also know that many Western countries are polarized, rived by cultural conflicts between metropolitan areas and more rural ones. Major political parties are weak (as in the case of the old center-left parties in Britain, France and elsewhere) or themselves behaving in anti-democratic ways (as with the Republican Party in the United States.).

These problems have given Putin and his top aides confidence to act aggressively, believing that “the American-led order is in deep crisis,” Alexander Gabuev of the Carnegie Moscow Center wrote in The Economist this weekend.

In the view of Putin’s regime, Gabuev explained: “A new multipolar order is taking shape that reflects an unstoppable shift in power to authoritarian regimes that support traditional values. A feisty, resurgent Russia is a pioneering force behind the arrival of this new order, along with a rising China.”

The situation in Ukraine remains highly uncertain. Putin may still choose not to invade, given the potential for a protracted war, a large number of Russian casualties and economic turmoil. An invasion would be a spectacular gamble with almost no modern equivalent — which is also why it would be a sign that the world might be changing.

Yahoo! News

White House hails Germany’s decision to halt certification of Nord Stream 2 pipeline to punish Russia

Caitlin Dickson, Reporter – February 22, 2022

The White House on Tuesday called Germany’s decision to halt certification of the new Nord Stream 2 natural gas pipeline “a major turning point in the world’s energy independence from Russia.”

Daleep Singh, who serves as deputy national security adviser for international economics and deputy director of the National Economic Council, made the comment during a White House press briefing in regard to steps taken by the U.S. and its NATO allies to punish Russia for its decision to recognize and send troops into two Moscow-backed separatist regions in eastern Ukraine.

Earlier in the day, President Biden announced that the U.S. was imposing new economic sanctions on Russia.

Singh began his remarks by highlighting German Chancellor Olaf Scholz’s announcement Tuesday that Germany was halting certification of the Nord Stream 2 project, a newly constructed natural gas pipeline between Russia and Germany that critics said gave the Kremlin too much power over energy policy in Europe. Singh said the ultimate decision on the pipeline followed U.S. “consultations overnight with Germany.”

“That’s an $11 billion investment in a prized gas pipeline, controlled by Russia, that will now go to waste. And it sacrifices what would have been a cash cow for Russia’s coffers,” Singh said. “But it’s not just about the money. This decision will relieve Russia’s geostrategic chokehold over Europe through its supply of gas, and it’s a major turning point in the world’s energy independence from Russia.”

During a joint press conference with Scholz at the White House earlier this month, Biden vowed to “bring an end” to the pipeline if Russia were to move forward with an invasion of Ukraine, “that means tanks or troops crossing the border of Ukraine.” At the time, the German chancellor was less willing to echo this specific promise, saying only that he and Biden were “absolutely united, we will not be taking different steps.”

During Tuesday’s briefing, White House press secretary Jen Psaki said President Biden “has never been a supporter of Nord Stream 2,” and added that while the president didn’t feel it was appropriate to take preemptive sanctions against the project, “the announcement by the German chancellor today was not by accident.”

Biden, she said, “never felt it was a good project, [he’s] been clear about that.”

Biden has acknowledged that the harsh sanctions the U.S. and its allies have pledged in response to Russia’s increased aggression against Ukraine, including the halting of Nord Stream 2, will likely drive up oil and gas prices worldwide. The president said Tuesday that he was taking “robust action to make sure the pain of sanctions is targeted at the Russian economy and not ours.”

“I want to limit the pain American people are feeling at the gas pump,” Biden said during his remarks at the White House.

Singh reiterated that point but declined to provide more specifics on how, exactly, the administration was working to minimize the impact of sanctions on Americans, saying only that the White House is engaged in an “ongoing effort and sensitive effort” to coordinate with major energy producers and consumers.

Asked when Americans could expect to see a difference in the price of gasoline at the pump, Singh declined to provide a timeline but said that “the collective power and authorities at our disposal, plus diplomatic maneuvers at our disposal, collectively we think will be effective at bringing down the price of gas and of oil.”

Bloomberg

Russia’s Richest Lose $32 Billion as Ukraine Crisis Deepens

Ben Stupples – February 22, 2022

(Bloomberg) — The fortunes of Russia’s super-rich have tumbled $32 billion this year, with the escalating conflict in Ukraine poised to make that wealth destruction much larger.

U.S. President Joe Biden on Tuesday unleashed sanctions targeting Russia’s sale of sovereign debt abroad and the country’s elites, and said he’s sending an unspecified number of additional U.S. troops to the Baltics in a defensive move to defend NATO countries.

Gennady Timchenko heads the list of Russian billionaires who have seen their fortunes drop, with almost a third of his wealth disappearing since Jan. 1, according to the Bloomberg Billionaires Index, a listing of the world’s 500 richest people.

Timchenko, 69, the son of a Soviet military officer who met and befriended Russian Federation President Vladimir Putin during the early 1990s, now has a fortune of about $16 billion, with the bulk of his wealth derived from a stake in Russia gas producer Novatek, according to Bloomberg’s wealth index.

Fellow Novatek shareholder Leonid Mikhelson’s fortune has tumbled $6.2 billion this year, while Lukoil Chairman Vagit Alekperov’s net worth has declined about $3.5 billion in the same period as the energy company’s stock has slid almost 17%.

The country’s 23 billionaires currently have a net worth of $343 billion, according to the wealth list, down from $375 billion at year-end.

Markets slumped further this week after Putin recognized two separatist republics in Ukraine, leading to Germany halting an energy project with Russia and the U.K. imposing sanctions on five of the country’s banks and three of its wealthy individuals, including Timchenko.

Also on the U.K.’s sanctions list are Boris Rotenberg, 65, and his nephew, Igor, 48, whose families made their fortune through gas-pipeline construction firm Stroygazmontazh.

Read more: Here Are the Russian Billionaires Facing Sanctions Over Ukraine

Igor’s father, Arkady, one of Putin’s former judo sparring partners, sold the pipeline firm in 2019 for about $1.3 billion. He purchased a minority stake from his younger brother Boris five years earlier when both siblings and Timchenko were hit with U.S. sanctions over Russia’s annexation of Crimea.

Why Donetsk and Luhansk Matter to Putin and the West

Insider

Harvard economist and former Obama adviser says Russia is ‘basically a big gas station’ and is otherwise ‘incredibly unimportant’ in the global economy

Matthew Loh – February 21, 2022

• Harvard economist Jason Furman said Russia’s economy is ‘unimportant’ except for its gas resources, The New York Times reported.
• His comments come as the US and Europe prepare heavy sanctions on Russia if it invades Ukraine.
• But there are concerns that their plans to punish Moscow will penalize the rest of the world too.

Russia’s economy is “incredibly unimportant in the global economy except for oil and gas,” Jason Furman, Harvard economist and ex-adviser to former President Barack Obama, told The New York Times.

“It’s basically a big gas station,” he said.

His comments come as the West prepares heavy sanctions on Russia if it invades Ukraine. While they have the potential to throw the entire Russian economy into chaos, these measures could also reverberate to further damage the US, Europe, and the rest of the world as they battle inflation and rising energy prices — a ripple effect that the West hopes to mitigate.

On Monday, Moscow declared the independence of two breakaway regions of Ukraine and sent troops there — escalating the prospect of a major war. President Joe Biden has already ordered sanctions on the separatist regions — Donetsk and Luhansk — prohibiting US citizens from engaging in any exports, imports, or new investments in these areas.

Despite Russia’s size and wealth in raw materials, its economy is more on-par with Brazil than with nations like Germany, France, and the UK, according to the latest nominal GDP data from the World Bank. According to the World Bank, its economy is weaker than Italy’s and South Korea’s, two nations with less than half of Russia’s population.

But as Furman notes, Russia’s oil and gas exports are significant to the world.

The European Union imports around 80% of the natural gases it uses, according to the US Energy Information Administration, and Russia accounts for 41% of the natural gas imports and 27% of the oil imports in the continent, per Eurostat.

Compounded with energy prices in the EU surging in price from 20 euros to 180 euros a megawatt-hour over the last year, the disappearance of those gas and oil imports could spell disaster for the region and the interconnected global economy. Meanwhile, in the US, gas prices have hit a seven-year high, climbing to around $3.50 per gallon, while inflation burgeons at its highest rate in 40 years, at 7.5%.

On the other hand, Ukraine has also been a major supplier of grain to other regions, sending 40% of its wheat and corn exports to the Middle East and Africa, The Times reported.

In response to a potential food crisis in those regions, US Secretary of Agriculture Tom Vilsack said on Saturday that American farmers would increase production and “step in and help our partners,” the Associated Press reported.

Ukraine accounts for 12% of the entire world’s grain exports, and is estimated to provide 16% of global corn exports this year, the AP reported. Vilsack told the outlet he believed that American consumers would largely be unaffected, but Europeans would face “a different story.”

“You have to look at the backdrop against which this is coming,” Gregory Daco, chief economist for consulting firm EY-Parthenon, told The Times. “There is high inflation, strained supply chains and uncertainty about what central banks are going to do and how insistent price rises are.”

Bloomberg

What Ukraine-Russia Tensions Mean for Stocks and Investor Portfolios

Central bank tightening and slowing growth loom as larger long-term threats for equities, according to strategists on both sides of the Atlantic.

By Charlie Wells – February 22, 2022

Tensions in Ukraine have markets on edge. Stocks are swinging, oil is closing in on $100 a barrel and uncertainty looms over investors big and small. 

But it’s more of a short-term headache than a long-term drag. That’s the view of analysts on both sides of the Atlantic trying to discern what the geopolitical crisis means for investor portfolios in the wake of Russia recognizing two self-proclaimed republics in eastern Ukraine.

Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter, sees the conflict dominating near-term headlines. But he doesn’t expect it to dictate market moves in the long or even medium term. Instead, the most important factors “remain Fed tightening and economic growth,” he wrote.

JPMorgan strategists led by Dubravko Lakos-Bujas were of a similar mind in their recent note to clients, citing the larger risk of tightening monetary policy for equities and noting that Russia-Ukraine tensions are a low earnings risk for U.S. corporates.

“But an energy price shock amidst an aggressive central bank pivot focused on inflation could further dampen investor sentiment and growth outlook,” they wrote. 

In the U.K., Bloomberg Intelligence equities strategist Tim Craighead wrote that European stocks face limited risk, “unless Russian energy supplies are cut.” The crisis might “shuffle the leader board temporarily” in terms of European equities, but Craighead noted that the market seems to be more focused on rising inflation, elevated margins and central bank tightening.

Still, Steve Clayton, who manages HL Select Funds at Hargreaves Lansdown in the U.K., noted that the crisis won’t be over in a blip. 

“Russian troops have not massed along the Ukrainian border in order to hold a cake sale,” he wrote in a note on Tuesday. “However this unfolds, tensions and uncertainties are likely to run hot for some time to come. The market will not like any escalation, nor will it trust any settlement between the parties unless accompanied by a rapid demobilization of Russian forces around Ukraine.”

Clayton sees U.S. Treasuries and Japanese government bonds as potential beneficiaries as investors seek safe havens. Given the nature of the conflict, he also points to defense stocks such as Bae Systems Plc as possible destinations, given that “European politicians are unlikely to urge for lower defense spending while the Russian bear is growling angrily.”

Banking stocks — which have been outperforming in Europe so far this year — could be losers. The U.K. just announced sanctions on five Russian banks. The EU proposed a package of sanctions on banks that finance Russian operations in the region. 

“Effective sanctions will impact on economic activity and banks will be where it is felt in the West,” Clayton wrote. “Lending volumes would be hit too, if tensions really rocket, because cautious consumers and businesses will refrain from borrowing until they feel more confident.”

Travel and leisure could also lose some steam, as they tend to when international tensions rise, wrote Clayton. Among several stocks, he pointed to Wizz Air, which has a significant network across Central and Eastern Europe. 

“Times of tension are when defensiveness can pay off,” he wrote. “People still have to eat, take medicines and get operated upon. Food retailers and drug companies like Sainsbury and AstraZeneca could be interesting, but Tesco’s exposure to Central Europe will not help.”