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What the Nord Stream pipeline leaks mean for people in Germany

Security experts are increasingly convinced that leaks in the Nord Stream pipelines are the result of sabotage. Could there be further attempts to damage infrastructure - and what would the consequences be for people in Germany?

Published: 29 September 2022 13:54 CEST

Aerial photos show a huge gas leak in the Nord Stream 1 pipeline. Photo: picture alliance/dpa/Swedish Coast Guard | -

What’s going on?

Earlier this week, Swedish and Danish authorities reported three unexplained leaks in the two Nord Stream gas pipelines running between Russia and Germany. It came after a dramatic drop-off in pressure had been registered in both Nord Stream 1 and Nord Stream 2 on Monday night, reducing the capacity of the pipelines to zero.

On Tuesday, the Danish military published videos showing huge circles of gas bubbling to surface of the Baltic Sea – in some cases, stretching up to a kilometre in diameter.

A video released by the Danish authorities shows gas bubbling up in the Baltic Sea. Photo: picture alliance/dpa/Danish Defence Command | –

Then, on Thursday morning, the Swedish coast guard reported yet another pipeline leak, suggesting that the damage to the pipelines may be greater than previously imagined.

“There are two leaks on Swedish territory and two on Danish territory,” a Swedish coast guard official told the AFP news agency on Thursday.

The leaks are located near the Danish island of Bornholm in the Swedish and Danish economic zones but in international waters.

What’s behind the leaks?

The discovery of the damage has caused widespread concern in the European Union that critical infrastructure is being targeted by hostile actors.

Though investigations are still ongoing, Danish authorities have reported explosions in the affected areas shortly before the leaks were discovered.

Both EU authorities and the NATO defence alliance are assuming that the leaks – and explosions – are the result of deliberate sabotage.

“As far as I can tell, it is a very intelligent attack that could not have been perpetrated by a normal group of people,” EU Home Affairs Commissioner Ylva Johansson said on Wednesday evenings, adding that there was a high risk that a state could be responsible. “We have suspicions, of course. But it is too early to judge that conclusively.”

Military experts have been slightly less reserved in apportioning blame for the destruction, with several looking to Russia as the most likely perpetrator of the attacks.

“Leaks in gas pipelines are extremely rare,” Norwegian naval officer and military expert Tor Ivar Strömmen told AFP. Both the Nord Stream pipelines are both new and highly robust, he said.

“I see only one possible actor, and that is Russia,” Strömmen added.

Meanwhile, Michael Giss, a naval commander in the German Bundeswehr (army), pointed to the fact that Russia’s sham referendums in occupied eastern regions of Ukraine and the likely attacks on the Nord Stream pipelines occurred on the same day.

“We also know that there are drones in the Russian navy – or even small submarines – that could be used for such purposes,” Giss told Tagesschau. “I also don’t want to exclude the possibility that certain measures may have been taken in advance during the construction of the pipeline to trigger such an event.”

The motivation could be to unsettle an already nervous Europe and drive gas prices even higher, experts believe.

Has this affected gas deliveries to Germany?

So far, gas deliveries haven’t been impacted by the damage to the pipeline – though the leaks have rendered both of the pipelines inoperable.

The gas supply hasn’t been affected because neither of the Nord Stream pipelines are currently in service. At the start of September, Russia cut all gas deliveries to Germany via the Nord Stream pipeline in what is widely seen as retaliation for western sanctions against Russia over the war in Ukraine.

In the case of the recently completed Nord Stream 2, the pipeline has never been in operation: Germany took the decision not to receive gas through the pipeline just days after Russia launched its full-scale invasion of Ukraine.

Nevertheless, both pipelines contained gas at the time of the leaks: Nord Stream 1 is likely to have had residual gas from previous deliveries while Nord Stream 2 was likely filled after completion for testing purposes or as a way to place political pressure on Germany to put the pipeline in operation.

Unused parts for the Nord Stream 2 pipeline in Mecklenburg Western-Pomerania. Photo: picture alliance/dpa | Stefan Sauer

Has this impacted energy prices?

Prices for natural gas have risen significantly in the European energy markets this week. On Tuesday, shortly after the first leaks were discovered, gas prices shot up from €167 per megawatt hour to €182 per megawatt hour.

By Wednesday, TTF futures contracts for Dutch natural gas – which represent trends in the EU market as a whole – had gone up to €212 per megawatt hour for deliveries in October and to €234 per megawatt hour for deliveries in January. This marks an increase of 14 percent and 11 percent respectively.

However, gas prices still aren’t anywhere near their previous peak in August, when TTF contracts soared to €346 per megawatt hour. Experts also believe that the latest hikes aren’t likely to last.

That’s partly because most European countries have succeeded in filling up their gas reserves in preparation for winter.

In Germany, which has the largest gas storage capacity in Europe, the gas storage facilities were around 91.5 percent full on September 27th. The government hopes to fill the facilities to at least 95 percent of capacity by November 1st.

To relieve citizens and businesses, the government is also working to introduce a gas price cap in the coming weeks. That would likely see households pay a capped rate for a certain amount of energy per year, with anything above that subject to market rates.

This would shield people from the worst of the price rises, even if Russia carries through on its latest threat to shut off gas deliveries via the Ukraine.

German politicians are debating how this would be paid for.

Could there be more attacks in future?

The fact that a potential attack on critical infrastructure was able to slip under the radar is a major concern. It has raised fears that other parts of critical infrastructure, including electricity cables, other gas pipelines and internet cables could be subject to future sabotage attempts, which would have a huge impact on people’s lives.

One particularly worrying target is the some 1000km of underwater cables that deliver electricity from Finland to Germany via the Baltic Sea, experts believe.

According to NATO security expert David van Weel, critical infrastructure like this has become a major target for cybercriminals and hostile states. Analysts have been warning for years that China and Russia are conducting spy operations to assess the undersea infrastructure of NATO countries.

Beyond gas, supplies of drinking water and electricity, internet connectivity could also be under threat.

Electricity cables deliver power to a factory in Hamburg. Photo: picture alliance/dpa | Daniel Bockwoldt

There are currently around 400 undersea cables with a length of around 1.3 million kilometres that connect countries across the globe. If these were sabotaged, the consequences for communication and the economy could be disastrous.

After the Nord Stream pipeline leaks, NATO forces – including the German Bundeswehr – are increasing their presence around this vital infrastructure with additional patrols.

The EU is also working on implementing measures to protect the drinking water, electricity and other vital infrastructure in its member states.

The initiative was started in summer and is set to be accelerated in light of the pipeline leaks.

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OPINION: How bureaucracy is slowly killing Germany

In the summer of 2022, I attended a Q&A session that Olaf Scholz held with members of the public in the city of Magdeburg. Coming only a few months after the Russian invasion of Ukraine, most of the questions centred on sanctions, energy costs and Berlin’s response to the war.

But the response I found most revealing was on the dull topic of tax reform.

An audience member asked Scholz why the VAT rate on dog food is seven percent but on baby food it is 19 percent. Parts of the system “don’t seem very coherent to me,” the man said with obvious understatement.

“I don’t think you’ll find anyone who understands the list of VAT exceptions,” Scholz replied with a grin, adding that “at any rate I don’t understand it.”

“But I can tell you that all attempts to change it have ended in a massive disaster,” he continued. “If we were to lay an empty table today, we would definitely do differently. But the system is there now and I think we will have to live with it for a while yet.”

It was a fascinating answer. Essentially, Scholz admitted that there are some regulations that are so complex that no one really understands them anymore. But trying to simplify them just isn’t worth the effort.

It reminded me of a story I once heard about Cairo’s famously dysfunctional traffic system.

Legend has it that Egypt invited a group of Japanese planners to come up with a way to fix it. But the Japanese were so befuddled by what they found that they advised the Egyptians to leave things exactly as they were. The system was so confusing that any attempt to tamper with it might only make things worse.

A similar thing could be said of Germany’s regulatory system. It can be contradictory and infuriatingly slow, but open the can of worms of trying to simplify it and you will probably live to regret it.

private pension plans spain

VAT is just one more confusing piece of German bureaucracy. Photo: Mathieu Stern/Unsplash

Summer snow and other oddities of German red tape

VAT serves as a notorious example. But, wherever you look in German life, you will find egregious cases of sprawling and overlapping regulations.

A few amusing examples:

In August 2022, the town of Esslingen in Baden-Württemberg wanted to organise a summer fête to help local restaurants get back on their feet after Covid. The idea was to build temporary food huts that restaurants could rent cheaply. But planning authorities insisted the huts be built to take the weight of heavy snowfall – during a month with average temperatures of 19C. The fête went ahead, but the eventual costs were “exorbitant,” city officials said.

Last winter, the town of Tübingen acted on an appeal from the federal government to cut gas usage. They decided to switch off street lights between 1 am and 5 am, something that would cut energy costs by 10 percent. Shortly afterwards though, they had to backtrack. The measure contravened a regulation on providing light for pedestrians. In the event of an accident they could have been sued.

A landlord in Hanover recently recounted her efforts to turn an empty attic into student housing. Her planning application was first rejected by fire authorities who said that the branches of a tree were blocking an escape route. Their proposal to cut the tree back was then turned down by the city authority for green spaces, which argued that trees form “a vital part of the city scenery” and “must be protected at all costs.”

Flood of new rules

It is not as if politicians aren’t aware that over-regulation is having a stifling effect on society’s ability to function and adapt.

In its coalition agreement, Scholz’ ‘traffic light’ government committed itself to cutting bureaucracy 63 times. There is an entire section in the agreement on how they planned to cut down official paperwork.

But changing such a deep-seated German mentality is a different matter.

In a withering report published in November, the government’s own bureaucracy watchdog, the Normenkontrollrat, concluded that under the current government the costs of bureaucracy “have reached a level that we’ve never seen before.”

Far from cutting back paperwork, the traffic light coalition has loaded companies, administrators and citizens with a whole raft of new rules, the watchdog said. “Ever more regulations have to be observed and implemented in less and less time,” it concluded.

The frustration is being felt most acutely by local administrators, who say that they just don’t have enough staff to cope anymore.

An open letter sent to Scholz by town councils in Baden-Württemberg pleaded that “things can’t go on like this. Ever more laws and regulations, all too often containing mistakes …are simply resulting in an unmanageable flood of tasks.”

Meanwhile, Germany’s revered Mittelstand, or small and medium sized family businesses, has warned that over-regulation is the single biggest threat to their future viability. A survey among middle-sized companies last year showed that they were far more concerned about regulation than energy prices. Other surveys have shown that a majority of companies don’t understand the regulations they are expected to follow, while two thirds say they make no sense.

“Enormous bureaucratic burdens are combining with labour shortages, lengthy administrative procedures, permanently high energy prices and high taxes in a blow to the future of our business location,” warns Marie-Christine Ostermann, head of the association of family business.

Stuck in the analogue era

For some though, the problem isn’t the regulation itself, it is the fact that there are not enough bureaucrats to deal with it all. After all, they argue, the rules are there to ensure that everyone’s concerns are accounted for.

“An unbureaucratic administration would be a nightmare,” protested economist Georg Cremer in a recent article for Die Zeit. “Sure, there can be too much of a good thing… (but) a prosperous social life is absolutely dependent on the government and administration being bound by law.”

Germany’s welfare system, Cremer points out, requires an army of bureaucrats who assess each claimant’s case based on things like the age of their children and their specific rental needs. “Undoubtedly, the welfare system is over-regulated”, he admits, but we also shouldn’t forget that any attempt to simplify it would make it less fair.

The Deutsche Institut für Wirtschaft, a left-wing economic think tank, has therefore argued that the answer to Germany’s woes is not to strip back regulation, but to employ more staff and push on with the digitisation of key services.

That sounds good in principle. But, when it comes to modernising Germany’s ossified public institutions, it is easier said than done.

A law passed in 2017 obliged local administrations to offer close to 600 of their services online by the end of 2022. A year past that deadline, just 81 of the services have been made available across the country.

The reason for the delays? Local governments are using software that is incompatible with the services developed by the federal government. Meanwhile bureaucrats often display a “grievous” lack of knowledge of how to use a computer, a recent analysis by consumer website Verivox found.

Bürgeramt

A man walks to the Bürgeramt, one of the many centres of German bureaucracy. Photo: picture alliance/dpa | Martin Schutt

A German Javier Milei?

In September of last year, Scholz appeared to have finally recognised that things have gone too far.

Doing a good impression of an anarcho-capitalist then running to be president of Argentina, the chancellor gave a rousing speech to the Bundestag in which he called on the country to unite against the scourge of excessive regulation.

“Only together can we shake off the blight of bureaucracy, risk aversion and despondency that has settled over our country for years and decades,” he said. “It is paralyzing our economy and causing frustration among our people who simply want Germany to function properly.”

Two months later, Scholz announced he had reached a “historic” agreement with the federal states to speed up planning processes and to make life “palpably” easier for German citizens.

The agreement, since praised by the Normenkontrollrat as “having a lot of potential,” will mainly muzzle environmental agencies, thus allowing LNG terminals, wind turbines and motorways to be built through sensitive natural environments.

The jury is still out on whether it will simplify your everyday life.

At the start of this year more new laws came into force, including the government’s now notorious gas heating ban.

One that passed with less attention was a decision to abolish child passports. Under the old system you could take your child to your local Bürgeramt and they would give you a Kinderpass on the spot for €13.

Now, all children are required to have proper documents that are valid for six years. The hitch? The passport (which costs €40 and takes six weeks to arrive) is only valid as long as your child’s face remains recognisable.

“The new system makes absolutely no sense for children under six,” the lady at the Bürgeramt told me when I applied for my newborn baby’s first passport this week. “A baby’s face changes so much that you’ll have to get a new one after a year anyway.”

This article originally appeared in The German Review, a twice weekly newsletter full of analysis and opinion on German politics and society. You can sign up to read it here.

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