There’s no way that Russia wants its traditional revenue source to be hit, Ischinger told CNBC’s Hadley Gamble on Tuesday.
“If we have to shut down this pipeline project, Russia will definitely lose, you know, tens of billions of dollars or euros going forward,” he said. “That cannot be in the interest of Russia at all.”
Around 43% of Europe’s total gas imports come from Russia, according to Eurostat. It will be “painful” for Europe to limit gas from Russia and there may be more energy shortages, but Moscow should expect Europe to retaliate if military activities escalate, Ischinger said.
“It is an item of leverage. I think Russia definitely has an interest to continue its income sources from providing gas and oil … to its western European partners,” he said. “We need to handle it carefully, but smartly.”
Key to watch is the shift in political tone coming from Germany, the Nord Stream 2 pipeline’s final destination. Former Chancellor Angela Merkel, who stepped down in December after 16 years in power and had a warmer relationship with Russia President Vladimir Putin than many of her Western counterparts, supported the pipeline and in early 2021 described U.S. sanctions on it as “not OK.”
Germany’s new leadership has taken a significantly different position. The country’s new Foreign Minister Annalena Baerbock has said Germany cannot approve the pipeline in its current form, saying in December that “as things stand, this pipeline cannot be approved as it is.”
“Asserting rather than implying its foreign policy leverage on the issue is a sea change from the approach we saw taken under Merkel, and Baerbock is perceived as keen to shake up Germany foreign policy making,” said Maximilian Hess, fellow at Foreign Policy Research Institute. Baerbock has also cited concerns over Ukraine and EU energy law that Hess says “will appeal to the pipeline’s critics in Washington and the EU’s east.”
The position isn’t finalized, though, as it’s not yet clear where the rest of the German government stands on the matter. “Uncertainty remains over potential pushback from German industry and the coalition’s unity on the issue,” Hess added, “which they avoided directly mentioning in the coalition program.”
— CNBC’s Silvia Amaro and Holly Ellyatt contributed to this report.