World

The EU said Wednesday that leaks from two Russia-Germany undersea gas pipelines appeared to be “a deliberate act”, as Moscow said it would call for a UN Security Council meeting over the incident.

The three outflows from the Nord Stream 1 and 2 pipelines have sent natural gas prices soaring, exacerbating an energy crunch in Europe as it stands on the threshold to winter and fanning geopolitical tensions.

Methane gas from the leaks are bubbling to the surface of the Baltic Sea close to Denmark and Sweden in discharges expected to last for a week, until depletion of the gas in the pipelines.

Europe has alleged the leaks are from sabotage, and fossil fuel-rich Norway boosted security at its installations in response.

They “are not a coincidence,” EU foreign policy chief Josep Borrell said in a statement. “All available information indicates those leaks are the result of a deliberate act.”

He warned: “Any deliberate disruption of European energy infrastructure is utterly unacceptable and will be met with a robust and united response.”

Suspicion has focused on Russia, which has cut gas supplies to Europe in retaliation for severe Western sanctions over the war in Ukraine.

But the Kremlin hit back, saying it was “stupid and absurd” to accuse Russia of causing the leaks and calling instead for President Joe Biden to answer whether the US was behind them.

The Kremlin said it would ask for the United Nations Security Council to convene “in connection with provocations” over the pipeline.

EU chiefs Ursula von der Leyen and Charles Michel have both also blamed the Nord Stream leaks on sabotage, as have leaders of several European countries.

Michel tweeted that they “appear to be an attempt to further destabilise energy supply to EU”.

He added: “Those responsible will be held fully accountable and made to pay.”

The EU is currently mulling further sanctions on Russia for annexation votes imposed on four regions in Ukraine its forces occupy.

Neither of the Nord Stream pipelines are currently operational, but they were full with gas when they were hit with what Swedish seismologists said were “massive releases of energy”.

One of the seismologists told AFP “there isn’t much else than a blast that could cause it”.

Danish Defence Minister Morten Bodskov told reporters in Brussels that “it can easily take one or two weeks for the area to calm down enough” for an inspection to verify the cause.

Two Danish military vessels have been sent to the area.

Non-EU member Norway — which has now overtaken Russia as the biggest supplier of gas to Europe — said it will beef up security around its oil and gas facilities.

“The government has decided to put measures in place to increase security at infrastructure sites, land terminals and platforms on the Norwegian continental shelf,” Norwegian Energy Minister Terje Aasland said.

The Norwegian Petroleum Safety Authority earlier this week called for “increased vigilance from all operators and shipping companies on the continental shelf”.

Built in parallel to the Nord Stream 1 pipeline, Nord Stream 2 was intended to double the capacity for Russian gas imports to Germany.

But Berlin blocked newly completed Nord Stream 2 in the days before the war.

Germany, which has been highly dependent on imports of fossil fuels from Russia to meet its energy needs, has since come under acute stress as Moscow’s supplies dwindle.

Sweden and Poland agree sabotage is the most likely cause of the Nord Stream leaks, with Warsaw suggesting Russia was probably the culprit, to escalate the war in Ukraine.

Pakistan’s foreign minister wants the world to engage the Taliban, warning of dangerous consequences if Afghanistan’s rulers are again isolated.

In an interview with AFP on a visit to Washington, Bilawal Bhutto Zardari cautioned against creating “parallel governance” after the United States, distrustful of the Taliban, put Afghanistan’s frozen assets in a professional fund in Switzerland.

“We’ve learned from the past that when we wash our hands and turn our backs, we end up creating unintended consequences and more problems for ourselves,” Bhutto Zardari said Tuesday.

“I believe that our concerns of an economic collapse, of an exodus of refugees, of a threat of new recruits for organizations such as ISIS-K and others, outweigh concerns that there may be about their financial institutions.”

The Taliban returned to power last year after the United States ended a two-decade war. Relations had soured with Pakistan, whose powerful military and intelligence apparatus was accused in Washington of quietly nurturing the Islamist militants despite providing logistical access to US forces.

In contrast to some previous Pakistani officials, the foreign minister — whose mother, former prime minister Benazir Bhutto, was assassinated in 2007 — offered no warm words for the Taliban.

But he said the militants needed “political space” on concerns such as women’s rights, which have been sharply curtailed.

“Throughout history, theocratic, autocratic regimes haven’t exactly tended to expand rights at times of economic strife,” he said.

“In fact, they tend to hold on to cultural issues and other issues to engage their population.”

The United States came away unpersuaded from a series of talks with the Taliban and in August said the militants had violated promises by welcoming Al-Qaeda leader Ayman al-Zawahiri, who was found at a house in Kabul and killed in a US strike.

– ‘Great power rivalries’ –

Bhutto Zardari, the Oxford-educated 34-year-old scion of a preeminent political dynasty, took office five months ago amid political turbulence in Pakistan after a no-confidence vote in former prime minister Imran Khan.

The strife comes as Pakistan is ravaged by floods that have submerged one-third of the country, displacing millions.

At a meeting Monday, US Secretary of State Antony Blinken promised long-term support. In a message less welcome by Pakistan, the top US diplomat also called on Islamabad to ask China to restructure debt accumulated as Beijing builds billions of dollars of infrastructure in a quest for Indian Ocean port access.

Asked about Blinken’s remarks, Bhutto Zardari said he has had “very productive conversations” with China and said he hoped that assistance after the historic floods “does not fall prey to great power rivalries and geostrategic issues.”

With Beijing seen by many Pakistanis as an uncritical ally, successive governments in Islamabad have rebuffed US calls to weigh in on the mass incarceration of Uyghurs and other mostly Muslim people, a campaign Washington calls genocide.

“I’m sure that the United States would like for us to comment more on China’s internal affairs,” Bhutto Zardari said.

“But maybe if we start by addressing disputes that are recognized by bodies such as the United Nations as disputes of an international nature, that would be more productive.”

He was referring to Kashmir, the Himalayan territory divided between India and Pakistan and the trigger for two of their three full-fledged wars.

Indian Prime Minister Narendra Modi, a Hindu nationalist, in 2019 stripped Muslim-majority Jammu and Kashmir of its historic autonomy and opened the way for other Indian citizens to live there.

Bhutto Zardari recalled that when his Pakistan People’s Party was in power in 2010, it moved to open  trade with India, then led by prime minister Manmohan Singh.

“We were willing to take the political risk, stick our necks on the line, and touch the third rail of Pakistani politics — but because we knew that there was a rational, reasonable player on the other end who would perhaps be willing to reciprocate,” Bhutto Zardari said.

“Unfortunately, that space does not exist today. It’s a very different India.”

After worrying drone reports and the “sabotage” of Nord Stream’s Baltic Sea pipelines, Europe’s biggest gas supplier Norway is beefing up security at its energy installations, which experts have singled out as vulnerable targets.

As spectacular as they may be, the gas leaks on the Nord Stream 1 and 2 pipelines linking Russia to Germany have no effect on Europe’s energy supply since they were not operational due to the war in Ukraine.

But a sabotage — the favoured theory among European leaders — of this type on Norwegian facilities would have a catastrophic impact on the continent, which is already struggling to meet its energy needs as winter approaches.

Norway has become Europe’s main gas supplier after Moscow cut deliveries in suspected retaliation against Western sanctions following its invasion of Ukraine.

The Scandinavian country has a vast network of pipelines linking it to the continent.

It is currently pumping at full capacity: according to official forecasts, its gas exports could set a record of 122 billion cubic metres this year.

That can be compared to the 150 billion cubic metres of gas per year that Russia supplied to the European Union before the war in Ukraine.

Faced with these stakes, Norwegian police announced Wednesday they were strengthening security measures already in place in the energy sector in a bid to reduce the risk of an attack.

“The situation is being taken very seriously and several measures have already been put in place to guarantee the best security possible”, police official Tone Vangen said in a statement.

She did not provide details, citing security reasons. 

On Tuesday, Petroleum and Energy Minister Terje Aasland made a similar announcement citing “reports of increased drone activity” near offshore oil platforms.

Norwegian energy giant Equinor has reported flights of “unidentified drones near certain installations”, a phenomenon not encountered before now.

“We are taking this very seriously and we have reported it to police,” Equinor spokesman Eskil Eriksen told AFP, providing no further details.

– Gas pipelines a weak link –

Echoing authorities, oil companies said they were taking extra precautions at their platforms, bases and land and sea installations.

Stretching over thousands of kilometres, sometimes at great depths, the oil and gas pipelines are a weak link in the energy supply chain that is so vital to Europe. 

“They are vulnerable, very exposed,” said Tor Ivar Strommen, a researcher at the Royal Norwegian Naval Academy.

He called for the introduction of additional security measures, including regular pipe inspections to ensure that explosives have not been placed there as well as closer monitoring of shipping near pipelines.

Prime Minister Jonas Gahr Store told Norwegian news agency NTB there was “no specific threat against Norway”.

But for professor and director of the Norwegian Institute for Defence Studies, Sven Holtsmark, it was “likely” that Moscow, often accused of using energy as a weapon, would try to sabotage Norwegian infrastructure.

“Before, the idea of Russia attacking Norwegian facilities would have seemed completely absurd, but we can no longer afford to exclude this possibility” in order to undermine European support for Ukraine, he told AFP.

“(Russian President) Vladimir Putin’s toolbox is running out and the war in Ukraine doesn’t seem to be going away any time soon. 

“So to me it makes sense for Putin to decide to sabotage Norwegian facilities, especially as it would be difficult to prove that Russia was behind it,” the expert added.

Global stock markets mostly sank Wednesday and the dollar soared as investors fretted over recession fears and heightened Ukraine tensions.

“With the prospect of a sharp economic slowdown, further pain for households and businesses, and investor sentiment on its knees, alas equities markets continue their descent,” said AJ Bell investment director Russ Mould.

The major Asian markets all closed down, and European stocks were down through afternoon trading.

The US was the exception, with markets edging up slightly at the open.

The British pound slumped 1.7 percent against the haven dollar — despite the Bank of England snapping up UK government bonds to try to bring calm to markets.

However, the UK government’s 30-year bond yield managed to retreat to 4.44 percent, having hit a 1998 peak at 5.14 percent.

The BoE intervention followed rare criticism Tuesday from the International Monetary Fund, which argued that Britain’s recent budget could increase inequality and worsen inflation.

Credit ratings agency Moody’s also waded in overnight with a warning about soaring debt.

New finance minister Kwasi Kwarteng’s tax-cutting plan last week sent shockwaves through markets, pushing the pound to a record low and leading to dire warnings for Britain’s economy.

“The BoE’s intervention is an attempt to soothe investor nerves after they were spooked by last week’s mini-budget,” said City Index analyst Fawad Razaqzada.

– Go-to dollar –

The dollar remains the go-to unit as the US Federal Reserve leads the way in raising interest rates.

Observers are betting that US borrowing costs will peak at around 4.75 percent next year, and are expected to remain elevated for some time.

The prospect of such tight monetary policy has battered equities, as US 10-year Treasury yields — a gauge of future rates — hit four percent for the first time since 2010.

“Fear of tightening-induced recessions has wiped out the recovery we saw in stock markets over the bulk of the summer as investors were once again burned by an over-eagerness to catch the bottom in the market, despite there being little evidence of it being justified,” said OANDA’s Craig Erlam.

“That fear has now gripped the markets and we may see a little more caution going forward,” he said.

Sentiment was also rattled by worries about developments in Ukraine, after Kremlin-installed authorities in four regions under Russian control claimed victory in annexation votes, with Moscow warning it could use nuclear weapons to defend the territories.

Ukraine and its allies have denounced the so-called referendums as a sham, saying the West would never recognise the results.

– Key figures at around 1345 GMT –

London – FTSE 100: DOWN 0.3 percent at 6,984.59 points

Frankfurt – DAX: DOWN 0.3 percent at 12104.37 

Paris – CAC 40: DOWN 0.5 percent at 5,728.16 

EURO STOXX 50: DOWN 0.4 percent at 3,315.49

New York – Dow: UP 0.2 percent at 29,193.25 

Tokyo – Nikkei 225: DOWN 1.5 percent at 26,173.98 (close)

Hong Kong – Hang Seng Index: DOWN 3.4 percent at 17,250.88 (close)

Shanghai – Composite: DOWN 1.6 percent at 3,045.07 (close)

Pound/dollar: DOWN at $1.0655 from $1.0730 on Tuesday

Euro/dollar: DOWN at $0.9587 from $0.9595

Euro/pound: UP at 90.67 pence from 89.39 pence 

Dollar/yen: DOWN at 144.43 yen from 144.81 yen

Brent North Sea crude: UP 0.1 percent at $85.67 per barrel

West Texas Intermediate: UP 1.0 percent at $79.46 per barrel

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