Sweden to issue guarantees worth ‘billions’ to energy groups

Sweden said on Saturday it would provide liquidity guarantees to Nordic and Baltic energy companies worth "billions of dollars" in a bid to prevent a financial crisis sparked by Europe's energy crunch.

Prime Minister Magdalena Andersson at a press conference on Saturday about a potential financial crisis sparked by Europe's energy crunch.
Prime Minister Magdalena Andersson at a press conference on Saturday about the Nord Stream gas pipeline from Russia to Germany being stopped indefinitely. Photo: Anders Wiklund / TT

Prime Minister Magdalena Andersson warned Sweden was facing the prospect of a “war winter”, and said the exact details of the guarantees remained to be worked out.

The announcement came after Russia said on Friday it was cutting off the Nord Stream gas pipeline to Germany indefinitely due to what it said were leaks in a turbine.

The closure is expected to lead to even higher production prices for electricity companies when the market opens on Monday.

Speaking to reporters, Andersson said the guarantees were aimed at giving energy groups “the breathing room that is needed”.

She said there was “a clear security policy agenda behind Russia’s actions”.

“Russia’s energy war is having serious consequences for Europe and Swedish households and companies, especially in southern Sweden which is dependent on electricity prices in Germany, which in turn is very dependent on gas,” she said.

“This threatens our financial stability. If we don’t act soon it could lead to serious disruptions in the Nordics and Baltics,” she said. “In the worst-case scenario we could fall into a financial crisis.”

Finance Minister Mikael Damberg, speaking at the same press conference, said the Swedish decision would “secure financial stability not only in Sweden but in the entire Nordic region”.

The guarantees were expected to be in place on Monday before the stock market closing and would cover all Nordic and Baltic actors within the next two weeks.

Sweden’s parliament has been called in from its summer break to hold a vote on the government’s proposal on Monday.

READ MORE: Energy crisis pushes nuclear comeback in Europe

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Who is behind the Nord Stream Baltic pipeline attack?

The Russians, the Ukrainians, the Americans, or someone else entirely. Who blew up the Nord Stream gas pipeline?

Who is behind the Nord Stream Baltic pipeline attack?

Ukraine quickly declared the explosions that caused the leaks in the Nord Stream 1 and 2 pipelines to be an operation by Russia, aimed at worsening the EU economy and adding to panic over winter gas prices, while Radosław Sikorski, a former Polish defence and foreign minister, thanks the US for what he described as “a special maintenance operation”. 

The governments of Denmark, Sweden, and Germany, the most closely affected countries, while all stating that they believe the explosions were the result of a deliberate attack, have so far been careful not to point fingers at anyone. 

So what are the theories raging over who might be behind the attack? 

The Russian hybrid warfare theory

Ukrainian presidential adviser Mykhaylo Podolyak said on Twitter that the damage to Nord Stream 1 and 2 was “a terrorist attack planned by Russia and an act of aggression against the EU”. 

Poland’s Prime Minister, Mateusz Morawiecki, also pointed the finger at Russia. 

“It was probably an act of sabotage, so it is most likely a signal from Russia, because we are waiting for these circumstances to be confirmed, and it is something very disturbing,” he said. “This is something that shows what means and mechanisms the Russians can resort to in order to destabilise Europe even more.” 

This line was echoed by Simone Tagliapietra, senior fellow at the Bruegel think-tank, who wrote on Twitter that the sabotage showed Russia escalating its use of the energy weapon to hybrid war.   

Brigadier General Carsten Rasmussen, who was Denmark’s Defence Attaché in Moscow until June, laid out the argument for why Russia might want to blow up the own pipeline in a series of Tweets in Danish. 

He said that the sabotage “creates fear” about whether Europe can get gas this winter, and also over the vulnerability of other infrastructure in Europe. He said the sabotage would lead markets to react, pushing up gas prices by 12 percent. He said the attack would “threaten Western unity”, pointing to  Sikorski’s tweet. Finally, he said the attack was a distraction from Russia’s referendums annexing new areas conquered in its invasion. 

“Who might be interested in provoking the four effects mentioned?” he asks, pointing the finger at Russia. “Nothing has yet been proven – and perhaps never will be. The sabotage actions in the Baltic Sea look like a hybrid action, not aimed at Denmark, but at the West’s unity and willingness to support Ukraine.” 

The Kremlin’s spokesman Dmitri Peskov dismissed such attempts to blame Russia as “quite predictable and also predictably stupid”. 

“This is a big problem for us, ” he protested in a call with journalists. “Because firstly, both lines of Nord Stream 2 are filled with gas – the entire system is ready to pump gas and the gas is very expensive… Now the gas is flying off into the air.”

US strategic attack or revenge for Ukraine invasion

Radosław Sikorski, a former Polish defence and foreign minister, posted a now highly criticised tweet thanking the US for the action. 

In follow-on tweets, Sikorski explained that Nord Stream’s main purpose for Russia had been to allow it to blackmail Eastern Europe with threats to cut off the gas, without also having to cut off gas to customers in Western Europe. 

“Nordstream’s only logic was for Putin to be able to blackmail or wage war on Eastern Europe with impunity,” he wrote. “All Ukrainian and Baltic sea states have opposed Nordstream’s construction for 20 years. Now $20 billion of scrap metal lies at the bottom of the sea, another cost to Russia of its criminal decision to invade Ukraine. Someone, @MFA_Russia, did a special maintenance operation.” 

Backing this argument is a clip taken from a press conference US President Joe Biden held with German Chancellor Olaf Scholz in February, days before Russia invaded Ukraine.  

“If Russia invades… then there will no longer be a Nord Stream 2,” Biden said. “We will bring an end to it.”

This has been tweeted thousands of times today in what some have dismissed as a Russian propaganda operation. Rather than threatening to sabotage the pipeline, Biden is more likely to have been referring to the possibility that Germany could simply block the pipeline and refuse to use it. 

Germany in the end went ahead with that decision and block the newly completed Nord Stream 2, taken the decision only days before Russia sent troops to Ukraine.