Nord Stream Trial Risks German Support for Ukraine
German authorities arrested Volodymyr Zhuravlev, a Ukrainian deep-sea diver, in Croatia last week. He is the latest suspect linked to the September 2022 bombing of the Nord Stream pipelines and was reportedly consulting on a film about the operation. His extradition to Germany is pending. The first criminal trial of an alleged ringleader, Serhiy Kuznetsov, begins on 26 October in Hamburg. Prosecutors have established the attack as a Ukrainian military operation using a yacht chartered in Germany and substantial C4 explosives.
The pipelines had supplied Germany with the bulk of its gas. Nord Stream 1 alone provided 55% of supplies before the war. Their destruction contributed to Germany’s energy crisis after the country had already suspended Nord Stream 2. Background includes decades of German-Russian energy ties under the “change through trade” doctrine, opposed by Poland, the US and others as a security risk. Ukrainian operatives sought to sever that relationship.
Key tensions centre on accountability and future policy. Questions remain over what President Zelensky knew and the role of then-commander Valerii Zaluzhnyi. Analysis suggests the trial will release details that the AfD is already exploiting by asking why Germany should support a country that sabotaged its infrastructure. Short-term military aid may hold, but longer-term enthusiasm for Ukrainian EU/NATO membership could weaken, especially if energy shortages recur. Germany has not publicly answered the core political question raised by the investigation it allowed to proceed.
Sources: UnHerd.
ECB Downplays Stagflation Risk from Hormuz Crisis
ECB Executive Board member Piero Cipollone stated on 24 August that the risk of stagflation from the Strait of Hormuz crisis and related Middle East tensions is “rather remote.” In an interview, he noted no current signs of stagnation combined with sharp inflation rises. Inflation remains aligned with the ECB’s June baseline projections, the European economy is proving more resilient than expected despite slowing, and oil prices suggest possible de-escalation. Monetary policy must stay well-calibrated; central banks can anchor medium-term expectations even if they cannot control energy commodity spikes.
This comes against a backdrop of elevated energy risks from Iranian-related disruptions, with Hormuz traffic thinned and sanctions discussions ongoing. Euro area headline inflation has faced upward pressure from energy, while the ECB targets 2%. Cipollone emphasised price stability’s role in enabling business planning via more stable nominal rates.
Open questions include how durable the resilience proves if the crisis prolongs or oil spikes further, and whether markets fully accept the remote-risk assessment amid broader fiscal strains in high-debt eurozone members. Analysis points to a holding pattern on rates rather than immediate easing, with monitoring of second-round effects on expectations remaining central. The comments contrast with more alarmist market narratives around supply shocks.
Sources: InvestingLive, ECB interview via Reuters/Il Sole 24 Ore.