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Merkel No Longer Rules Out Nord Stream Action to Punish Putin

Sep.07 -- German Chancellor Angela Merkel is rethinking her sustained support of the Russian-led Nord Stream 2 pipeline as a potential response to the poisoning of Russian opposition figure Alexey Navalny. Earlier it was reported that the German clinic treating Navalny ended his artificial coma as his health showed signs of improvement. Bloomberg's Ray Colitt reports on Bloomberg Markets.

Video Transcript

- Raymond, we were anticipating the Nord Stream 2 could potentially be linked to this poisoning. I think a lot of people have been surprised how quickly maybe Angela Merkel, who usually conducts a fairly mercantile foreign policy, has been convinced of the benefits of that.

RAY COLITT: Yes, I think that's true. I mean, she certainly changed positions from only last week when she said that the two should not be mixed. And then over the weekend, towards the end of the week or the weekend, pressure has been building both within her own coalition, her own party, and of course the opposition as well.

Having said that, I am not quite sure that she's decided to let it go, to pull the plug entirely. I mean, after all, we're talking about sinking more than 9 billion euros on the bottom of the ocean. Hundreds of companies are involved-- European companies are involved in the project. I have a feeling there may be sort of an intermediary type of solution rather than shutting it down entirely.

Perhaps a sort of a moratorium for some time to send the signal that this is serious, that they cannot take that, you know, sort of type of action that the Russians have taken with the poisoning. But at the same time, not endangering the project altogether. Let's not forget, it's been paralyzed for a while anyway. So a couple of months more, maybe 12 months, wouldn't be all that emphatic.

- Yes, such news would maybe please Washington. When you say a moratorium, are you talking about completing it and then not using it? What would actually happen?

RAY COLITT: Well, there are different proposals on the table from different members of her party. That's one, finishing it and then not using it, which to us sounds a bit odd. Why would you do that? The other one is, is to not finish it at all, perhaps continue construction in a couple of months or next year.

So there are different ways of doing this, all of them a bit odd. I mean, I guess the worst solution would be not doing anything at all, just having all that steel and money be wasted in the Baltic.

- Final quick question. How damaged have relations between Berlin and Moscow become as a result of this? It was increasingly clear that Angela Merkel was growing very frustrated with her inability to change policy in Moscow. Has this sort of-- is this the straw-- a very large straw-- but has it broken the camel's back?

RAY COLITT: I think it's quite serious. And again, it's not an isolated event. This has been sort of a string of events over the past couple of years. There was the cyber attack, there was a killing in a Berlin park of Chechen citizen. So this is the last.

And again and again, we're hearing from Merkel and her advisors how frustrated she is. Today her spokesman says that they haven't spoken about this event at all yet, Merkel and Putin. So you can see how frigid things have become, how cold things have become between the two countries.