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Forecast Podcast: Sabotage suspected after unexplained Nord Stream gas pipeline leaks

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Editors Jimmy Lovaas and Alex Moore discuss possible sabotage of the Nord Stream gas pipelines, plus more on Canada dropping COVID vaccine travel requirements, a presidential election in Brazil, a new term at the US Supreme Court and Puerto Rico ending tax exemptions on some food.

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These stories and others are also available in our free weekly Forecast newsletter.

This episode was produced with work from Factal editors Joe Veyera, Irene Villora, Jeff Landset, Jaime Calle Moreno and Alex Moore.  Music courtesy of Andrew Gospe

Have feedback, suggestions or events we’ve missed? Drop us a note: hello@factal.com.


Factal Forecast podcast transcript

This is an unofficial transcript meant for reference. Accuracy is not guaranteed.

JIMMY LOVAAS, HOST:

Welcome to the Factal Forecast, a look at the week’s biggest stories and what they mean from the editors at Factal. I’m Jimmy Lovaas.

Today is September 29.

In this week’s forecast we’ve got Canada dropping COVID travel restrictions, a presidential election in Brazil, a new term at the US Supreme Court, Puerto Rico ending tax exemptions on some food and a look at the Nord Stream gas pipeline leaks. 

You can also read about these stories and more in our weekly newsletter, which you can find a link to in the show notes. 

Canada drops COVID border requirements

Information compiled by Joe Veyera

JIMMY: Travelers will no longer need to provide proof of vaccination against coronavirus to enter Canada starting Saturday. That as the country eases its pandemic border measures.

Officials from Canadian border communities had called on the government to lift travel restrictions, claiming they discouraged Americans from visiting to the detriment of local economies. 

Vaccine mandates have also been a political flashpoint. As you may recall, the self-proclaimed “Freedom Convoy” of truckers brought Ottawa to a standstill for weeks in February. That is, before the federal government invoked the Emergencies Act for the first time ever to restore order.

Now, Canada’s health minister says the decision is not an indication the pandemic is over, but that the rate of cases imported from across the border is “insignificant.” 

Meanwhile, critics say the impact of the restrictions could have long-lasting implications on cross-border trips even after they’re lifted. 

There’s no indication whether the United States will follow suit and lift its own vaccination requirement on foreign visitors.

Brazil presidential election

Information compiled by Irene Villora

JIMMY: Brazilians will go to polls on Sunday to choose between current president and strongman Jair Bolsonaro, and former leftist president Luiz Inácio Lula da Silva.

Members of the Organization of American States will oversee the presidential election, as well as those for all national and regional chambers and 27 governors. 

In an unprecedented move by the country’s electoral court, members of the armed forces and civilians have been invited to take part in a transparency commission

That, following Bolsonaro’s repeated unproven claims that electronic voting machines are prone to fraud, despite their use in the country’s elections for more than two decades. 

Since his election in 2018, Brazil’s far-right president has claimed the armed forces as the only ones that can guarantee political legitimacy and the rule of law. 

He has also claimed to have unconditional support of the military, regardless of Sunday’s results.

Now, polls suggest Lula’s popularity remains strong, despite his past conviction in an anti-corruption case. 

The latest surveys show that the progressive candidate could get more than 50 percent of the votes needed to avoid a runoff, but a tight race is expected.

New SCOTUS term begins

Information compiled by Jeff Landset

JIMMY: The US Supreme Court will start a new session on Monday. A session in which it will make major decisions on voting rights, affirmative action and free speech.

The most conservative Supreme Court in generations lived up to its billing in its last session by overturning Roe v. Wade and limiting the EPA of much of its authority, among other decisions. 

This will also be the first full session with a justice appointed by President Joe Biden. Ketanji Brown Jackson officially took over for Stephen Breyer as associate justice on June 30.

Now, the makeup of the court will remain the same unless there are multiple unexpected openings. 

That means liberals will keep a close eye on the decision of Moore v. Harper, which could give state legislatures the power to run federal elections as they see fit. 

The court may also end affirmative action when it comes to university admissions, as well as let religious vendors refuse to provide services to members of the LGBTQ community.

Tax exemption for prepared foods ends in Puerto Rico

Information compiled by Jaime Calle Moreno

JIMMY: Puerto Rico’s current tax exemptions for prepared food are scheduled to end next Thursday. The end comes as the island continues reeling from Hurricane Fiona.

Just last week, the United States declared a state of emergency for more than 78 municipalities in Puerto Rico following the hurricane’s effects across the island

The storm left several people dead, bridges collapsed and houses destroyed. It also caused nationwide power and water outages that have continued since the hurricane made landfall on Sept. 18. In fact, more than 30 percent of the island is currently without electricity. 

Now, the sales and use tax exemption that’s set to end next week helped make prepared foods cheaper for those affected. 

And with so many people In Puerto Rico still waiting for compensation for the devastation that Hurricane Maria caused in 2017, the tax exemption helped those suffering with some respite. 

Finally, similar to Hurricane Maria’s aftereffects, Puerto Rican residents are frustrated with the speed and distribution of the federal emergency aid after this hurricane. And that’s a frustration that’s likely to continue. 

Nord Stream gas pipeline leak

Information compiled by Alex Moore

JIMMY: Our last item for this forecast is on the Nord Stream pipeline leaks. For more on that I spoke with our Europe desk lead Alex Moore.

JIMMY: Hi, Alex. 

ALEX: Hello, Jimmy.

JIMMY: Boy am I glad you’re here. I’m hoping you can explain this story unfolding out in the Baltic Sea. I guess to start, do we know when these pipelines started to leak? And also, can you give us a bit of a refresher on these pipelines? I fear some listeners, outside of Europe at least, might not be familiar with them.

ALEX: Yeah, so these are a series of pipelines that run from Russia under the Baltic Sea to Germany. And Nord Stream 1, those pipelines have been functioning for about a decade now. And Nord Stream 2, which also leaked, was not actively transmitting gas to Europe. If you recall, I believe it was two days before the February full invasion of Ukraine, Germany pulled the plug on what was a very controversial, long-running dispute over this new pipeline. Multiple US administrations opposed it; the UK, other parts of Europe opposed it. And Germany finally pulled the plug right before the invasion, but Nord Stream 1 did continue to serve as a sort of key gas pipeline from Russia directly to Europe. And on Monday this week, the 26th, both pipelines started to leak.

JIMMY: And do we know what caused the leaks? There are some reports it could be sabotage. What can you tell us about those?

ALEX: Yeah, all the countries that sort of are – their territorial waters sort of surround where the leaks were, conveniently, none of them happened in the territorial waters of the countries, but Denmark, Sweden, they have all confirmed that their finding is that this was sort of a purposeful explosion that sabotaged the pipelines and led to big seismic activity. We’ve all seen the video I’m sure of the, you know, the bubbles in the sea. Other countries, Poland and Ukraine, have been a bit more unequivocal, directly accusing Russia. The US has been very, sort of, cautious with assigning any blame, as were the Danes, the Swedes. But what seems to be the conclusion all around is that it was a purposeful sabotage. I should also add, I forgot to add Der Spiegel, the German major news outlet, they did report actually, on Tuesday, I believe, that the CIA had given Germany intelligence one to two weeks ago that Russia was planning on doing something like this. Unconfirmed, obviously, but allegedly the CIA was aware of something that was going to happen.

JIMMY: If it does turn out to be sabotage, can you explain a bit about who might gain from such an action?

ALEX: Yeah, I’ve already alluded to — I think a lot of the eyes immediately, of course, went to Moscow for this. So Nord Stream 1 was halted indefinitely. It was pumping about 20 percent of normal capacity to Europe before late August. I believe it was August 31 when Russia shut it down for maintenance and then decided to indefinitely hold it due to some disputes over what Russia claimed were sanctions on parts from Canada. So the pipeline was not actively pumping to Germany at the time, but there was gas in both pipelines, Nord Stream 1 and 2. But there are a couple of reasons why, if it were Russia, again, we’re not directly accusing them right now of doing it, but if it were them, you know, it could be Putin signaling to Europe that he is willing and able, crucially, to horizontally escalate, sort of, hybrid war efforts against the continent. Obviously, and I believe you and I’ve talked about this in the past on this podcast, but Russia is in the midst of, sort of, a prolonged energy war against continental Europe. Sort of using their leverage as a massive supplier of European gas to sort of put pressure on European governments to halt or cease their support for Ukraine, specifically as winter comes and Europe starts to face, you know, recessionary pressures with industry, you know, subject to these rising energy costs. So this could be part of that. There are a couple other possible explanations, you know. Very simply, it could just be them seeking to create sort of a force majeure out for Gazprom if they were to face lawsuits for not supplying the requisite amount of energy that they were contractually obliged to supply. It could also be part of another sort of running dispute that’s been ongoing over the past few days between Gazprom and Naftogaz, who is Ukraine’s large state oil company, and specifically their transit providers that have in the past and still continue to be, even throughout the war, sort of a key transit way for Russian gas to get to Europe. So, Naftogaz and Gazprom are in sort of a dispute right now over transit fees not being paid. So this could potentially, by signaling to Europe that throughout the winter you’re not going to get gas through Nord Stream, which it’s all but sure that we’re not going to see any gas pump into Europe through Nord Stream. So it could be sort of a signal to Europe to put pressure on Ukraine to allow Naftogaz to sort of take the loss, I suppose, because those pipelines running through Ukraine are now just that much more important for Europe with Nord Stream gone. So a few possible explanations. And that’s just the Russian side. There have been some theories thrown out there, I’ll call them, about suspected involvement of other players, but we’ll just stick with that for now.

JIMMY: Any guess as to what might happen if sabotage is confirmed?

ALEX: I’m not quite sure. Honestly, I don’t know, this is not something that I anticipated. I think we’ll continue to see Europe try to do what they’ve been doing now for, you know what, the last seven months since the full invasion, which is try to diversify their energy sources further away from Russia. You know, this was always sort of the argument against Germany going through with another Nord Stream pipeline, was that over reliance upon the import of Russian hydrocarbons is potentially dangerous for these very reasons – giving them that leverage. So I think we’ll see the EU further try to diversify their imports of energy. We’ve already seen them do so with Azerbaijan, for example. They signed a large energy contract with Azerbaijan a couple months ago. So I think that ball will continue to roll. As far as concrete responses, that’s a good question, outside of the EU trying to further diversify their imports.

JIMMY: Well, we’re just about out of time, but what do you think folks should be watching for next then?

ALEX: Yeah, I mean, obviously, the big thing is any concrete, you know, be it leaked intelligence, whatever, that attribution that Moscow did it would be the big thing. The leak is still ongoing. So the Danish said that it would take about a week for the leak to be capped. And that was Tuesday. So obviously, there’s gonna be environmental fallout. So we want to make sure that’s capped as quick as possible and that’s, you know, not catastrophic. So those are the two immediate term things to watch out for. And, again, I would keep an eye on the Naftogaz-Gazprom dispute. I don’t exactly know or think we’ll see Europe directly pressure Naftogaz to sort of assuage to Gazprom’s demands to make sure that that gas keeps transiting to Europe through Ukraine, but that’s definitely a possibility.

JIMMY: Well, I think we’ll leave it there for now and hopefully not have to touch base on this again for anything worse.

ALEX: I know. Yeah, the war keeps surprising us in unforeseen ways, doesn’t it?

JIMMY: That it does. Hey, again, thanks for thanks for your time today. 

ALEX: Thank you, Jimmy. 

JIMMY  

Take care.

JIMMY: As always, thank you for listening to the Factal Forecast. We publish our forward-looking podcast and newsletter each Thursday to help you get a jump-start on the week ahead. Please subscribe and review wherever you find your podcasts. We’d love it if you’d consider telling a friend about us.  

Today’s episode was produced with work from Factal editors Joe Veyera, Irene Villora, Jeff Landset and Jaime Calle Moreno. Our interview featured editor Alex Moore and our music comes courtesy of Andrew Gospe.

Until next time, if you have any feedback, suggestions or events we’ve missed, drop us a note by emailing hello@factal.com

This transcript may be updated or revised in the future. Accuracy and availability not guaranteed. 

Copyright © 2022 Factal. All rights reserved.

Music: ‘Factal Theme’ courtesy of Andrew Gospe

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