What has Happened:

• On September 26, 2022, a series of explosions caused serious damage to the Nord Stream 1 and Nord Stream 2 natural gas pipelines.
• Both pipelines were constructed to transport natural gas from Russia to Germany through the Baltic Sea, and are majority owned by the Russian gas company Gazprom.
• Sweden and Denmark, in whose exclusive economic zones the blasts occurred, have concluded that the pipelines were blown up deliberately, but neither nation has said who might be responsible.
• Earlier today, investigative journalist Seymour Hersh posted in a blog that the U.S. was behind the explosions, which the White House immediately dismissed as “utterly false.”
• Academy Securities has not verified and is not implying the accuracy of the report, but would simply like to share our perspectives.

Why it Matters:

“Without access to classified intelligence, operational specifics, and collection capabilities (and we must assume Hersh had no access), everything about his article is total speculation. Not surprisingly, the White House and the CIA are denying it. The question that remains is who benefited the most from the blast that destroyed three of the four Nord Stream pipelines…Russia or the western alliance of partners helping to resist Russian misguided adventurism in Ukraine?

Russia benefited by punishing Germany, eliminating their access to the rich and predictably available source of LNG, and by possibly causing a fracture in the alliance. The west benefited because it affected the co-dependency that existed between Germany and Russia. At the time, the German chancellor seemed to be vacillating. He was hesitant about increasing Germany’s support for Ukraine and was concerned about the prospect of a cold winter. Eliminating the option of Nord Stream LNG simplified Germany’s calculus. They were “all in” with NATO.

Clearly, U.S capabilities for this type of operation are unmatched (except by the Israelis). However, I doubt this administration directed the operation. Putin ordered this and his motivation is far more linear and simple.” –

General Spider Marks

“Spider lays this out very well and I agree that it is doubtful that President Biden ordered the attack. Hersh is not someone that I recognize as a viable source and others have not followed suit in reporting. I also still lean towards Putin ordering this to keep the West off balance with possible Russian actions outside of Ukraine. Russia has become the epitome of gray zone conflict and this act falls in line with those potential actions. The next day NATO warships began patrolling over undersea pipelines. Putin will play any hand that results in NATO having doubts or backing down.” –
General Robert Walsh

“It is hard for me to believe our leadership would authorize the destruction of a piece of commercial infrastructure affecting so many allies  without a consult.  I am sure we have the means, but I don’t think that we would try to sway Germany by this type of action.  There are legal liabilities associated with this type of operation as well.  Makes no sense to me.” –

General Frank Kearney

Kimberly Cash, an Associate on our Debt Capital Markets coverage team, shares her unique insights as a former Navy Explosive Ordinance officer.

“To echo General Walsh and General Marks, I must assume Hersh didn’t have access to classified information. Hersh refers to the Navy Diving and Salvage Center in Panama City. The base in Panama City is home to the Navy Experimental Dive Unit (NEDU) and the U.S. Navy Diving and Salvage Training Center (NDSTC), where all Navy Divers and Navy Explosive Ordnance Disposal (EOD) Techs attend dive school. From my experience, NEDU is a testing and evaluating command for diving and hyperbaric procedures. Navy divers focus on underwater welding of ships, retrieve sunken ships, and even have been tasked with retrieving astronauts from the space capsule. This type of operation would not have been organized or trained for at this command.

Navy EOD are the folks trained for dealing with explosives and we have the capability to dive down to 300ft. While serving in the Navy as an EOD officer and team leader, my team focused on Mine Counter Measures, where our primary mission was to render safe any explosives underwater. From my perspective, I don’t see why the CIA would need NEDU or special divers to dive 50 meters, just Nitrox.” – Kimberly Cash