Opinion
After the poisoning of the Russian oppositionist leader Alexey Navalny and his later treatment and on-going recovery in Germany, the German chancellor Angela Merkel received significant pressure to stop the Nord Stream 2 pipeline project.
Nord Stream 2 is a Russian-German gas pipeline project that connects both countries via the Baltic Sea. The pipeline construction is about to be finished, the gas supply contracts are signed, the German interconnection pipelines are built and operational, and the investment costs of about $11.5 billion are sunken. What is missing is about 160 kilometers of pipeline laid in the Baltic Sea. Only foreign sanctions on pipe-laying vessels prevent the project’s realization.
Navalny was attacked by a Soviet-developed chemical weapon “Novichok”, still a Russian asset of its “hybrid warfare.” The by far most prominent Russian oppositionist leader has survived the poisoning and will most likely recover and return to Russia one day. His fate there is unknown, but Navalny has so far been brave and fortunate to maneuver the full arsenal of Russian political harassment. What he gives to Germany was the opportunity to save his life and create the myth of an invincible Russian opposition. What Navalny also brought to Berlin, is the consequential foreign political responsibility.
Germany’s single most powerful foreign political lever is the Nord Stream 2 pipeline. The political pressure put on Merkel to stop this project comes from inside the German political establishment as much as from outside German borders. The United States, Ukraine, some Central European countries, as well as the EU Commission, have been opponents of Nord Stream 2 ever since. Now there is a chance to combine all individual resentments against the project, link it to Navalny, and finally stop the pipeline. However, there are five convincing reasons why Germany should and will not cancel Nord Stream 2.
1. Nord Stream 2 and Navalny are not connected. Although there is no evidence, thus it is uncertain that the Russian government has directly ordered the poisoning of Navalny, the country’s track record of poisoning and killing dissidents is devastating. The regime’s incapacity to do anything about it is a legitimate reason for foreign condemnation resulting in sanctions. Particularly some of these attacks were executed on foreign soil. The cancellation of Nord Stream 2, however, is too big of a step. For some good reasons, the Nord Stream 2 consortium has pushed the construction of the pipeline through, despite the Russian annexation of Crimea and the Russian involvement in the Ukrainian civil war. Amongst a lot more provoked foreign political inconveniences according to the Moscow-invented playbook of the “hybrid warfare,” the pipeline project has received sufficient political support in Germany. The poisoning of Navalny is just a tipping point to the sum of all Russian misbehaviors and cannot qualify for the ultimate cancelation of Nord Stream 2. It would be instead an overreaction against the Russian government and would not do justice to the case of Navalny. Germany and its EU partners have been consistent and predictable to react to specific behavior with specific targeted sanctions.
2. The opposition to Nord Stream 2 is not strong enough. The majority of the German political elite across the political spectrum supports the Nord Stream 2. One should not forget that Chancellor Merkel is in her likely last term. The campaign for Merkel’s successor is in full progress. The German public acknowledged the political opportunistic stance against Moscow, but it does not support it.
The vocal opposition against Germany’s support of Nord Stream 2 is foreign and the foreign position against the pipeline has not changed since 2015.
The US is the most powerful and most active opponent of Nord Stream 2. In 2019, the US government-imposed sanction on pipe-laying vessels, which has since set the construction on hold. Further sanctions are imminent. With Nord Stream 2 prevented, the US government and industry expect to create a Liquefied Natural Gas (LNG) export market in the EU. Poland is critical to Nord Stream 2, as it sees the pipeline diminishing its role as an important gas transit country. Currently, Germany imports most of its gas imports from Russia via the Belarus-Poland transit pipeline. Nord Stream 2 would change Germany’s reliance on the Polish pipeline, which to Warsaw’s belief would increase Poland’s political reliance on Moscow. Other Central European countries share the fear of increasing Russian influence. Ukraine is the strongest European lobbyist against Nord Stream 2. Russia openly admits that the Baltic pipeline project is there to create an alternative to the Russian-Ukrainian gas transit route. Currently, the EU receives most of its imported gas from Russia, via the Ukrainian transit pipeline. Different from Poland, Ukraine seeks to maintain the status quo of the EU’s reliance on Russian gas supplies. The Ukrainian government is concerned to lose about $3 billion annually in gas transit fees if alternative supply routes are established. These transit fees have supported Ukrainian oligarchs for decades and will continue to do so.
Factually, almost all Nord Stream 2 opponents are driven by individual and mostly economic interests. Their lowest common denominator is the cancellation of Nord Stream 2. The misbehavior of the Russian government and the coincidence of the German foreign political responsibility of the Navalny case has given the opposition another opportunity to communicate their discontent against the pipeline-project.
3. The cancellation of Nord Stream 2 has no perspective to change Russian behavior. The main and least complex argument against Nord Stream 2 is Germany’s and Europe’s increasing over-reliance on Russian gas. But this argument is only substantial in so far that the EU will most likely import more gas from Russia than from anywhere else if Nord Stream 2 is in place. This is an easy solution for a complex question of future gas supplies. It is a fact that the EU already imports more gas from Russia than from anywhere else, even without Nord Stream 2 in place. The reliance on Russian gas is already existing. The EU’s approach to hedge its reliance on Russian gas supplies has been disregarded within the debate around Nord Stream 2 because it is foreign politically not attractive and its execution is too gentle and bureaucratic. The EU in general pursues three goals to mitigate the risk of reliance on Russian gas. These goals are the creation of a unified and liberal gas market, the undermining of gas as a primary energy source, as well as the creation and diversification of import capacities. This allows the EU to act as a stronger political and economic opposite of Russia. Nord Stream 2 fits in the third of the EU’s goals, the creation of import capacity. The pipeline provides the EU with the advantage to not lose Russia as the main supplier while creating the opportunity for the EU of alternative gas import routes to politically unstable states such as Ukraine and Belarus.
From a different point of view, if Germany would sanction the Nord Stream 2 project in a response to the Navalny poisoning, the EU would derail from its bureaucratic and predictable approach towards market liberalization. The EU would also alienate Russia in the politicization of the gas trade relationship. Despite Russia’s financial loss of approximately $11 billion, carried by the state-owned gas company Gazprom, the cancellation of the pipeline has a minimal impact to politically or economically destabilize the Russian government. Instead, the status quo of former gas import routes remains in the loop, while it will take years for EU countries to build and benefit from alternative LNG import terminals. Gazprom will not pursue another direct Russian-EU pipeline, but develop its LNG export capacities and explore other foreign markets. This will eventually destabilize the EU’s gas import security and increase gas prices for the consumer.
4. There is no special German-Russian relationship. The Nord Stream 2 pipeline is not a result of a special bond between the government of Germany and Russia to share common foreign political goals and values to the disadvantage of Central and Eastern European countries.
The former German chancellor Gerhard Schröder’s role as an executive in the Nord Stream 2 company is a fact that is neither approved nor endorsed by the German government or the public. Gazprom employs Schröder, which makes him not a special envoy of Germany who promotes gas deals with Russia. The two German companies Uniper and Wintershall are investors in the pipeline who have economic interests in the pipeline. Uniper will buy and sell gas provided by Nord Stream 2, whereas Wintershall provides pipelines for the internal European distribution. The other non-Russian investors is a French, Austrian, and Dutch company with an equally shared interest.
The consequent rapprochement of Germany and Russia after the European “East-West”-divide has led to a unique relationship between both countries based on the historical responsibility of World War II and the socialist dictatorship of Eastern Germany. Germany has unique relationships based on its past with many other countries, including France, the US, and Poland. The pursued friendship is since the re-election of President Putin in 2012 at the latest over. The list of Russian foreign political escapades directed against Germany is long. President Putin’s popularity in Germany is rising only at the right and left extreme political spectrum. Russian hybrid warfare is in full swing.
In Navalny’s first interview after his poisoning with the German news-outlet DER SPIEGEL, he indicated that the cancellation of the Nord Stream 2 pipeline is “Germany’s business”, but indicated that targeted sanctions against the Russian elite are welcome by the Russian people. The chief of the German Liberal Party (FDP), Christian Linder, has introduced the idea of sanctions against Russian officials, similar to the Magnistky Act. The Magnistky Act is a US law that allows sanctions against Russian citizens who were involved in the death of the Russian lawyer Magnistky in 2009.
5. Nord Stream 2 is beneficial to the EU. Whenever foreign political sanctions are imposed, there is a risk of negative consequences for imposing state. If Germany or the EU would impose sanctions on Nord Stream 2, negative effects for their own are inevitable. Even further, the negative effects could outbalance the objective of the sanctions. In other words, the EU will likely suffer more than Russia if Nord Stream 2 is not completed.
Set aside the billions of invested dollars by European companies, the EU gas market will have to compensate for the loss of 55 billion cubic meters of gas import capacity per year. Although the EU will likely be able to compensate for those gas volumes from other import routes, the negative effect on gas prices is certain. Also, the EU gas market liberalization slows down as Central and Western European gas hubs will have fewer transport capacities and volumes for trade. The Nord Stream 2 interconnecting pipeline, EUGAL, owned by Wintershall, is already built and in operation.
Gazprom, as Russia’s pipeline gas export monopoly, enjoys an import monopoly status in many Central European countries, which has allowed the company to dictate contracts and gas prices. The construction of the first Russian-German trans-Baltic pipeline, Nord Stream (1), has supported a declining role of Gazprom’s market power in the EU. Nord Stream 2 will fully comply with EU regulations and thus support gas price liberalization in the EU.
Conclusion
The EU presents itself as an equal partner to Russia, which has set the rules in its relations with Russia and maintains consistency to it. This includes a carefully considered sanction policy that is reasonable, predictable, targeted, and with a chance of success. The cancellation of Nord Stream 2 does not provide any of these.
Russian gas in Europe is more an opportunity than a dependency. The import of Russian gas in Europe is beneficial to European countries first before it becomes beneficial to Russia. This is based on the fact that the strategic importance of gas for industries and households have diminished over the last decade. The sources of alternative energy resources and renewable domestic power production in most EU countries have increased, which leaves natural gas in second place. However, the import of gas remains important. At reasonable costs, gas as a fuel of relatively carbon emission provides baseload power for the transition period to an EU wide aimed carbon-free energy mix for the coming decade.