Russia’s controversial 764-mile pipeline, Nord Stream 2, is almost finished. What will this mean for the region – and for the world?
Why is this new pipeline so controversial?
The Nord Stream 2 pipeline will transport natural gas directly from Russia to Germany via the Baltic Sea. It is under close scrutiny as a fair amount of gas from Russia to Europe is currently passing through other countries, including Ukraine, which are heavily dependent on revenue from transit charges. And while the original Nord Stream pipeline has been in service since 2011 and follows the same route, the second set will double the amount of gas from Russia. Ukraine and other transit countries fear that the Kremlin may eventually divert all its European natural gas supplies to the Nord Stream system and shut down overland routes. So while Moscow and Berlin argue that Nord Stream 2 is purely a commercial enterprise, the United States and many European countries believe it to be a thinly veiled Russian geopolitical project aimed at exerting influence over the world. Central and western Europe while weakening its eastern neighbors.
How exactly could Ukraine be affected?
Ukrainian President Volodymyr Zelensky and his Foreign Minister Dymitro Kuleba argued the pipeline will not only hamper Ukraine’s economy – it could cost it $ 2 billion in annual transit fees – but would also pose a security threat as it would remove the geopolitical influence that Kiev holds due to its intermediary status. Transit revenues have also accounts for a good chunk of Ukraine’s defense spending at a time when the country is still mired in military conflict with Russia and Russian separatists in eastern Ukraine.
But is Germany still on board?
German Chancellor Angela Merkel is usually pretty tough on Russia and its president, Vladimir Putin, but in this case she is at a stalemate. German companies believe abandoning the Nord Stream 2 project would be a costly legal problem and damage Germany’s reputation as a “safe place to invest”. Meanwhile, European gas production is declining, but demand is expected to remain stable over the next two decades. As a result, there are concerns about meeting the continent’s energy needs, and it does not hurt that the supply of Nord Stream can be had at a relatively low price. Merkel and other ministers to have a reference to the deal could be in jeopardy after Russian authorities arrested and jailed opposition leader Alexei Navalny earlier this year, but that threat has fizzled out. Merkel tries to draw some kind of line in demanding that Ukraine remains a transit country even after the completion of the pipeline, but it is not known whether Russia will acquiesce.
What is the position of the United States?
The Trump and Biden administrations have opposed the pipeline, and it’s a rare bipartisan point of agreement in the halls of Congress. There seem to be legitimate concerns about Europe’s potential over-reliance on Russian energy and Ukraine’s vulnerability, but there are also selfish reasons for the opposition: the United States wants to get more involved on the European gas market as a supplier. President Biden called the pipeline a “bad deal,” and Secretary of State Antony Blinken called highlighted American opposition. Yet the administration waived sanctions on the company overseeing the construction of the gas pipeline, Nord Stream 2 AG – which is owned by Russian energy giant Gazprom – and its CEO Matthias Warnig, a former East German intelligence officer who has been described as a pal of Putin.
Why waive these sanctions?
Mainly because the administration thinks opposing the effort is futile. The pipeline is 95% complete, so at this point the only companies that would be affected by the sanctions are on the German side, and Biden doesn’t want to hamper the Washington-Berlin relationship, which is rebounding after four difficult years. And even if the administration goes ahead with sanctions, there are potential workarounds: the German state of Mecklenburg-Western Pomerania, where the gas will land, created a foundation to try to protect private companies from sanctions.
So the pipeline is a done deal?
It looks like it. Putin said in June that construction of the first of the two lines was complete and the second could be completed in a few months. But the gas won’t start flowing until a certification process is completed, so the anti-Nord Stream 2 contingent may still have ammunition. The United States and Germany continue to engage in private chats on the issue, and if the United States manages to hold Germany up a bit longer, the German national elections in September could be a game-changer: the German Green Party, which has so far performed well in the polls and could play an important role in the next government, came out of against the pipeline earlier this year for environmental and geopolitical reasons. If the Greens seize a certain power before the final certification of Nord Stream 2, there is a chance that the party could scuttle the project at the last minute. Ukraine, for its part, is ready to take legal action against Gazprom will unblock Central Asian gas supplies it has kept under control for 15 years, said Yuriy Vitrenko, CEO of Ukrainian gas company Naftogaz. The Financial Times. If successful, Kiev probably wouldn’t have to worry so much that Nord Stream 2 would render its own pipelines useless. “Central Asian gas alone can fill the entire Ukrainian gas transit system,” Vitrenko said.