Nord Stream 2

6 m.   |  2021-03-17

I n the background of the current complicated relations between EU and Russia, particularly Germany and Russia, the issue of completing the North Stream-2 pipeline is important for both nations.

Nord Stream 2 pipeline is envisaged to deliver Russian gas to Germany via two parallel pipelines through the Baltic Sea. It is the copy of the Nord Stream 1 and has a total capacity of 55 billion cubic meters of gas per year.

No matter how complicated Russia-Germany relations have been in the past, the cooperation on energy hasn’t suffered due to mutual interests. Germany has a problem of ensuring energy security, which in turn secures economic growth. Alternative energy development in recent years has not been enough to outweigh gas imports and experts believe that traditional energy will continue to dominate in the coming decades. The demand for energy in Europe, in particular, in Germany will increase. Moreover, Russian gas supply to Germany is both affordable and guaranteed.

The construction of Nord Stream 2 is also important for Russia. Firstly, gas exports grow, thus increasing income from energy sources for Russia. Currently, Germany remains the number one consumer of Russian gas, the largest market for Russia. Second, by increasing its role in ensuring the energy security of Europe, particularly of Germany, Russia also increases its political influence.

Regardless of the tense political relations between the EU and Russia, as a result of which economic ties have suffered, a complete rupture of both political and economic relations is impossible. Statistics indicate this. Although Russia’s trade turnover with the EU decreased more than twice between 2013-2020 (before the crisis in Ukraine), it still amounted to $190 bil. (excluding the UK) in 2020. The export of energy has its important role here and contributes to a large share of the total exports.

Finally, by constructing Nord Stream – 2, Russia reduces its dependence on transit corridors, particularly Ukraine as it has been the main route for gas into Europe. That’s the reason why Russia and Germany, though having serious disagreements, fight in unisun for the construction of Nord Stream – 2. Overcoming these serious obstacles to complete this project is of utmost importance as The United States, EU and Ukraine, are against the constructions all of which have their own interests.

The US position in the issue of Nord Stream – 2 is based on both economic and political motives. Economically Washington seeks to secure a market for its own liquefied natural gas to Europe, including to Germany. The US is adamant on its sale of gas to Germany instead of Russia. However, the American liquefied natural gas is more expensive. It is also inferior to Russian gas in terms of supply continuity. It’s no coincidence that Berlin constantly reminds its American and European partners that Nord Stream – 2 is just an economic project, free from geopolitical restrictions.

T he geopolitical motivation of the United States, is to deprive Russia of additional income and to prevent its growing political role and influence in Europe. During the ex-president Donald Trump’s administration, Washington imposed sanctions on all European companies involved in the construction of Nord Stream – 2. As a result, 18 companies stopped their participation in the project. The construction, which was almost finished, also stopped. Nord Stream – 2 was envisaged to be completed by the end of 2020. Currently, most of the work is done. Less than 150km of the gas pipeline at a length of more than 1200 km is left to be built.

It is hoped that under Joe Biden’s administration, the US will soften its position on the Nord Stream – 2 issue. Nevertheless, Washington still pursues its policy of sanctioning involved countries. The European Union is also against the construction of the gas pipeline, as it doesn’t contribute to Europe’s energy security and diversification of energy sources: thus Europe’s energy dependence on Russia is growing significantly. The EU is also careful it doesn't reduce Ukraine’s role as a transit country. Indeed, in case Ukraine's transit revenues are lost, the US and the EU should consider compensating their ally.

The reasons for Ukraine’s stance against the pipeline is obvious. The exploitation of Nord Stream – 2 will mean a reduction or loss of the role of being a transit country, with further economic and political consequences. Kiev will lose not only stable income but also an important lever of influence on Russia.

Considering the external pressures on the Nord Stream – 2 project, overcoming it is not entirely impossible. First, Germany is the most important ally for the United States. Relations between these two economic powers are no less important for Washington than for Berlin. Therefore, it’s not in the US interest to spoil relations with a main ally in continental Europe because of the gas pipeline project.

Germany is a key country in the European Union and has major influence on the internal and foreign policy of the EU. Therefore, no matter how negative attitudes of other EU member states are towards Nord Stream – 2, Brussels cannot keep Berlin from completing the project. It is no coincidence that there is already a certain shift in the position of both Washington and the EU countries in favor of the pipeline’s construction. An attempt is made to find some compromise with the following logic: let the gas pipeline be built but it shouldn’t affect the supply of Russian gas to Europe through Ukraine.

The construction of Nord Stream – 2 is also a matter of Germany’s sovereignty. Berlin has repeatedly stated that extraterritorial sanctions are unacceptable and it is an encroachment on his sovereignty. It’s not superfluous to recall the precedent of the problem. In the 1980s, the US opposed the construction of a land-based gas pipeline from the Soviet Union to Germany, the construction is the current Ukrainian gas pipeline. Ronald Reagan’s administration at the time imposed sanctions, however Germany kept the idea of the pipeline’s construction alive with Washington ultimately giving in. If during the Cold War in the 80s of the last century the divided Germany could overcome American pressure, then today it has a significantly more chance to succeed.

Huge funds have been invested. Besides most of the offshore part of the project, the onshore infrastructures including the gas receiving and distribution stations in Germany are also ready. Thus, the implementation of the project is just a matter of time. The Russian journalist notes that it can be postponed, but not be stopped.