My Op-Ed on German motives for Nord Stream 2 appeared in the Dziennik Gazeta Pravwna 4 Aug. 2021 (no. 149 dziennik.pl, forsal.pl), derived from an English interview (below here) with Artur Ciechanowiicz (PAP, Brussels). [Polish Op-Ed link]
Here is my full English interview, expanded for clarity:
1) [AC] What are the consequences of the Nord Stream 2 deal between Washington and Berlin?
[T O’D] Stepping back a bit: this deal marks a victory by Berlin in its long and intensifying contest with its ally, the USA, over which of these two biggest transatlantic powers will decide the alliance’s strategy with respect to Russia and China. The two allies deeply disagree on this matter.
In the USA, both Democrats and Republicans have agreed since the Obama administration that “Great Power Competition” must be the strategy for the alliance versus Russia and China. The Americans strongly feel it is necessary to “decouple” from globalism’s deep trade and tech integration with China and Russia, that these states must either change their disrespect for global trade rules and moderate their increasingly aggressive geopolitical activities, or be isolated and forcibly contained.
Germany, with almost 50% of its GDP from global trade, deeply disagrees with this US strategy [i.e., German exports provide 46.9% of GDP, the USA’s only 11.7%]. Berlin likes global rules; but its unbalanced economy cannot afford trade decoupling and it broadly opposes forceful military containment of China and Russia. Instead, it wants only negotiations and occasional sanctions.
So, Nord Stream 2 is an iconic example of this clash, this “leadership fight” between the USA and Germany over the transatlantic alliance’s strategy towards Russia. Berlin wants to maintain energy ties at all costs, while the USA has long advocated maximum European energy independence from Russia, and to constrain Russia (and defend Ukraine) by forcing Putin to continue having to send gas across Ukraine to reach his European customers.
Russia, for its part, wants to re-incorporate former-Soviet Ukraine [plus Belarus, Moldova and Georgia, and minimally keep them outside of the EU and NATO], and has wanted to avoid having to send its gas to Europe via Ukraine. Moscow’s transit dependence on Ukraine not only provided income for Ukraine, this constrained Russian subversion and military aggression there, for fear that the transit pipelines could be interrupted by either Ukrainian state or non-state actors.
For Germany, the “insecurity” of having to import Russian gas through Ukraine deeply alarmed Berlin. And so it made a strategic decision over 20 years ago to partner with Russia, to build new pipelines to bring gas directly from Russia to Germany [via Nord Stream 1 and Nord Stream 2] and on to European customers long supplied with the same Russian gas but via Ukraine. The aim was to make Germany the new hub for distribution of Russian gas in Europe.
Given Berlin’s logic, the 2014 Russian war on Ukraine and its annexation of Crimea only made it more sure than ever of the dangers of relying on Russian gas imports that have to transit Ukraine, and it redoubled its efforts to complete NS2, notwithstanding this would undermine German relations with three consecutive US administrations and with many of its EU allies, esp. Poland and East-Central Europe – a region where its much-prized soft power has been sacrificed.
Accordingly, Berlin insists that, with NS1 and NS2 in place, German diplomats will now, finally, be the ones to “handle” European energy relation with Russia, even if this scheme means abandoning Ukraine. Berlin wants its and Europe’s much-needed Russian gas imports to avoid any risks of having to transit the conflict zones in Ukraine. Of course, Germany will reap certain commercial benefits from this policy – it is, after all, taking Ukraine’s gas-transit business away for its own firms to handle; however, this has been most fundamentally a geostrategic decision flowing from Berlin’s deep security-of-energy-supply concerns for itself and Europe [i.e., security of supplies from Russia], and its strategy of continuing to “engage” with Russia.
In my view, considering that (1) Germany and Russia had already completed Nord Stream 1, (2) that Russia had already largely completed Turkstream 2 in 2020, (3) that Russia already completed its new Power of Siberia pipeline to China, and (4) had already built massive new LNG export facilities in the Arctic, the net result is that Putin is no longer infrastructurally constrained to supply Russia’s vital European gas customers by transiting Ukraine or, for that matter by transiting the smaller-capacity Belarus-Poland route.
Even without NS2 completed, what remains of Russia’s gas transit via Ukraine to reach European markets. is, from a strategic point of view, expendable. Russia’s gas-export business can prosper without it. So, if Putin wants to escalate his war in Ukraine, the remaining 40 bcm per year of gas Gazprom still sends via Ukraine is not a “strategic impediment” for Moscow. Putin can easily sacrifice this flow in consideration of all the new pipeline capacity Gazprom has built, mostly with Germany, and in consideration of Russia’s new LNG and pipeline options to market its gas to China and elsewhere.
It is very important to recognize the reality that all this new Russian gas-export capacity, even without NS2 online yet, means that Putin had already won his strategic objective to totally reorganize the path of Russian gas exports to Europe so as to decouple his gas-business security from exposure to his geopolitical adventures against Ukraine, as well as against the other legacy transit states, Belarus and Poland. In other words, the USA, plus Poland, Ukraine and other like-minded allies, have lost their long battle to block this decoupling. All the new Russian export capacity bypassing these states had already made Ukraine’s remaining gas transit business too small to cause any significant crisis to either Russia’s export business – or to German and EU imports – if Putin provokes a wider war in Ukraine.
[Note: in April 2021, Putin threatened Ukraine by putting, reportedly, around 100,000 troops on its borders. However, for the first time such a crisis evoked no alarm in European media or government circles that a conflict in Ukraine might interrupt vital Russian gas flows across Ukraine, causing a European energy-supply crisis. As late as 2017 over 95 bcm had still flowed across Ukraine; however, today’s remaining 40 bcm of Russian-gas transit across Ukraine and contracted to continue through 2024, is a small percentage of total Russian gas exports to Europe (which were roughly 170 to 200 bcm in the past few years) and this could easily be substituted by increases in Russian gas sent via the new export infrastructure Russia has built, largely in partnership with Germany, and via its new LNG export capacity.]
The USA and those in Europe who long opposed this Moscow-Berlin partnership now have to retrench and develop a new strategic approach. [We shall soon see if Biden-Blinken’s new envoy for energy matters, Amos Hockstein, will focus on details of implementing the modest deal between Merkel and Biden, principally on maintaining the present, rump gas transit volumes via Ukraine for some years more, or launching a new comprehensive strategic policy direction.]
Clearly, from their repeated explanations, Biden-administration officials involved in the decision to waive further NS2 sanctions had assessed that it was not possible to stop the pipeline when it was already 95% complete and considering their German allies were willing to go to the limit in stalling renewed transatlantic cooperation across the board in order to complete their NS2 project with Moscow, and to permit construction despite whatever sanctions were imposed.
However, it is not clear to me that top Biden officials involved had also surmised Germany and Russia had already made Ukraine transit strategically irrelevant, even without having completed NS2. In any case, this reality further puts into sober context Biden’s decision not to impose further sanctions on Nord Stream 2 and/or German firms..
Biden was in a difficult position. Berlin had made it perfectly clear that, even if he imposed more sanctions on NS2 or on German companies involved, Germany would make sure NS2 is finished. The US Senate had been quite confident that the unusually harsh and narrowly targeted sanctions it had imposed on NS2 in its PEESA and PEESCA sanctions, of 2019 and 2020 respectively, would make construction so difficult as to surely stop it for perhaps some years if not kill the project outright. Yet, Berlin’s (and Copenhagen’s) regulators had allowed construction to continue even after US sanctions had halted reputable insurance companies and commissioning firms from working on NS2. And, Berlin would have simply allowed Russian ships and firms to finish NS2 if Biden put USA sanctions against his German ally.
Biden-Blinken had already been trying to negotiate some “compensation” and “guarantees” from Merkel to protect Ukraine and other allies; but Merkel, and her ministers Maas and Altmaier, had given next to nothing.. [In fact, it seems Merkel was holding back on advancing ANY substantive transatlantic-alliance issues, holding the entire relationship hostage until Biden agreed to waive further Nord Stream 2 sanctions. As I have written elsewhere, acquiring Merkel’s cooperation on transatlantic issues was crucial to Biden-Blinken in the G7- and NATO-meetings, the runup to his in-person face off with Putin. The “optics” of Berlin’s continued stonewalling on transatlantic issues, till NS2 was accepted by the USA, presented a serious dilemma for Washington as Biden needed to meet Putin from a position of demonstrable transatlantic unity, esp. considering Putin’s recent extraordinary military display against Ukraine and unprecedented cyber attacks on the USA and allies in the last some months before the summit. Nevertheless, Berlin was playing hardball with Biden.]
So, like in Afghanistan against the Taliban; Biden came to the conclusion that the fight against Berlin-Moscow to halt NS2 was essentially lost before he arrived to the White House, and escalation would likely fail, making the USA appear even weaker.
This is yet another sharp lesson, for what is now a third consecutive US administration, that Berlin will go to great lengths to insure that its own preferred geostrategy towards Russia and China wins out in the transatlantic alliance over Washington’s more strategy of “renewed Great Power competition.” Biden et al are now constrained to think carefully about how to persuade German elites and popular classes alike that the preferred German approach of protracted “dialogue” and energy partnerships with Russia will ultimately backfire.
2) [AC] Can you actually see any correlation between the European Commission’s statements that “the NS2 is not a project of common Europäern interest” and its (lack of) actions?
[TO’D] Clearly, Germany, and those member states, such as Austria, who agree on building Nord Stream 2, have imposed this project on Europe. Berlin never approached the project from a point of view of solidarity first, it never consulted with the Commission or Member sates it knew would be opposed to the Russian project such as Poland, the Baltic States and many others. So, this is a concrete example of Berlin’s method of de facto leadership of the EU, it is “leadership from behind,” which means imposing its will without making clear its intentions from the start or consulting.
This mode of de facto “leadership” by fiat has often happened on other issues such as the launch and characteristics of its Energiewende, the all-renewables program adopted in 2011, also the decision to shut all nuclear German plants taken hastily by Merkel’s cabinet within about 48 hours of Fukushima in 2014, and its suddenly altered immigration policy that she announced in 2015, none of which did Berlin coordinate with its neighbors or with Brussels in a spirit of solidarity as the EU treaty requires.
The point here is not whether these were wise or unwise policies, but that Germany, under Merkel in particular, has simply imposed decisions that deeply affect its neighboring Member states or the European Commission as a fait accompli, without consultations, and, as she said in 2020, she’d “do it again.” Nord Stream 2 is but one more example.
In this situation, the EU Commission took some time to come to a position of clear opposition to NS2. This occurred during the presidency of Jean-Claude Juncker; but its tools were very meager. The extension of European energy law, the Third Energy Package, to NS2 was a major victory for the Commission’s authority in such weighty energy matters. The EU Commission will now have an opportunity to take leadership and is empowered by law to constrain the negative impacts of NS2 when it reviews the unbundling and approval of the pipeline under the Third Energy Package.
Under the extension of the Third Energy Package law, German regulators and officials will first make their rulings on the Russian proposals governing the ownership and operation of the pipeline; however, then the EU clearly has the right and capacity to overrule any violations it finds under EU law, and we hope it does its job responsibly on this. Poland and others can, and I am sure will, play a very strong role in demanding the Commission do this; and will also, I am sure, pursue legal actions, including suing Nord Stream 2 AG as necessary, especially over the issue of really effective “unbundling” the law requires, to prevent the full use of this pipeline against the interests of EU and Ukrainian energy security.
3) [AC] Is it a good idea to rely on Germany as far as potential sanctioning of Russia is concerned?
[TO’D] No. As an example: after the 2014 Russian invasion of Ukraine; it would have been proper for the European Commission to head the European response. Instead, a mistake was made to allow Germany and France to do this, and we see the consequences. They insist on endless, unproductive negotiations which do not change the status quo of Russian occupation. The USA was, at first, happy to see Germany and France take a leading role in standing up to Russian aggression and aiding Ukraine. However, this initial confidence, we now see, was not justified.
In particular, if there is a Russian cutoff of energy supplies via Ukraine, or new Russian aggression there, it is likely that German leadership will bicker as to “who is responsible” – Ukraine or Russia – and will insist on lesser sanctions than Poland and most other EU states, and will, of course, say that “keeping lines of communication with Moscow” is most important..
This Nord Stream 2 deal is largely symbolic. The anti-NS2 forces in Europe and the USA had already lost their effort to prevent its construction, and at best this agreement was a last attempt to get some “face saving” concessions from Berlin, and lesson the economic impact on Ukraine.
Just to reiterate: any guarantee Merkel might get from Putin, as she promised to do in the deal with Biden, to continue gas transit across Ukraine for several years more at the present rate of around 40 bcm per year, will of course bring some much needed income to Ukraine from transit fees. However, this is much less gas than when it was transiting about 100 bcm in 2010 and 2011(see p 26), before Nord Stream 1 came online in 2012, not to mention the further reductions from 65 bcm last year, after Turkstream 2 came online in 2020. The key issue is that these smaller transit volumes, whose continuation are now under consideration offer no significant deterrence against Russian aggression as was evident previously.
4) Is this agreement in fact a breach of the EU’s “solidarity principle” in energy matters?
The German-Russian project has already been found, by the European Court of Justice, to be in violation of the principle of solidarity in the EU Treaty for its related OPAL pipeline project with Russia.- OPAL is the continuation of Nord Stream 1 carrying Russian gas south across Germany to the border with the Czech Republic. It is certainly possible that Poland and others could raise legal objections for not having been consulted by its fellow Member state, Germany, in building and putting into operation Nord Stream 2 and its continuation pipelines that deeply affect its and EU energy security, and doing so without having gone through the European Commission. So, Yes.
The Global Barrel 