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How to lose friends and alienate people or Germany on Nord Stream 2

Germany’s proceedings around Nord Stream 2 will not only hurt this country, but also European common policy as a whole from a security point of view. Additionally, they are undermining Germany’s already-fragile position as the European mediator and dealmaker.

April 4, 2019 - Wojciech Jakóbik - Articles and Commentary

A piece of the Nord Stream pipe on public display in Kotka, Finland Photo: Vuo (cc) wikimedia.org

In the 1970s Henry Kissinger famously wondered, “Who do I call if I want to call Europe?” His statement underlined the Old Continent’s lack of common policy. Divisions of this nature are especially evidenced in contemporary times when it comes to the Nord Stream 2 project. The European Commission (EC) already assumed that this project, which calls for the construction of another gas pipeline from Russia to Germany, would not serve common European energy policy in terms of diversification. However, energy policy is still decided by individual member states, and Germany has diverged from the EC’s opinion.

That is why the EC’s proposal to limit projects like Nord Stream 2 with antimonopoly rules that fill legal gaps in Europe was met with heavy criticism from Germany and orchestrated efforts in the European Union’s Council, where a German-French alliance assured that legal authorities in Germany, rather than in the EC, will have the final say on details pertaining to Nord Stream 2. Meanwhile a compromise supported by critics of Nord Stream 2 suggested that the EC would supervise any deal on this issue from the start to the end.

A revised gas directive will allow the EU to supervise the German-Russian deal between the German regulator Bundesnetzagentur (BnetzA) and the Russian joint stock company Nord Stream AG, which serves as the project operator for Nord Stream and Nord Stream 2. Gazprom, the Russian gas industry giant owns a 100 per cent of Nord Stream 2 AG. BnetzA has a history of dealings in Gazprom’s favor that have been contested by multiple actors including Poland, Lithuania and Ukraine. One of the most controversial decisions made by BnetzA involved the OPAL pipeline case. OPAL is a pipeline in Germany connected to the original Nord Stream 1 line and designed to disseminate the Russian energy supply it carries further into Central and Western Europe.  BnetzA allowed Gazprom to use all of its capacity to pump more gas from Nord Stream 1 through OPAL, thereby increasing Russia’s saturation of the regional European gas markets. Partly due to these dealings, the EC launched an ongoing investigation of BnetzA under the suspicion that the German regulator has cut taxation and transportation agreements that breach EU regulations.  The German government, however, defends BnetzA and Nord Stream 2 no matter what, as demonstrated by its latest press release.

The French-German assault on the EC’s intervention in defence of Nord Stream 2 on the one hand, and the criticism from the rising majority of this project’s contestants in Poland, Scandinavia, Baltic States and Central Europe on the other hand, reveals how opinions on Gazprom divide Europe. Much derision surrounding Nord Stream 2 already exists – and to think that this pipe is not even functioning yet, at which point one can probably expect increased tensions and arguments over the line’s usage and impacts. What does this mean for common European policy?

Germany’s image as Europe’s dealmaker is under threat. When the Germans and the French propose common policy which implies the establishment of individual member states as European champions of economic sector for the supposed purpose of competing with China, because of Nord Stream 2 such an initative raises fears instead of hopes around Europe. By defending Nord Stream 2 via a political umbrella with its spike aimed at the EC, Germany undermined its coalition capability in the eyes of other countries, particularly those that do not exercise as much power in the European Union. The main assumption after the gas directive case is that rules are rules, but in the end it remains that Germany can win any such economic or energy quarrel in the European Union. The idea of an effective compromise based on the principle of EC supervision is a joke.

It is high time to ask if Germany’s foreign and economic policy is ensnared by its energy relationship with Russia. Ultimately Germany is being hurt as well as the rest of the EU. Russia has betrayed Germany’s trust more than once, for that matter. Take the case of gas turbines sold by the German company Siemens on the belief that they would be installed deep in the Russian steppe on the Taman peninsula but in reality were sent to the illegally annexed Crimean peninsula. On March 18th 2019 Vladimir Putin officially launched power and heat power stations using those turbines – adding huge insult to injury for Germany.

At the same time we need to underscore positive developments in German policy. It is Berlin that should be thanked for sustaining the sanction regime against Moscow in spite of divisions across the EU. The Germans have also been heavily engaged in NATO’s eastern flank initative. They are eager to cooperate with Central and Eastern European countries on economic policies that provide bilateral profits.

Nevertheless these positive aspects cannot excuse Germany’s position regarding Nord Stream 2. At the most basic level, Nord Stream 2 presents a security problem for all of the EU. This exact issue was raised during the Warsaw NATO summit by Poland, USA, Denmark, Norway and other states afraid of little green men on Gotland or somewhere else near the route of Nord Stream 2. Unfortunately official discussion on this topic had been effectively blocked by Germans.

To convince Berlin that something is seriously wrong, Washington is threatening to impose sanctions over engagement in the Nord Stream 2 project. Even if this is an empty threat, demonstrates a significant rift in US-German relations. against situation in which it is Germany to be called if the United States needs to ask Europe about something which would be ideal for Germans or the EC which position is undermined by German unilateral moves around Nord Stream 2. So when Kissinger’s successors in the US administration ask who they should call in Europe now, the answer is different when you ask different Europeans. The EC is doing as much as EU members states let it. It is another call to reform EU institutions, but with so many already-existing divisons, that would be like opening Pandora’s box.

One cannot claim that Nord Stream 2 is only about Ukraine’s returns from gas transit of Russian gas. It is moreover about European unity and hard security. Germany’s persistent addiction to bilateral economic relations with Russia almost always culminates in new problems. They are losing friends in the United States and alienating less-influential EU states. In the end, Germans are offended by Russian policies, as in the case of the Crimean gas turbines from Siemens. Germany must ask itself: are its current policies vis-a-vis Russia and energy really that worthy to be continued?

Wojciech Jakóbik is an energy analyst at the Jagiellonian Institute and editor in chief of biznesalert.pl

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