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CWA # 548, 11 September 2021

NIAS Europe Monitor
Nord Stream-2: Why is the region unhappy about the pipeline?

  Joeana Cera Matthews 

The US and Germany joint statement is a compromise wherein the US suspends sanctions imposed on the Nord Stream-2 pipeline while Germany threatens Moscow against weaponizing the pipeline.

The Nord Stream gas pipeline system from Russia to Germany has been the centre of attention for a while now. The primary opposition against the completion of the pipeline has been from Ukraine and the Central and Eastern European countries (CEECs) since they stand to lose the most via the project. The Nord Stream project presents both an economic and security threat to these countries. The EU also voiced their concern regarding the project though their opposition hasn’t been as strong. 

The threats perceptions: Energy, economy and security
First off, the energy threat. Pre-Nord Stream, gas reserves from northern Russia’s Yamal Peninsula would travel through Ukraine, Slovakia and Czech Republic to finally reach Germany. The initial pipeline bifurcated in Belarus travelling into Poland and the other CEECs, as well. Evidently, pre-Nord Stream gas transit happened via Ukraine and the CEECs. However, on completion of the Nord Stream pipelines, this route will be bypassed with the direct, underwater gas transit route. The detour implies that Ukraine and the CEECs lose out on their gas supplies. Their increased dependence on Russian natural gas leaves them facing an energy crisis with this transition. These countries, along with some members of the EU, thus view the pipeline as a Kremlin geopolitical project aiming to expand Russian influence over European energy resources. 

Second, the economic threat. The bypassing of the present route affects the previously benefitting countries implying that these economies lose out on the gas transit fees. This loss will severely impact their revenues and put them in major financial crises. Third, the security threat. Currently, Russia depends on the CEECs and Ukraine for supplying gas to their European consumers. The reduced dependence post-Nord Stream will assist Russia in increasing its regional destabilization. Their geopolitical argument rests on the premise that purchasing gas from a state-owned enterprise (Gazprom), funnels money directly to the Kremlin. Thus, they would basically end up funding Russia’s nefarious activities both domestically and globally. Ukraine remains the most fearful of such an outcome given their existing conflict with Russia over the Crimean Peninsula and the Donbass region. 

Fourth, the role of history. The regional history plays a significant role in better understanding the CEECs’ stance against the completion of the project. The USSR regime had wreaked havoc in the CEECs and today’s Putin-led Russia doesn’t fall far behind in preying these countries. Ukraine and the CEECs (particularly Poland and the Baltic states) fear the potential increase in Russia's political leverage via the project. Placing the Nord Stream project in this historical perspective explains the vehement opposition staged by Ukraine, Poland and the Baltic states.  

The US-Germany joint statement fails to soften the threat perceptions
The US and Germany have made moderate concessions to Ukraine and the CEECs in an effort to soften the blow. Their joint statement was, in effect, a compromise wherein the US suspended all sanctions imposed on the Nord Stream-2 pipeline while Germany threatened Moscow against weaponizing the pipeline. Primarily focused on the most affected Ukraine, the statement speaks of a Green Fund to invest in Kyiv’s energy sector thus reducing its dependence on fossil fuels. They also expressed their intent to back the energy transitions of the CEECs. 

Germany agreed to use its leverage over Russia to extend the Moscow-Kyiv gas transit agreement by another decade, which otherwise ended in 2024. Increased efforts to implement the Minsk Protocol via the Normandy format was also promised by Germany. But these are just declarations of intention and not substantial enough for the affected countries. Finally, the US’ announcement of the Biden-Zelenskyy meet also raises suspicion of whether it is a US effort to cushion the ‘betrayal’ of Ukraine.

What next?
Ukraine was, primarily, disturbed by the covertness of the statement. The office of the Ukrainian President Volodymyr Zelenskyy said that any decision on Nord Stream-2 couldn’t be taken without all those impacted by the project. Ukraine and Poland had also released a joint statement post the US-Germany declaration; they warned that the pipeline was not only a threat to Kyiv and the CEECs but also to NATO and the EU. They went on to state that supporting the completion of the pipeline only empowered Russia at a time it faced widespread criticism for its destabilizing activities.

The joint statement also indicated a diminishing trust in Germany; whether Berlin’s economic interests outweighed its ability to take a firm stance against Russian aggression worried them. Another concern was the practicality of the declaration. Even if Germany and US upheld their end of the declaration, the fact that Russia held the other end impacted their reliability on the stakeholders. The inability to uphold past agreements added up to this concern. 
Implications

The primary fallout via the latest statement and the larger pipeline project is the victimization of the previous transit countries. More often than not, the sacrosanct principles of the EU disappear when push comes to shove. Realpolitik overshadows value systems while the middlemen – here Ukraine and the CEECs – end up as victims. If history is anything to go by, Germany’s warning to Moscow politicizing energy has limited efficiency. Moscow has been sanctioned in the past and is currently under sanctions, yet it doesn’t seem to abate the Kremlin ability to continue its malicious activities. 

The lack of energy diversification in Europe and its consequently growing reliance on Russian energy – almost to a dangerous level – points to further worry. Environmentalists, however, are concerned of the harmful effects to the fragile marine ecosystems. Even if natural gas were friendlier to the climate than coal; its combustion contributes to global warming. Thus, the construction of a multibillion-euro pipeline indicates a long-term investment ‘locking’ Germany and the EU into fossil fuels. Thus, the pipeline stands to jeopardize the bloc’s move to a low-carbon economy.

Finally, the larger strategy of the US vis-a-vis the compromise shouldn’t go unnoticed. Under the pretence of maintaining ties with ‘good friends’, the US appears to have strategized weakening the Sino-Russian ties whilst strengthening Moscow-EU relations. Their sanctions yielded no results; changing the strategy to indirectly support Moscow seemed a better alternative. The US expects this to reduce Russian aggression in the region and improve bilateral relations. Unfortunately, Ukraine and the CEECs are caught in the political crossfire.


About the author
Joeana Cera Matthews is a Postgraduate Scholar at the Department of International Relations, University of Mysore, and was an intern at NIAS. Her research interests include the refugee crises in Europe, human rights violations of transgender and non-binary people in war zones, and the political issues faced by unrecognized countries. She is currently working on Sino-European relations and its influences in weakening European cohesion.

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