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Nord Stream 2 undermines NATO unity

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The Nord Stream 2 gas pipeline is quickly turning into major irritant souring relations between the United States and its European allies. For the first time in the recent history of Euro-Atlantic integration, Germany has made it perfectly clear at the highest level that it could introduce sanctions against Washington and could even persuade its EU and NATO partners to act as a united front against the US. The reason for this is the stubborn desire by the US Congress to slap punitive sanctions on the European participants in the Nord Stream 2 project, including both private companies and government agencies in Germany and other countries.

The US news agency Bloomberg recently reported, citing two German officials that Germany is preparing to strike back if the US introduces additional sanctions against the Nord Stream 2 gas pipeline.

According to the agency, the government of Chancellor Angela Merkel is mulling the possibility of calling for coordinated actions by the European Union if Washington goes through with sanctions against the participants in the Nord Stream 2 project. Referring to a statement by the German Ministry of Economics, Bloomberg also emphasized that new US sanctions would hit German and European companies, banks, and government agencies.

Although seemingly calm on the outside, Angela Merkel has clearly toughened her rhetoric nonetheless. In her July 2 address to parliament, she said that Berlin looks at the Nord Stream 2 project in terms of its economic benefits and considers it necessary to complete it. She added that in spite of the threatened US sanctions, Germany will support the completion of the gas pipeline running under the Baltic Sea. She argued that the new extended sanctions being discussed on Capitol Hill in Washington are extraterritorial, and “are not consistent with my understanding of the law.”

“We still believe that it’s right to get the project done,” Merkel emphasized.

A few hours before the Chancellor’s speech in the Bundestag, Minister of State at the Federal Foreign Office Niels Annen told a meeting of the parliamentary committee on economics and energy that Washington’s new sanctions on Nord Stream 2 are unacceptable: “The fact that the US Congress acts as a regulator in European affairs is absurd. Just imagine, if we adopted a resolution on US energy security in the Bundestag,” Annen stressed. According to him, imposing sanctions is not the way to go because what this particular case is all about is more than just relations between Germany and the US, it is about European sovereignty. Niels Annen also welcomed the committee’s stated desire to explain to the US lawmakers its position on Nord Stream 2.

However, Angela Merkel still views US-German relations in a wider context of European and global security. In an interview published recently in several European media, she admitted the possibility of a new geopolitical reality where the United States would not have a leading role: “We grew up in the certain knowledge that the United States wanted to be a world power. Should the US now wish to withdraw from that role of its own free will, we would have to reflect on that very deeply.”

Objectively speaking, the positions of Germany and its partners (including Austria) regarding the implementation of the Nord Stream 2 project can be strengthened by differences existing on this issue in the United States itself. Congress is currently considering two options for sanctions, with the most recent one being the mildest of the two. Both bills envision additional restrictions on the use of ships, including for preparing the sites the pipeline will run along, and may also prohibit foreign companies from providing insurance risk assessment services to the Nord Stream 2 project. The main disagreement is about US sanctions against foreign organizations that conduct testing and certification of the pipeline. In a nutshell, it comes down to the fact that a gas pipeline cannot be launched without a final certificate of compliance with all required international standards.

According to available information, in view of the upcoming presidential elections and the worsening domestic situation, most US senators are now gravitating towards a milder resolution in order to avoid aggravating contradictions already existing between the United States and Germany, as well as within NATO as a whole, and also in order not to play up to President Donald Trump, who has recently toughened his stance on Berlin. At the same time, in late June, a group of US senators, including Ted Cruise, Jeanne Shaheen, John Barrasso, Ron Johnson and Tom Cotton, proposed including sanctions on the Nord Stream 2 project in the US defense budget for fiscal year 2020-2021. The authors of the initiative believe that it would fast-track the possible introduction of sanctions, because, unlike a regular bill that can be subject to lengthy discussion, the defense budget is invariably approved each fall.

President Trump has recently been pressing for new sanctions against Nord Stream 2, while simultaneously ratcheting up his criticism of Germany. According to his former National Security Adviser John Bolton, whose book of memoirs came out right amid the current aggravation of the political situation in the US, two years ago, Trump openly threatened to withdraw the United States from NATO because Germany and its allies were implementing  the Nord Stream 2 project. According to Donald Trump’s logic, since the US pays Europeans for their safety, Europeans, in return, must buy American liquefied natural gas, even at a higher price.

What happens next will depend on the position of Germany and other European countries wishing to maintain their energy-related cooperation with Russia. Stanislav Mitrakhovich, a senior expert at the Russian National Energy Security Fund and the Financial University, believes that new US sanctions can slow down the project, but without resistance from Europe Washington may go even further.

“If the United States feels that Germany is ready to back off and dance to Washington’s tune, it can still go ahead and introduce tough measures, including against German businesses. If so, the construction might be put on ice simply because the pipes are in Germany.”

Meanwhile, in Germany itself the media has so far refrained from overdramatizing the situation around the completion of the Nord Stream 2 project. Thus, the newspaper Die Welt believes that the project operator has a chance to complete the construction of the pipeline without fearing US sanctions simply by changing the ownership of the Akademik Chersky pipe-laying ship, which has been commissioned to finish the job. The Gazprom Fleet Company could re-register the Akademik Chgersky, which is its only pipe-laying vessel, to the Samara Thermal Energy Property Fund (STIF), which is not subject to possible sanctions. According to the newspaper, the only impediment to the pipeline’s construction could be a ban on most types of work in the Baltic Sea in July-August for reasons of conservation of local fish stocks (protection of cod spawning).

The whole situation warrants a further toughening of rhetoric on both sides of the Atlantic. In a statement, carried by the business newspaper Handelsblatt, two Bundestag deputies – Timon Gremmels (SPD faction’s speaker on gas policy) and Markus Töns (SPD faction’s speaker on trade policy) slammed the US sanctions as “an encroachment on the principle of legality and protection of investments in Europe.” They emphasized that “the threat of tougher extraterritorial sanctions has consolidated the ranks of the German Bundestag. Even the parliamentary factions generally critical of the gas pipeline project see the proposed restrictions as a violation of international law and an attempt to undermine the sovereignty of Europe.”

“We are convinced that the time of diplomatic restraint is now over. To protect European interests, the German government and the European Union should introduce countermeasures and consider the use of retaliatory sanctions, for example, against US shale gas. The real threat of serious retaliatory sanctions is the only way we can possibly resolve the conflict. This is the only language Donald Trump understands,” the MPs stressed.

For Russia, this is creating opportunities for closer trade, economic and political cooperation with Germany and other European countries. Considering the scope of German business involvement in the Nord Stream 2 project and the personal position of Chancellor Angela Merkel, the chances are high that the gas pipeline will be completed and Moscow will be able to benefit from the growing contradictions between the US and Europe.

From our partner International Affairs

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Bids open for Somalia’s first-ever oil block licensing round

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Somalia has announced that it is opening licensing rounds for seven offshore oil blocks. This comes days after the Federal Government of Somalia approved the board members of the newly established Somali Petroleum Authority (SPA), which will serve to be the regulatory body of Somalia’s oil and gas industry.

Somalia’s Minister of Petroleum and Mineral Resources Abdirashid M. Ahmed stated that the establishment of a regulator leadership is the first critical step of the implementation of Somalia’s petroleum law which was passed earlier this year and signed by President Mohamed Abdullahi Mohamed “Farmaajo”.

The Petroleum Law asserts that the regulatory body serves to design a financial and managerial system that fosters international competition and investment into Somalia’s oil and gas industry. While also ensuring the citizens of Somalia, and the Federal Member States see their fair share of oil and gas revenue based on the revenue-sharing agreement.

Somalia has been plagued with civil war, drought and famine for nearly three decades, tapping into Somalia’s vast oil reserves which are estimated to be approximately 30 billion barrels would greatly contribute to the rebuilding and the development of the country’s infrastructure, security, and the economic and social sectors. Exploration for oil in the East African nation started well before the nations collapse in 1991. ExxonMobil and Shell previously had rights to five offshore oil blocks in Somalia and has recently renewed its previous lease agreement with the government of Somalia. Both companies have agreed to pay $1.7 million per month in rent for the leased offshore blocks.

The Office of Minister of Petroleum and Mineral Resources stated that the 7 blocks which are up for bidding process are among “the most prospective areas for hydrocarbon exploration and production in Somalia”

The licensing round will take place between August 4th, 2020, and March 12th, 2021.

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Armenia’s attack against Tovuz is also an attack against Europe’s energy security

Dr. Esmira Jafarova

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The recent escalation of tensions between Armenia and Azerbaijan, this time along the international border in the direction of the Tovuz district of Azerbaijan in the aftermath of an armed attack launched by Armenia on July12–14, 2020,had been brewing for some time before finally boiling over into full-fledged military clashes, the worst in recent years, that caused causalities and destruction on both sides. Azerbaijan lost more than 10 servicemen, including one general and a 76-year-old civilian. There are many reasons why this attack happened in this particular border area (and not along the Line of Contact, as usual) and at this particular time, but in this piece I want specifically to focus on one of them and, in concurrence with other internationally recognized scholars in this field, assert that this attack against Azerbaijan should be considered as an attack against Europe’s energy security and well-being.

To begin, a brief review of the history of recent developments in conflict resolution testifies that, although the year 2019 was relatively incident free along the Line of Contact between the Armed Forces of Armenia and Azerbaijan, and for the first time in many years mutual visits of journalists took pace, the year was also identified as the “lost year for the conflict settlement” owing to the lack of progress in the negotiations. This absence of progress was accompanied by incendiary rhetoric employed by Armenia’s Prime Minister Nikol Pashinyan who, having ascended to power on the back of the many alluring promises of the so-called “Velvet Revolution,” found himself grappling to deliver on those ambitious reform pledges. The harbingers of heightening hostility were seen in Pashinyan’s infamous declaration during the pan-Armenian games held in Khankendi on August 5,2019, when he said that “Nagorno-Karabakh is Armenia, and that is all;” as well as his continuous insistence on changing the negotiation format –already established by the relevant decisions of the OSCE –to include representatives of the puppet regime in the occupied Nagorno-Karabakh region as an independent party to the peace negotiations.

The year 2020 started off with the January meeting of the Foreign Ministers in Geneva, and in April and June two virtual meetings were held because of COVID-19 lockdowns; however, hopes for any positive progress quickly subsided in the wake of other negative developments. The so-called “parliamentary and presidential elections” that were held by Armenia in the occupied Nagorno-Karabakh region of Azerbaijan on March31, 2020, were condemned by the international community. These mock elections later culminated in the Shusha provocation,in which the “newly elected president” of the puppet regime in the occupied territories of Azerbaijan was “inaugurated” in Shusha – a city that carries great moral significance for Azerbaijan. The last straw in a hostile build-up was the denial by Pashinyan of Russia’s Foreign Minister Sergei Lavrov’s comments about a staged, step-by-step solution to the conflict; Pashinyan denied that this was ever the subject of negotiations. The very recent threats by the Armenian Ministry of Defense, which publicly threatened “to occupy new advantageous positions” in Azerbaijan, further testified to the increasingly militaristic mood among Armenia’s upper echelons.

This litany of discouraging events relating to the peace process over the last year and a half in some ways heralded what we witnessed on July12–14, 2020.This attack against Azerbaijan along the international border between Armenia and Azerbaijan reflects the deep frustration of the Pashinyan regime in its inability to bring about the promised changes. Economic problems were heightened by the COVID-19-induced challenge and decreasing foreign assistance, and this was all happening against the backdrop of Azerbaijan’s increasing successes domestically, economically and internationally. Azerbaijan has long been established as an important provider of energy security and sustainable development for Europe through the energy projects that it is implementing together with its international partners. The Baku–Tbilisi–Supsa Western Export (1998) and Baku–Tbilisi–Ceyhan (2005) oil pipelines and Baku–Tbilisi–Erzurum (2006) gas pipeline have enhanced Azerbaijan’s role as an energy producing and exporting country, and the Southern Gas Corridor (SGC) is already becoming a reality. This 3500-km-long Corridor comprises four segments – the Shah Deniz-II project, Southern Caucasus Pipeline Extension (SCPX), Trans Anatolian Pipeline (TANAP) and its final portion, the Trans Adriatic Pipeline (TAP). The Corridor passes through seven countries – Azerbaijan, Georgia, Turkey, Bulgaria, Greece, Albania and Italy – with Italy being the final destination receiving Caspian gas. Turkey is already receiving gas via TANAP and is contracted to accept up to 6 billion cubic meters of gas via this pipeline. Europe is expected to receive 10 billion cubic meters of Azerbaijani gas per year, and the first gas has already arrived on Albanian territory. The SGC is scheduled to be fully operational by fall 2020 and TAP is almost complete. Things are progressing uninhibitedly and even the COVID-19 pandemic has been unable topreventthe success of the SGC. This Corridor stands as one of the guarantors of Europe’s energy security by providing diversification of energy sources and routes, even despite Europe’s Green Deal, which also acknowledges the continent’s long-term demand for gas.

Such critical infrastructure, vital for Europe’s energy security, passes close to the border area that includes the Tovuz district attacked by the Armed Forces of the Republic of Armenia on July12–14. Armenia is the only country in the South Caucasus that is isolated from these regional energy projects owing to its policy of expansion and occupation. It is thus the only country that does not have anything to losefrom creating chaos and destruction around this critical energy infrastructure. Jealousy and the feeling of self-imposed isolation from all regional cooperation initiatives have no doubt increased Armenia’s hostility toward these energy projects. Further vivid evidence of Armenia’s belligerence against Azerbaijan’s energy infrastructure was provided by its threat to attack the Mingachevir Dam, a civilian infrastructure project that is also a vital component of Azerbaijan’s largest hydroelectric power plant. Hydroelectric power comprises the largest component in Azerbaijan’s renewable energy potential, today standing at around 17–18%ofthe overall energy balance of the country. It is not difficult to imagine the magnitude of civilian causalities in case such a destruction materializes. 

By conducting this act of aggression against Azerbaijan along the international border in the direction of Tovuz, Armenia wanted firstly, to divert attention from its own internal problems. Secondly, the regime desired to disguise its failures on the international front, especially recently when Azerbaijan initiated the summoning of a special session of the United Nations General Assembly related to COVID-19,convened on July 10, that was supported by more than 130 members of the UN. Thirdly, Armenia wanted to drag in the Collective Security Treaty Organization (CSTO) against Azerbaijan by invoking Article 4, which states: “… if one of the States Parties is subjected to aggression by any state or group of states, then this will be considered as aggression against all States Parties to this Treaty…”.Fourthly, and the central thesis of this article, Armenia intended to target critical energy infrastructure implemented by Azerbaijan and its international partners, thereby jeopardizing the energy security of not only the neighboring region, but also of the greater European continent. The aforementioned existing oil and gas infrastructure aside, the SGC is set to be fully operational by fall 2020, and this multibillion-dollar megaproject offers economic, social and many other benefits to all participating countries involved in the construction and implementation of this project. Any damage to this critical infrastructure would deal a heavy blow to the current and future sustainable development of Europe.

Europe must therefore be vigilant regarding such provocations. International actors, including the European Union,OSCE Minsk Group, United Nations, United States, and the Russian Federation, called for an immediate cessation of hostilities between Armenia and Azerbaijan. However, given what is at stake,including this time the crucial energy infrastructure, had Armenia’sattack not been proportionately parried by the Azerbaijani Armed Forces, the statement made by the European Union about this recent military attack could have contained stronger language beyond just “…urging both sides to stop the armed confrontation, refrain from action and rhetoric that provoke tension, and undertake immediate measures to prevent further escalation… .” Naming and shaming the aggressor appropriately is indispensable in this situation. As Mr. Hikmat Hajiyev, Head of Foreign Policy Department of the Presidential Administration and Adviser to the President of the Republic of Azerbaijan on Foreign Affairs, also noted: “the EU should distinguish between the aggressor and the subject of aggression.”

In the 21st century, the international community should not tolerate such flagrant violations of international law; disrespect of UN Security Council resolutions (822, 853, 874, and 884) and other relevant international documents calling for an end to the occupation of Azerbaijani territories; and the feeling of impunity in instigating an attack against a sovereign state, a neighbor, and a crucial player in the realization of critical energy infrastructure projects key to Europe’s own energy security. Azerbaijan has long put up with such aggression and the occupation of its internationally recognized territories in Nagorno-Karabakh region and seven adjacent districts, and has opted for negotiations toward a peaceful solution of the conflict. Yet the aggressor cannot be allowed to continue its attacks against other parts of Azerbaijan– this time Tovuz –thereby jeopardizing not only the latter, but also energy security and sustainable development of the greater European continent just because such provocations seem to offer an escape from the regime’s domestic and external problems. Such practices should be condemned in the strongest possible terms. This should be done not only for the sake of Azerbaijan and regional security in the South Caucasus, but in the name of Europe’s own energy security and well-being. 

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Palestine Plays Regional Power Politics with Proposed Energy Deal

Dr. James M. Dorsey

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Faed Mustafa, Palestine’s ambassador in Ankara, Turkey

When Faed Mustafa, Palestine’s ambassador in Ankara, expressed interest in June in negotiating with Turkey an agreement on the delineation of maritime boundaries in the eastern Mediterranean and cooperating on the exploitation of natural resources, he was repositioning Palestine in the larger struggle for regional dominance and the future of his state.

“We also have rights in the Mediterranean. Palestine has shares in oil and gas located in the eastern Mediterranean. We are ready to cooperate in these areas and sign a deal,” Mr. Mustafa said.

Mr. Mustafa did not spell it out, but Palestine would bring the Gaza Marine gas deposit, 36 kilometers off the Gazan coast, to the table. Discovered in 1999, the field, believed to have reserves of 31 billion cubic meters, remains unexplored as a result of multiple armed Israeli-Palestinian clashes, Israeli obstruction, and repeated changes in the consortium that would have ultimately exploited the field.

Palestine’s efforts to hook up with Turkey, at a time when relations with Israel have all but broken down, coincide with stepped up Israeli attempts to stymie Turkish inroads in Palestine paved by support for activists in Jerusalem and funding of historic and cultural facilities, in the wake of US President Donald J. Trump’s 2018 recognition of the city as Israel’s capital.

The Palestinian move also is a ploy to counter several steps taken by the United Arab Emirates and Saudi Arabia to confront Turkey in Jerusalem and the eastern Mediterranean, facilitate a US plan to resolve the Palestinian-Israeli conflict that endorses annexation, and influence the succession of ailing 84-year old Palestinian President Mahmoud Abbas.

Turkish President Recep Tayyip Erdogan vowed last week in a speech celebrating the change of status of Istanbul’s Hagia Sofia – originally built as a Greek Orthodox church in 537 AD, then renovated into a mosque before becoming a museum by the founder of the Turkish Republic, Mustafa Kemal Ataturk, in 1935 – to a mosque once again this month, that it would be “the harbinger of the liberation of the Al-Aqsa mosque.”

Al-Aqsa on the Harm-e-Sharif or Temple Mount in Jerusalem is Islam’s third holiest shrine. Backed by Israel, Saudi Arabia has sought to muscle its way into the Jordanian-controlled endowment that administers the Harm-e-Sharif.

A Palestine hook-up with Turkey could complicate Palestinian membership of the East Mediterranean Gas Forum, dubbed the OPEC of Mediterranean gas, that also includes Egypt, Cyprus, Greece, Israel, Italy, and Jordan. France has applied for membership in the Cairo-based grouping while the United States is seeking observer status.

Founded in January and backed by the UAE, the Forum is virulently opposed to Turkish attempts to redraw the maritime boundaries in the region on the back of an agreement with Libya. Turkey refused to join the Forum.

While it is unlikely that the Gaza field will be operational any time soon, production would reduce Palestinian dependence on Israel. Palestinian officials said early this year that they were discussing with Israel an extension of Israeli pipelines to send gas from Israeli gas fields to Palestine but that the talks, contrary to Israeli assertions, did not include development of the Gaza field.

In a twist of irony, Qatar, the UAE’s nemesis, would support a pipeline agreement by guaranteeing Palestinian payments for the gas. The Israeli pipeline along a 40-kilometer route adjacent to the Gaza border with three pumping stations would enable Gaza to operate a 400 MW power plant in a region that has, at the best of times, an energy supply of 15 hours a day.

The status of the talks remains unclear given an apparent delay of Prime Minister Benjamin Netanyahu’s annexation plans amid international condemnation and US insistence that the Israeli leader postpone his move that had been scheduled for July 1.

Qatar reportedly threatened to cut off millions of dollars in aid to Gaza, provided in coordination with the Israeli government, if the Jewish state pressed ahead with annexation.

In June, Israel  approved the transfer of US$50 million from Qatar to Gaza in a bid to dial back mounting tension with militants in the Strip that could spark renewed military confrontation as both Israel and Palestine struggle to get a grip on the coronavirus.

Some Palestinian analysts see the pipeline deal as an attempt by the Palestine Authority (PA) to enhance its influence in Gaza and undermine Hamas – its Islamist rival that controls the Strip – by a significant contribution to a surge in the power supply and a dramatic reduction of the cost of electricity. The risk, these analysts say, is that the pipeline would increase Palestinian dependence on Israel.

Economist Nasr Abdel Karim argued that Israel would only allow enhanced flows of gas, including from the Gaza field, if it leads to an even deeper split between the territory and the West Bank.

“Israel will not allow the Palestinians to benefit from the gas field for economic and political reasons. Israel might allow this in one case — if this plan is part of a bigger project to develop Gaza’s economy so that it splits from the PA and the West Bank,” Mr. Abdel Karim said.

Author’s note: An initial version of this story was first published in Inside Arabia

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