Nord Stream 2 is a $12 billion pipeline bringing the Arctic Russian gas under the Baltic Sea to Germany. Doesn’t seem that hot-button right. I mean, it’s a progressive initiative that is expected to double the Russian gas supply to Germany, Europe’s largest economy. It’s a little more complicated than that. The reality is that Russia already supplies 40% of the EU’s total gas supply – just behind Norway. The new pipeline is reportedly touted to increase that amount by as much as 55 billion cubic meters per annum. That project has thus permeated a prospect of EU’s dependence on Russia, majorly spearheaded by the Russian-arch-rival United States. Another hurdle is that the pipeline is effortlessly skipping Ukraine to supply gas to Germany. With the Moscow-Ukraine Transit agreement expiring in 2024, it is estimated that the pipeline would cost Kyiv an annual loss of $1.5 billion in transit fees. Thus, brewing geopolitical aggravation and monopolizing concerns misting Russia, the Nord Stream 2 Pipeline is much more complicated than I initially assumed; until I dabbled with each perspective in detail.
Germany’s Position
Naturally, Germany is a gaining party in the pipeline agreement. The Doubling gas supply, expedited transit, fewer hurdles. What’s not to rejoice. However, Germany is in a conflict of interest. As far as I have studied Germany, it has majorly played an arbitrator in the region, primarily between Europe and Russia. Germany stood as a mediator in a variety of issues that could have sparked chaos had it not been for the deft strategies of German politicians; or particularly a singular politician. The departing German Chancellor, Angela Merkel, is on the verge of step-down after being 16 years in power. She has brokered a handful of accords that could have taken the region by a storm had it not been her mediation to put things into perspective. She’s doing the same today as she went on a spree to meet dignitaries through Europe and across the Atlantic to settle issues on a positive note before she bids farewell next month. During her visit to Ukraine, she affirmed that the pipeline ‘should not be used as a geopolitical weapon’ and reiterated that under the US-Germany agreement signed in July, Russia would face sanctions if it ever resorts to using Nord Stream 2 to gain nefarious advantages. In my opinion, her words were simply on wobbly ground.
Mrs. Merkel has always played a mediator, whether it is the stiffened relations following the Russian annexation of Crimea or the volatile movements in the East Ukrainian region of Donbas. However, in the last few months, Mrs. Merkel has been at a crossroads when it comes to Kremlin’s infamous human rights violations. I mean it’s not a surprise that the Kremlin has always resorted to eliminate political adversaries through extreme means of assassination or incarceration. Yet, the recent example of poisoning of Mr. Alexei Navalny, a popular activist, and critic of the Kremlin (particularly President Vladimir Putin), took a surprising turn when Mrs. Merkel adopted an unconventionally stringent tone against Russia. She even went on to threaten the prospect of Nord Stream as Berlin harbored a reviving Navalny. However, Mr. Navalny was subsequently tried and imprisoned on his return to Moscow while the Nord Stream 2 continues bustling to completion. Clearly, the threats were not heeded.
Moreover, while in Mrs. Merkel’s recent visit to Russia she further pushed the notion, she was rather rebuffed by Mr. Putin, deeming the issue as judicial and not political. Mr. Putin further dismissed her entreaties regarding the extension of the transit agreement with Ukraine on the basis of demand contingency of Europe. To quote, Mr. Putin stated: “This is an obvious thing: we can’t sign a transit contract [beyond 2024] if we don’t have contracts to supply our consumers in Europe,”. It is really not a stark extrapolation on my part, therefore, that after Germany’s most powerful leader steps down, Russia could very well resort to not extending the transit deal with Ukraine despite a pretense of compliance and reassurance – even at the brunt of fraying ties.
United States’ Position
It’s not news that the US opposes two of its long-standing foes in the region on all fronts: China and Russia. Easy to grasp then that the US voiced deep concern over Russia’s inflating energy exports to Europe. However, President Biden decided to drop sanctions off the builders of Nord Stream 2 under the US-Germany agreement: offering assurances that Ukraine would be facilitated for the lost revenue. The waived sanctions would have stopped the project had Mr. Biden not relented his stance to deter potential Russian aggression. However, while the agreement was not so much as a trust exercise in Russia than a strategic step to mend ties with Germany in its efforts to rally Berlin’s support in leveling with regional rivals like Iran and China, US State Department did offer a flimsy warning that renewed sanctions would be slapped if Russia tries to bully Ukraine via Nord Stream 2. I only gather one instance (sort of a question) from this tryst of events. Apparently, Russia has continued to embark on political strangulation of opponents and activists despite mounding sanctions for years. How exactly is a threat of a sanction to deter Russia?
Ukraine’s Position
Probably the most hopeless joint press conference I have ever witnessed. As Mrs. Merkel joined the stage with Ukraine’s President, Volodymyr Zelenskyy, he reiterated his reservations deeming Nord Stream 2 pipeline as a ‘dangerous geopolitical weapon’. Mr. Zelenskyy stated: “We view the project exclusively through the prism of security and consider it a dangerous geopolitical weapon of the Kremlin”. Nonetheless, Mr. Zelenskyy was again reassured by Mrs. Merkel, just two days after she visited Russia, that the pipeline would not inhibit its security nor hamper its economic aspirations. However, the assurances were deemed as too general especially when Russia is so close to holding absolute control of a major energy source to Europe. The sentiment is quite clear apparently. Ukraine comprehends that Russia holds the strings while Europe prefers economic endeavors over safeguarding its geopolitical position in the region. It is evident by the recent statement of Naftogaz, Ukraine’s State Energy Firm, which cast doubt over the prospect of Russia extending the gas transit agreement beyond 2024. Clear to say, both the dull press conference and the growing pessimism within Ukraine paint a bleak picture around the assurances of Germany.
Future Outlook
My opinion is deeply rational when it comes to suggesting any future prospects that could or could not drive the region’s geopolitical and economic outlook. Nord Stream 2 pipeline is on the brink of completion with only 15 km (9 miles) left to construct. While the United States recently slammed sanctions over two Russian companies closely involved in the Nord Stream 2 project, what’s worthy of attention is the fact that the Kremlin is brazen over the fact that the nearly-completed project could not be impeded anymore. So were the sentiments I conjured from the statement of Daniel Vajdich, president of a company that advises the Ukrainian Energy industry, who stated: “These sanctions do nothing to halt Nord Stream 2”. Thus, it is apparent that the only real weapon enjoyed by the US is turning futile to resist Russia early on; the prospect of holding any leverage, therefore, over an aggressive Kremlin is simply wishful thinking.
Meanwhile, albeit Mrs. Merkel’s intermittent reassurances and a generous pledge of contributing at least $175 million to the new $1 billion “Green fund for Ukraine”, her powers of rhetoric are slipping. Recent pre-polls show that her Christian Democratic Union (CDU) is barely leading the tally within Germany, quite a tick to cast that the party is losing its luster post Merkel’s departure. Thus, I opine that that with the US crippled on multiple fronts (Afghanistan being an eye-opener for the optimists), and Germany heading towards a political divide, Ukraine’s reservations are quite legitimate. And as Russia continues to turn Europe into a spiral of energy dependence, it’s only a matter of time before Ukraine finds isolation in a conflict surrounded by a sea of present, yet invalid allies.
