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The Politics of Nord Stream Pipeline between Russia and European Union

Introduction

The Nord Stream pipeline is the longest subsea pipeline in the world. The pipeline includes two lines which run for about 1, 224 km through the Baltic Sea from Vyborg in Russia to Greifswald in Germany (Gazprom, 2020). The Nord Stream pipeline ensures high reliability natural gas to the European countries with Germany being the prime buyer (Whist, 2008). The first string of the pipeline became fully functional by November 2011 and the second one by October 2012. The pipeline was constructed using 1,220-millimeter high strength anti-corrosion concrete coated steel pipes with its outlet pressure at Portovaya Compressor station being 220bar and the outlet pressure in Germany being 106bar (Gazprom, 2020). The Portovaya Compressor Station the first of its kind in the world of the global gas industry with a capacity of around 366MW pumps natural gas into Nord Stream. Gleaned on the attainment of the already existing Nord Stream Pipeline a resolution to build a similar pipeline was manifested. The Nord Stream is a joint program of Wintershall (15.5 percent), Gasunie (9 percent), Engie (9 percent), E.ON (15.5 percent) and Gazprom (51 percent) (Gazprom, 2016). The construction of the pipeline began in 2018 and is expected to be completed by 2020 or the beginning of 2021 with the construction continuing at a very ambitious pace. Similar to its predecessor Nord Stream, Nord Stream-2 has two lines running from Ust-Luga in Russia to Greifswald in Germany. Nord Stream is owned and steered by Nord Stream AG with Gazprom being the prime shareholder and Nord Stream being a wholly-owned ancillary of Gazprom with Nord Stream-2 AG as its owner and machinist (Vanand, 2018).

Map: 1

Map of the Nord Stream

Source: Gazprom (2016).

The capacity of Nord Stream is about 55 billion cubic meters of gas per year and with the inclusion of Nord Stream-2 it is believed to double the capacity to 110 cubic meters of gas per year. The project ever since its birth has been subjected to harsh criticism and opposition by numerous states who believe that they are the ones affected by the pipeline with states such as the Baltic states and Poland expounding it as Russia’s master plan to increase her leverage on them and menace their energy security (Mackinnon, 2020). The United States has been the loudest in its protest against the pipeline and has clearly stated that the pipeline is a way for Russia to dominate Europe and to gain geopolitical interests. The growing dependence on Russian gas is also seen as an underlying threat to the tactical interests of the EU and the common market. In addition, the pipeline is considered as a political and economic threat its surging environmental impact remains to be the sweeping concern of the Baltic States.

The advocates of the pipeline believe that the significance of the project will increase so as the demand for gas. Moreover, Europe’s energy security has been greatly hampered due to various problems that Russia and Ukraine dealt with in the past. The supporters believe that Nord Stream 2 will greatly improve Europe’s security as Ukraine will no longer remain a transit state. The adversaries on the other hand are in contrast to this and state that during such crises Russia has revealed its true intentions and how it uses gas not as a commodity but as a weapon (Kruse and Annette, 2019). They feel that with the operation of the pipeline Russia will have more leverage on Europe in the case of a crisis. Ukraine would also lose about 3 billion Euros in transit fees annually which would deteriorate the financial condition of the country (Kruse and Annette, 2019). The advocates also believe that this project would enable Europe to receive gas at a low price thus making its energy sector secure and Ukraine could buy its gas from Europe instead of Russia for a good price without the risk of a possible crisis. The project also attracts a great deal of critiques in the sphere of its environmental impacts. While the adherents consider it to build by complying with the highest environmental standards, the opponents are of a completely different opinion. However, the Baltic Sea is unlike any other Sea as it is very shallow and is the world’s largest body of brackish water with a very slow turnover rate as it takes around 8 years to replace 50 percent of the water and about 30 or more to replace all the water in the Sea but it does not necessarily mean that the water replaced is clean, which means that the harmful waste discharge will remain in the water for a very long period of time thus posing a threat to marine life. There is much debate as to whether the pipeline is a blessing or a boon and the differences in opinion vary massively. The Baltic States are dependent on Russia for a lot of energy resources, gas being the most acute as the Baltic States import the majority of their energy resources from Russia which is seen as a potentially hostile state by the Baltic Governments (Grigas, 2008). The Nord Stream is a very important project for Germany but for the Baltic States and the transit states like Ukraine, it is seen as a very grave threat as it hampers their national security and energy security simultaneously.

Politics of the Nord Stream Pipeline

The EU member states including the Baltic States have experienced energy disruptions from the Russian energy companies. Russia is not hesitating to use energy as a political tool to influence the region. Estonia, Latvia, Lithuania, Belarus, Georgia, Moldova and Ukraine have faced energy disruptions from the Russian energy companies Gazprom and Transnet. In 2007, Estonia faced energy cuts from the Russian Federation. Latvia also faced a similar situation in 2002 and 2003 continuously. The situation of Lithuania is most vulnerable due to the energy blockades from Russia. Lithuania was a victim of the Russian energy aggression during the independence period. Immediately after the declaration of independence in 1991, Russia blocked energy exports to Lithuania. Lithuania witnessed energy disruptions yet again in 2001, 2005 and 2006. Russia has been very successful in using its energy resources to control the Baltic States. The Baltic energy isolation and absence of the necessary infrastructure is the main reason for the energy vulnerability of Baltic States.

The Nord Stream-2 because of its ongoing status makes it very difficult to draw out the possible implications that it might confer upon the European Union. In the case of completion of the Nord Stream-2, National Security is bound to be affected as the Ukrainian transit line and the Belarusian-Polish gas pipeline are most likely to be abandoned which would provide Russia with an open window for taking up military and actions in Ukraine and Belarus (Atlantic Council, 2021). If Russia happens to deploy their military in Ukraine or Belarus with the intention of hostility, it would pose a serious threat to the National security of Europe as a whole. The energy security is also expected to be disturbed with the completion of the pipeline. With the operation of the Nord Stream-2, the EU will become dangerously dependent on Russian gas making them more vulnerable to cutting off gas supplies during winter which Gazprom is notorious for (Atlantic Council, 2021). Gazprom could financially extort the EU countries as well. Apart from financial extortions and intended gas supply cut-off, accidents could also take place which would result in an acute shortage of the gas demands. The Nord Stream-2 on completion could have devastating repercussions when it comes to geo-politics. It is believed that Russia has intended to have a German and Austrian alliance against Eastern Europe and Northern Europe with the purpose of breaking up the EU (SCFR, 2021). If the Nord Stream-2 becomes operational, it would become really easy for Russia to infiltrate the European energy market and achieve its set goals. The Nord Stream-2 is in violation of the European Energy Policy which requires the diversification of gas supply and production. Since Nord Stream-2 is a fully owned ancillary of Gazprom as its producer as well as its supplier, it is in violation of the Energy Policy. Gazprom has always opposed the Energy Union’s policy of diversification and unbundling and preferred long-term contracts and monopolization instead (Atlantic Council, 2021). The Gas supplies from Russia to the EU would be least impacted as it has declined over the years because Europe is moving towards clean energy usage. Moreover, Gazprom has several pipelines other than Nord Stream-1 and Nord Stream-2 which supplies massive quantities of gas to Europe annually. Europe requires about 135 billion cubic meters of gas annually and with the completion of the Nord Stream-2 Gazprom would be supplying about 319 billion cubic meters annually which is 136 billion cubic meters more than the required amount of gas which is a massive waste (Atlantic Council, 2021). The Nord Stream-2 on completion would have significant implications on the European Union 28 especially in terms of finances. Before the Nord Stream-1 was constructed, Ukraine received about 3 billion US dollars as transit fees but after the Nord Stream-1 became operational, Gazprom cut their supplies and diverted them to the Nord Stream-1 pipeline because of which Ukraine’s annual transit revenues went down to less than 2 billion dollars (European Parliament Think Tank, 2020). After Gazprom seized ownership of the pipeline running through Belarus, Poland and Belarus receive about 500 billion dollars in transit fees. After the completion of the Nord Stream-2 pipeline, Germany would emerge as the prime transit area and would receive about 2 billion US dollars annually for transporting gas to the countries in Southern and Eastern Europe which would subsequently result in Germany becoming the monopoly. The total cost of the Nord Stream-2 Pipeline is estimated to be about 11 billion Euros and Gazprom is expected to finance half of the cost while the other 5 partner companies are meant to lend 950 million Euros each (Atlantic Council, 2021). If the Nord stream-2 ceases, the European Union will not be liable as it had never approved of the project but Germany on the other hand had approved of the project so the German government would most likely become liable. The European Union believes that there is no need for another pipeline to be constructed as it already receives an ample amount of gas through the already existing Pipelines and the addition of another pipeline would be a waste and would make no mercantile sense. If not for political or geopolitical motives, the Nord Stream-2 pipeline serves no purpose. According to the opposition, facilitating the Meddling by the Russian military in Ukraine and Belarus and cutting off of Germany from the rest of Europe seems like the goal behind the pipeline.

America’s Response to the Nord Stream Pipeline

The United States of America has been at the forefront when it comes to opposing the Nord Stream pipeline. Even though the United States is not directly affected by the Nord Stream, they have been the loudest in their protests against the project. The US has taken on its closest allies and the companies that it had differences with. In the year 2019, it was reported that the US even went to the extent of sending a threatening letter to the German companies who were working on the pipeline and further escalated the project. The United States passed a defense bill as a part of the 2020 National Defense Authorization Act which stated that 60 days after it has been enacted, a report ought to be filed to congressional committees which would identify the vessels that engaged in laying of the pipes and the ones involved would be dealt with severities so much to the point of their visas being revoked and block all transactions related to US properties (Mackinnon, 2020). The bill allotted the individuals a period of 30 days to reduce their involvement in the project. The US secretary of State Antony Blinken stated that the Biden administration intended on upholding the sanctions legislation and made it clear that the Nord Stream 2 was a bad deal and a Russian geopolitical project intended to divide Europe and weaken European energy security (DW, 2021). The Nord Stream has sparked fears that the pipeline would be used by Russia to increase and expand their already existing Leverage over Europe. Approximately, about 20 companies which comprised mostly the insurers bailed out of the project as a response to the US sanction warnings (DW, 2021). Some of the German politicians hoped that with the end of the Trump era and with Biden taking over as the president diplomacy would prevail and they would be able to move forward with the completion of the pipeline. However, the Biden administration is being pressured to implement the sanctions and if done so it would not only put Russia under a major loss but result in an exorbitant grave for some of the substantial business enterprises of Europe. The Biden administration seems to be unprepared to undermine their relations with Moscow. The US has been criticized time and again for keeping their business interests at heart as they believe that the only reason why the US has been in strong opposition to the pipeline is that they want to sell their liquefied gas to the European countries. This confrontation is all about the show of strength, influence and power to prove their point and can be seen as a brawl against North Stream AG whose major shareholder is Gazprom and is the enterprise behind the pipeline (DW, 2019). If handled in a reckless manner, the sanctions would sabotage President Joe Biden’s desire of restoring a strong relationship with Germany and if it were to result in a Trans-Atlantic conflict, it could even end up hampering the US-EU collaboration to sustain the sanctions on Russia which were implemented because of Russia’s hostility against Ukraine.

Recent Developments of the Nord Stream Pipeline

The first string of the Nord Stream-2 was filled up in October 2021 and the Second string in December. The Russian President, Vladimir Putin and Deputy Prime Minister Alexander Novak rejected all accusations made against the Nord Stream not complying with European energy Law. Novak stated that the Nord Stream would not face any disruptions regarding the certification (The Hindu, 2021). The construction of Nord Stream-2 was completed in September 2021 however, the pipeline is not yet operational as it is still anticipated validation from Belgium and Germany.

Conclusion

The EU has a major role to play in the member states’ energy security. Since, many post-Soviet states are integrated into the EU and its attempts to diversify energy imports from alternative energy sources such as the United States, the Middle East and Central Asian countries can reduce the dependency on the Russian energy sector and provide energy security. However, the European Union has initiated several strategies and projects to integrate the post-Soviet states’ energy market into the EU market. It has adopted a common energy policy to strengthen the member states’ energy security supply. The primary objective of the common energy policy is to create a single energy market in the region. It allowed the new member states to raise their opinion against energy security challenges. In 2009, the EU also adopted a third energy package intending to develop energy interconnections and integrate the energy sector. In 2009, the EU established the Baltic Energy Market Interconnection Plan (BEMIP) for the Baltic States. The main areas of the BEMIP are electricity market integration, electricity interconnections and generation and gas internal market and infrastructure. The EU Strategy for the Baltic Sea Region (EUSBSR) is another important strategic document that identifies the development prerequisites that are essential for member states at the regional level. However, since, Germany is one of the powerful members of the Union, the completion of the Nord Stream pipeline between Germany and Russia created a rift between EU member states.

Dr. Karamala Areesh Kumar
Dr. Karamala Areesh Kumar teaches International Relations and World Politics at P.G and Research Centre, St. Joseph’s College (Autonomous), Bangalore, Karnataka. Ph: 9654724441
C Achila Chang
C Achila Chang, Post Graduate student, Department of Political Science, St. Joseph’s College (Autonomous), Bangalore, Karnataka.
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