Germany-Russia gas links: Ukraine more concerned than Trump

09:00, 12 July 2018
Economy
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Photo from UNIAN

Donald Trump may have used typically emotive – if premeditated – language from the outset at the NATO summit in Brussels to lambast Germany for its willingness to build a gas pipeline, but the U.S. president’s view that this will make Europe particularly dependent on Russian gas is widely shared by European politicians, thinktanks and energy specialists, including some in Berlin.

No country is angrier about the pipeline than Ukraine as it stands to lose billions of much needed dollars if Russia can transfer its gas transmissions to Europe across the Baltic Sea, away from a pipeline running across Ukrainian territory, the Guardian reports.

Earlier this week, Ukrainian President Petro Poroshenko said: “This is not a commercial project – it is not economical or profitable – it is absolutely a political project. There is no point, from the economic point of view, creating this project. This is absolutely a geopolitical project.”

By contrast, the German chancellor, Angela Merkel, has tried to maintain that the construction of Nord Stream 2 pipeline is a common sense economic project, with no political consequence. For many, her refusal to see the geopolitical implications of making Europe so dependent on Russian energy shows the reach that, the majority shareholder in the project, has into Germany. The presence of the former German chancellor Gerhard Schroeder on its board and his friendship with Putin seems only to symbolize the triumph of Russian interests.

Read alsoPolish PM warns Nord Stream 2 could undermine security

The aim of a second double-pipeline – which was once scheduled for completion by the end of 2019, but is now likely to be delayed – is to act as a decades-long substitute for the decreasing production of the Netherlands, Denmark and Britain. For Merkel it is also politically essential to get Germany out of nuclear energy by 2022, but still reduce her country’s carbon emissions.

Sweden, Denmark and Finland have expressed ecological reservations about a second natural gas pipeline at the bottom of the Baltic. The Danish parliament has empowered its government to veto the pipeline on security or environmental grounds and, separately, the European commission has objected on the basis that the project will undermine its plans for an energy union, including a greater diversity of supply.

The UK has also been objecting, albeit less stridently. Poking Merkel over Nord Stream 2 risks alienating her at a sensitive moment.

One of the curiosities of the controversy is that attitudes to the pipeline are thought to be a litmus test of how someone perceives Russia. By opposing the pipeline, perhaps for an amalgam of U.S. commercial and security reasons, Donald Trump seems to set himself against Putin’s largest geoeconomic project.

But it is possible that Trump’s target is not Moscow, but Berlin, and the Russian president is merely the victim of a wider trial of strength between the two great western economies.

There are also questions over whether Germany needs Nord Stream 2. The pipeline will deliver at least 55bn cubic metres (bcm) of natural gas from Russia to Germany annually, just like the first-double pipeline, representing 110 bcm together. At present, German natural gas consumption amounts to about 80 bcm a year, of which just over a third is covered by Russia. Many energy experts say efficiency measures will result in reduced demand, leaving a gas surplus.

Read alsoU.S. says Nord Stream 2 to exacerbate Europe's dependence on Russian-sourced energy

Merkel has promised Ukraine and Poland that existing transport routes over land would continue to be needed in the future, but these promises are seen as valueless in Ukraine.

Ukraine says that Gazprom’s chief executive, Alexei Miller, has differed publicly, stating that he would no longer want to use the Soyuz pipeline that crosses its territory from 2020 onwards. Gazprom insists all the natural gas for western Europe should be transported through the Baltic Sea, with Germany acting as a distributor country.

The biggest fear is that the pipeline allows Russia a boot on the throat of Europe. It had not been afraid to cut off supplies faced by price disputes with Ukraine.

Nord Stream’s defenders, however, see the U.S. protests purely through the prism of US commercial self-interest. Trump’s outburst is regarded simply as an effort to promote the sales of American liquified national gas.

Read alsoRussia not to be able to build Nord Stream 2 pipe bypassing Ukraine - Ex-U.S. envoy

The question now is whether the U.S. Congress would follow through in its threat to sanction European companies involved in the pipeline. The U.S. treasury has shown through secondary sanctions on firms trading with Iran that it possesses an overwhelming economic power to force EU firms to divest from commercially profitable projects.

For all the talk in Europe about establishing a European economic sovereignty, the reality is that the U.S. under Trump can expose that ambition as a fiction. The question is whether it is in the U.S.’s self-interest to wield its power over its supposed allies and partners quite so nakedly.

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