US – German Betrayal: NordStream 2 and Russia’s power expansion
Elina Kent: Welcome to the Kyiv Post Podcast, where you can tune in to stories that give you a deeper understanding of Ukraine.
I’m your host Elina Kent. I’m a multimedia producer and lifestyle journalist here at the Kyiv Post.
This week we are discussing what’s been on everyone’s minds, the recently announced deal between the US and Germany giving a greenlight to complete the Nord Stream 2 pipeline.
Here to discuss his article on the topic is our staff writer Max Hunder, who has been closely following the story. Hi Max.
Max Hunder: Hello, thank you for having me.
EK: Tell us about these recent developments with the Nord Stream 2 pipeline.
MH: So on Wednesday evening, Germany and the US made a joint statement which basically, which signaled America’s approval and blessing of Germany’s completion of the Nord Stream 2 pipeline. We had about a day to digest this news before it was officially announced because it had been leaked on Tuesday evening. And then, Wedneseday evening Kyiv time, late evening Kyiv time, it became official, they made the statement. And that was followed by Ukrainian and Polish foreign ministers making a joint statement vehemently opposing this and critiquing this thing.
EK: This is a significant shift because up until this point America had been against the completion of the Nord Stream 2 pipeline since the start of its construction in 2015.
The Nord Stream 2 pipeline is an addition to the current Nord Stream pipeline that was finished in 2011, an undersea pipeline that transports 55 billion cubic meters of gas from Russia to Germany every year.
MH: Nord Stream 2 will double that capacity, making it possible for Russian to send 110 billion cubic meters to Germany annually under the Baltic sea.
EK: The completion of the pipeline will mean a significant economic hit for Ukraine. In 2020, Ukraine made 2.1 billion dollars from transit fees.
MH: Last year in 2020 Russia sent 55.8 billion cubic meters of gas through Ukraine. Now obviously 55 billion cubic meters is the capacity of this new pipeline that is about to be finished. So in theory if they keep sending the same volume of gas they did in 2020, that means they won’t need Ukraine at all.
They will probably still send some gas through in reality, but it will be massively decreased and cutting gas supply off through Ukraine, and cutting off completely will become very easy for Russia.
EK: Beyond the threat to Ukraine’s energy sector, the country stands to lose one of its most significant remaining deterrents against further Russian attacks.
Russia has needed Ukraine’s pipelines to send gas to Europe, so it would be equally problematic for Russia to transfer gas if there were a full out war or invasion. Now that the obstacle of how to get gas to Europe is essentially out of the way, there isn’t much stopping them from further aggression. And Russia’s moves the last few months have already caused major concern in addition to this new development, as troops on the border of Donbas amassed over the past several months.
MH: If it’s not useful to them anymore, that’s a big deterrent gone. And they now have much more freedom to do as they please in Ukraine.
EK: Germany gets around a third of its gas from the Netherlands, another third from Norway and about 35%-40% from Russia. As gas production is heavily scaled back in the Netherlands with talks of doing away with it by 2030, Germany will have to drastically increase its need for gas from other sources. That 35% reliance on Russia could grow.
MH: I don’t know if it will. But it could now, it’s got the possibility to. And if it does that, well how could you rely on Germany if you are Ukraine, it’s an unreliable ally. It’s not somebody who is likely to be willing to fight for you diplomatically or physically.
EK: Although the U.S. and Germany pledged to hit Russia with sanctions if the Kremlin uses the Nord Stream 2 pipeline as a weapon against Ukraine, the promises are not doing much to appease Ukraine.
MH: Yeah, they have, but these promises are arguably quite empty. So basically the context of this is that Germany has always been closer to Russia than most of Ukraine’s other allies because of this historic thing called Ostpolitik, that developed in the 60s and 70s as a way for Germany to maintain good relations with Russia a kind of policy direction. Because they wanted to make amends after the horrific destruction of World War II. A lot of people in Washington foreign policy circles argue that continues to this day. And Germany also has a huge demand for gas, they use a lot of gas for power stations, and gas is used in the steelmaking process. They have a lot of steel plants. And they need even more gas now, probably over 100 billion cubic meters a year. It’s currently at about 90, it’s going to be over 100 billion soon because they are decommissioning their remaining nuclear power plants, they have 6 reactors, nuclear reactors still going, they are decommissioning them. In 2011 Merkel decided after Fukushima she was going to end nuclear power use in Germany by 2022 which is next year. So Germany has always been pro NordStream 2, and that’s always been the one question mark over Germany’s status as a reliable ally, their energy needs.
EK: Meanwhile the United States has disappointed Ukrainians, and many feel betrayed. Biden waived the hard sanctions that the Trump administration had put in place. And although the U.S. and Germany promised a $1 billion Green fund as an effort to further support Ukraine’s energy security, it isn’t enough to appease the risks and worries for Ukraine.
MH: People are trumpeting this 1 billion number they shouldn’t be, it’s misleading. It says 1 billion in the text but basically there’s a promise to attract a billion dollars of investment from third parties into the renewable energy sphere, which is now famous in Ukraine for not having any new investment in at all for a year, because of the horrible conditions that have been created by sort of mismanagement of energy regulation and very erratic behavior from the government and the energy ministry in managing the sphere.
To say that they are going to attract a billion dollars of investment into a sphere that nobody wants to right now invest is just ridiculous, so realistically we are looking at 175 million dollars of a initial donation from Germany into this fund and a separate thing an energy envoy who is going to have 70 million to spend for clean energy projects in Ukraine. It’s a fig leaf, it’s nothing, it’s an insult, it’s a joke. That put together is not even 10% of what Ukraine is going to lose in a year. Ukraine got 2.1 billion dollars last year from transit fees, that added together is not even 15 % of that figure. It’s nothing. And I think Ukrainian government was right to reject this deal and not be silenced by America.
EK: Another factor worth mentioning in this story is the hand that kleptocracy may have played and the risk of further corrupting democratic institutions.
MH: Nord Stream 2 really got off the ground in large part thanks to Gerard Schroder, who was a former chancellor of Germany from 1998 to 2006 for the social democratic party, which is the center left party there. And what he did was just extraordinary and I don’t know how there hasn’t been a huge criminal investigation, people there have just accepted it.
Several days after he quit the chancellorship, he took the position of the chairman of the board of Nord Stream AG. Now this is pretty bad. It gets even worse that the month before he took that position when he was still chancellor, his government agreed at least 1 billion euros minimum of 1 billion of German government funding for the Nordstream 1 pipeline. It’s unbelievable the amount of kleptocracy. People I spoke to said this is kleptocracy winning. This is a green light for kleptocracy. And it shows to Russia, and not just Russia, to every other corrupt dictatorship with loads of money from oil and gas which they can throw around and lobby politicians, that decisions can be bought. It shows that decisions can be influenced and outcomes can be bought with 300,000 euros a year which was what they were paying Shroder in one of his board positions.
You can buy our democracy and decision making process for that small amount of money, it’s just going to start an open season on other projects and it’s going to mean that in the West politicians have more and more offers from these dictatorships.
EK: That was this week’s episode of the Kyiv Post podcast. I’m your host Elina Kent. You can further read the multiple stories about NordStream 2 in this week’s Kyiv Post issue online, at kyivpost.com You can subscribe to our podcasts on all streaming platforms and follow along the Kyiv Post website. Stay safe, stay home, and subscribe to the Kyiv Post.
