WASHINGTON, D.C. — In the past week there has been much discussion in the American capital about the controversial Nord Stream 2 pipeline intended to bring Russian gas to western Europe under the Baltic Sea while bypassing the route through Ukraine, which earns Kyiv billions of dollars in revenue.
Academics and experts on the pipeline discussed on June 13 at the Kennan Institute think tank in downtown Washington why the Germans eagerly embrace the joint scheme with Moscow. And Ukrainian parliamentarians visiting Congress told U.S. politicians its construction represented a threat to their country.
And last week U.S. President Donald Trump again slammed the scheme and threatened sanctions to halt it.
Nord Stream 2 is planned as a 1,225-kilometer pipeline to transport gas from Russia’s Ust-Luga to Germany’s Greifswald and would double the capacity of the existing Nord Stream pipeline.
Germany, Europe’s largest economy, wants Russian gas to replace the coal and nuclear power sources it wants to gradually abandon.
The project has bitterly divided the European Union with Poland, other East European, Scandinavian and Baltic states viewing the pipeline as a way for Russian President Vladimir Putin to exert control over the continent.
Opposition from several EU states including Denmark, which has forbidden construction in its territorial waters, has stalled the pipeline’s completion.
Germany shocks many in Europe
Russian state gas producer Gazprom is funding half the project while German companies, Anglo-Dutch firm Shell, and the Austro-French Engie enterprise cover the rest.
American Professor Thomas O’Donnell, who teaches and does research at the Hertie School of Governance in Berlin, is regarded as an expert on the pipeline.
He is in Washington for a month as a temporary scholar at the Kennan Institute and told the Kyiv Post he will be interviewing U.S. government officials, politicians, businesspeople, and academics to get the American view on Nord Stream 2.
He said that Germany’s strong support for the pipeline has shocked Ukraine and other East European countries.
Presently most Russian gas reaches Western Europe via the Soviet-era pipeline running across Ukraine. Even before Russia invaded Ukraine in 2014, it tried to use the pipeline to exert political influence and inflict economic pain on Ukraine. Europe was shaken when Moscow cut off supplies to Ukraine, and hence all destinations westward along the pipeline, in January 2006.
“If it’s cut off, it will cause a tremendous crisis in the EU,” said O’Donnell and Germany believes only an alternative route will provide gas security. He said German Chancellor Angela Merkel and other German leaders “have no illusions about Putin” but nevertheless firmly support the pipeline.
“It is a risk for Germany and Europe that the gas is going through a country at war – Ukraine,” he said. “If Putin steps beyond a certain limit [in attacking Ukraine], then regardless of what the Ukrainian president says, some patriotic tank commander is just going to hit the pipeline and it’s gone, causing a huge crisis for Europe.”
He said Germans lost confidence some time ago that the Ukrainian government would carry out the necessary reforms and changes that would make them into a reliable partner for gas supplies.
“Many Germans say Putin is a great risk but so are the Ukrainians. Germany lacked confidence in Ukraine’s ability to reform even before the 2014 (EuroMaidan Revoloution that ousted former president Viktor Yanukovych),” O’Donnell said. “The Germans are in such an intense energy situation… that it’s a geopolitical decision.”
He said Berlin decided it couldn’t do anything about Putin but could do something about Ukraine. Although many in the German government sympathize with Ukraine, O’Donnell said they made a “realpolitik decision” to build the pipeline.
If Russia, as it seemingly intends, ceases using Ukraine’s pipeline for the majority of its gas exports to western Europe, Kyiv will lose billions of dollars in transit revenues.
Many believe that Moscow has hesitated to launch an all-out attack against Ukraine because of fears that Kyiv would disable the pipeline and thus cut Moscow’s largest single stream of income.
Without that consideration O’Donnell said Ukraine becomes more vulnerable to Russian aggression – something Kyiv is keenly aware of.
But he believes that Germany will feel obliged to continue efforts to support Ukraine and compensate it with generous amounts of development aid. He also said that the Nord Stream 2 does not have the capacity to handle all Europe’s needs and the Ukrainian pipeline or other means – possibly liquified natural gas (LNG) – will still be required.
O’Donnell believes there are historical reasons at play that result in many of the “German elite” believing that closer business relations with Moscow are necessary.
“Germany has a history of ‘Ost-politics’ – a reaction to the Cold War where it thought that doing business with Russia would be a factor for peace,” O’Donnell said.
“That got the Russians to trust Germans enough to agree to the reunification of the country in 1989……But the idea that it would transform Russia into a liberal democracy and keep them from engaging in military adventures – well, look at Ukraine – that didn’t happen.”
Although hopes of weaning Russia away from its traditional autocracy and militarism largely failed, O’Donnell believes that some cling onto the hope.
There is, he said, particularly among older but influential, businesspeople “a very deeply-held conviction that Germany is purely an economic power and…… that if you do business with (Russia), you won’t have a war with them.”
That accords with a strong body of thought in Germany, said O’Donnell, that believes their country’s destiny is to project its power via “geo-economic” means, using its immense economic and industrial strength.
Some Germans and Austrians, O’Donnell believes, think it would be convenient if Putin pulled off plans to “unite” Russia with Ukraine and Belarus.
He said the Danes had “thrown a monkey wrench” into construction plans and may have stalled them for two years beyond the original planned completion date for the end of 2019.
But O’Donnell believes that America has the ability to actually stop the project dead which has upset Putin and caused tension between Berlin and Washington.
Trump said on June 12 he was considering sanctions over Nord Stream 2 which he warned would make Germany dependent on Russia for energy.
“We’re protecting Germany from Russia and Russia is getting billions and billions of dollars from Germany… .it really makes Germany a hostage of Russia if things ever happen that were bad” Trump said after meeting with Polish President Andrzej Duda at the White House. Poland vigorously opposes the new pipeline.
Typically, Washington warns international companies carrying out work on projects it opposes that they will be banned from operating in the vast and lucrative U.S. market.
“I think it’s legitimate that everything be done to stop this project. But if you’re going to stop this project, then you have responsibilities,” O’Donnell said.
America can provide liquefied natural gas to replace much of the Russian gas but realistically needs 10 years before it can to secure European needs. He said in the meantime America “must find ways to help the Ukrainians and Europeans to make the transit work though Ukraine.”
Meanwhile, he said, Gazprom’s transit contract with Ukraine will expire in January 2020 and Moscow has put unacceptable preconditions on negotiating a new one so that Europe must brace itself for a possible gas-supply crisis.
U.S. Energy Secretary Rick Perry said last month that a sanctions bill targeting companies and owners of vessels involved in the project was coming shortly.
That was something that was applauded by the head of Ukraine’s parliamentary committee on foreign affairs, Hanna Hopko, who led an inter-party group of Ukrainian politicians talking to American politicians and officials, including at the Department of Defense Pentagon headquarters, last week.
She called the construction of the pipeline an existential danger to Ukraine and said she had been dismayed after being told that the German ambassador to the U.S. had been going from door to door in the Congress offices to lobby politicians against supporting sanctions against the pipeline.
Hopko said many in the European parliament had labeled the pipeline as a threat for European security: “It’s not the export of gas to the European Union, it’s the export of corruption.”
She said other topics discussed by the Ukrainian delegation and their American hosts included sanctions against Moscow and economic support to the Azov Sea region, measures to prevent Russia from closing the Azov Sea, the release of 24 Ukrainian Navy sailors illegally held since last November by Russia and a draft bill to provide Ukraine with a major non-allied status – an important step towards achieving NATO membership.
