Cayman Islands, Caribbeanand International News
Thursday, Feb 02, 2023

Nord Stream 2: Why Russia’s pipeline to Europe divides the West

Nord Stream 2: Why Russia’s pipeline to Europe divides the West

The Russia-owned pipeline is at the centre of a disagreement between Germany and the US, which sees the project as a way for Moscow to increase leverage in Europe.

As Western powers attempt to avert a Russian invasion of Ukraine, Nord Stream 2, a long-touted energy infrastructure project that has already driven a wedge between Germany and the United States, could become a key bargaining chip.

The $11bn gas pipeline across the Baltic Sea, owned by Russia’s state-backed energy giant Gazprom, runs from western Siberia to Germany, doubling the capacity of the already-in-use Nord Stream 1 pipeline.

While Germany has maintained it is solely a commercial project, Nord Stream 2 also has geostrategic consequences, bypassing Ukraine and potentially depriving it of the approximately $2bn in transit fees Russia currently pays to send gas through its territory.

The pipeline could heat 26 million German homes at an affordable price and construction was completed in September.

However, German regulators have yet to issue the final legal permission Gazprom needs to begin operations.

The US has viewed the pipeline as a geopolitical tool for Russia to undermine energy and national security, increasing Moscow’s leverage over Europe, where gas prices have been soaring.

The pipeline has been opposed by Ukraine and Poland and has left Washington in a difficult position with some of its European allies. It has also caused political infighting within Germany’s new coalition government and left the West divided in its response to the situation.

Last week, German Chancellor Olaf Scholz, who had previously refused to be publicly outspoken on the possibility of halting the pipeline if Russia were to attack Ukraine, offered his strongest indication that this was still possible.

“It is clear that there will be a high cost and that all this will have to be discussed if there is a military intervention against Ukraine,” Scholz said at a news conference with NATO Secretary General Jens Stoltenberg.

On January 13, the US Senate failed to pass a bill sponsored by Republican Senator Ted Cruz to slap sanctions on Nord Stream 2.

The administration of US President Joe Biden had lobbied Republican senators against the bill, fearing its effect on US-German relations and the possibility that it could further antagonise Russia amid the Ukraine crisis.

Ukraine’s President Volodymyr Zelenskyy had asked the Senate to approve the Nord Stream 2 sanctions, while Germany had specifically asked that the US Congress not to propose sanctions.

In May, Biden waived sanctions on the Russian-owned, Swiss-based company running the pipeline project, Nord Stream 2 AG, as part of an agreement with Germany.

However, the US’s stance has not had the desired effect in Germany, and Russia has piled on the pressure, with the state-run Tass news agency saying sanctions on the pipeline would lead to declining energy supplies and gas price growth in Europe.

“The more the US talks about sanctioning or criticises the project, the more it becomes popular in German society,” said Stefan Meister, a Russia and eastern Europe expert at the German Council on Foreign Relations.

“Germans in the majority support the project, it is only parts of the elite and media who are against the pipeline.”

A gas supply shortage in Europe has been widely blamed on a dearth of gas flows from Russia. It has particularly hit Germany’s low-income workers, which Scholz’s Social Democrats (SPD) party rely on for votes.

Tens of thousands of Russian troops have been deployed near Ukraine’s borders, prompting fears that Moscow could launch an attack at very short notice.

The US and UK have begun withdrawing some of their embassy staff from Kyiv, while the European Union has refused to follow suit, with a top diplomat saying that they did not wish to “dramatise” the situation further.

Allseas’ deep-sea pipe-laying ship Solitaire sets pipes for Nord Stream 2 pipeline in the Baltic Sea September 13, 2019

The US has promised to boost security assistance for Ukraine, but recent talks between the West and Russia failed to reach a breakthrough, with some of Moscow’s demands rejected as non-starters.

They include that Ukraine should never join NATO and that NATO’s military activities be limited to member states, including Poland.

However, a subsequent round of talks last week in Geneva between US Secretary of State Antony Blinken and Russian Foreign Minister Sergey Lavrov appeared to have calmed tensions, at least temporarily.

The situation seems unlikely to be solved quickly – few want a conflict, but there is a possibility one could be triggered accidentally by a political misstep.

Russia has agreed to further talks between Lavrov and his UK counterpart, Ben Wallace.

Ukraine, a former Soviet republic that shares borders with both the EU and Russia, has social and cultural ties with Russia, with Russian widely spoken. Despite gaining independence in 1991, Russia still sees Ukraine as an important territory and has long resisted its move towards European institutions.

Two months after the Nord Stream 2 certification process was suspended, it has become one of the strongest remaining tools for the West to influence Russian decision-making when it comes to military action in Ukraine.

For Russia, the pipeline is important because it removes the risks associated with sending gas through transit countries, allowing Gazprom to ship gas directly to its most important European customer, Germany,

The pipeline could cut their operating costs by about $1bn per year, as transit through Ukraine, in particular, is expensive.

“Germany has been resisting pressure from the US because it absolutely needs reliable gas supplies from Russia and, for all it is now one of the top exporters of liquified natural gas in the world, the US cannot replace Russia in that role as key gas supplier to Germany,” said Ronald Smith, senior oil and gas analyst at BCS Global Markets.

“Ukraine stands to lose several billion dollars per year in transit fees – which is what makes NS2 a cheaper option for shipment – a key stream of hard currency income for the country.”

Bypassing Ukraine sharply reduced the country’s leverage with Russia and reduced its income. However, Europe and Germany depend on Russia’s gas, with this current conflict exposing vulnerabilities, meaning Nord Stream 2 has become both a deterrent to war in Ukraine and a punishment option in the event there is one.


Related Articles

WARNING GRAPHIC CONTENT - US Memphis Police murdering innocent Tyre Nichols
Almost 30% of professionals say they've tried ChatGPT at work
Interpol seeks woman who ran elaborate exam cheating scam in Singapore
What is ChatGPT?
Bill Gates is ‘very optimistic’ about the future: ‘Better to be born 20 years from now...than any time in the past’
Tesla reported record profits and record revenues for 2022
Prince Andrew and Virginia Giuffre Photo Is Fake: Ghislaine Maxwell
Opinion | Israel’s Supreme Court Claims a Veto on Democracy
Moonwalker Buzz Aldrin Gets Married On His 93rd Birthday
Who’s Threatening Israeli Democracy?
Federal Reserve Probes Goldman’s Consumer Business
China's first population drop in six decades
Microsoft is finalising plans to become the latest technology giant to reduce its workforce during a global economic slowdown
China's foreign ministry branch in Hong Kong urges British gov't to stop the biased and double standards Hong Kong report
Tesla slashes prices globally by as much as 20 percent
1.4 Million Copies Of Prince Harry's Memoir 'Spare' Sold On 1st Day In UK
After Failing To Pay Office Rent, Twitter May Sell User Names
Lisa Marie Presley, singer and daughter of Elvis, dies aged 54
FIFA president questioned by prosecutors
Britain's Sunak breaks silence and admits using private healthcare
Hype and backlash as Harry's memoir goes on sale. Unnamed royal source says prince 'kidnapped by cult of psychotherapy and Meghan'
Saudi Arabia set to overtake India as fastest-growing major economy this year 
Google and Facebook’s dominance in digital ads challenged by rapid ascent of Amazon and TikTok
FTX fraud investigators are digging deeper into Sam Bankman-Fried's inner circle – and reportedly have ex-engineer Nishad Singh in their sights
TikTok CEO Plans to Meet European Union Regulators
UK chaos: Hong Kong emigrants duped by false prospectus
France has banned the online sale of paracetamol until February, citing ongoing supply issues
Japan reportedly to give families 1 million yen per child to move out of Tokyo
Will Canada ever become a real democracy?
Hong Kong property brokerages slash payrolls in choppy market
U.S. Moves to Seize Robinhood Shares, Silvergate Accounts Tied to FTX
Effect of EU sanctions on Moscow is ‘less than zero’ – Belgian MEP
Coinbase to Pay $100 Million in Settlement With New York Regulator
FTX assets worth $3.5bn held by Bahamas securities regulator
A Republican congressman-elect is under investigation in New York after he admitted he lied about his education and work experience.
Brazilian football legend Pele, arguably the greatest player ever, has died at the age of 82.
Hong Kong to scrap almost all its Covid rules
EU calls screening of travellers from China unjustified
US imposes Covid testing for visitors from China
Ukraine President Volodymyr Zelenskyy Addresses Joint Session of Congress - FULL SPEECH
If a country is denied the right to independence by another, it is not in a union. It is in a dictatorship.
Where is Rishi? Chancellor Jeremy Hunt's excuses about the UK's economic challenges just don't make sense
Former FTX CEO Bankman-Fried finally arrested in Bahamas after U.S. files charges
Corruption works: House Financial Services Chair Waters doesn't plan to subpoena her donor, Sam Bankman-Fried, to testify at hearing on FTX collapse
Ronaldo's new contract...
Prince William's godmother resigns honorary royal role after exposing her/their racism
British PM Rishi Sunak pledges further action on strikes to 'protect lives'
Tax fraud verdict again exposes illusion of Trump the master businessman
Tax fraud verdict again exposes illusion of Trump the master businessman.
Double standards: UK lawmakers attack EU chief over Ireland claims