Pipeline Politics: Putin, Europe and the Nord Stream 2

How a gas pipeline between Russia and Germany divides NATO and splits Europe

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A major project is underway that, its critics argue, will split the EU and threatens European stability. But this project isn’t Brexit, or the rise of the populist right. It is a pipe, just over a metre in diameter, that will link Germany to Russia.

Last month, at a Washington summit coinciding with NATO’s 70th anniversary, two years of open discord between Donald Trump and European member states had already put a dampener on festivities. Vice President Mike Pence threw cold water on any hopes of a cordial atmosphere between allies, insisting to NATO leaders that Germany was soon to become “literally a captive of Russia” if a new gas pipeline in the Baltic Sea went ahead. The 1,200km Nord Stream 2 will link Ust-Luga in Russia with Greifswald in Germany, and will transport 55 billion cubic metres of gas a year, doubling the capacity of the existing Nord Stream. Reiterating criticisms made by President Trump, Pence linked the project with Germany’s failure to meet the guideline for defence spending that NATO sets at two per cent of GDP. “Germany must do more,” he said. “We cannot ensure the defence of the West if our allies grow dependent on Russia.” If the Trump administration is to be believed, this pipeline turns Europe’s largest economy into Putin’s vassal state.

This raises concerns for Europe’s energy security. Russia has form for cutting off the gas supplies of its neighbours, and has been accused of using its vast reserves of natural gas as a political weapon, a form of strong-arm energy diplomacy, and even as part of its arsenal in a grand strategy of “non-linear warfare”. Twice, in 2006 and 2009, Moscow has suspended supplies to Ukraine following disputes over pricing, debts and supply, interrupting flows across several countries. The fear is that Nord Stream 2 could allow Russia to turn off the taps to Western Europe.

Estonia, Latvia and Lithuania, all EU and NATO members (and all former Soviet republics, nervous of Russian revanchism) are implacably opposed to the project. Poland, the former satellite state, is opposed. Ukraine has been engaged in a shooting war against Russian incursion into its Eastern provinces since 2014. For the Baltic states, the US, and much of Eastern Europe, Nord Stream 2 is a political project, a “Trojan horse” for Russian influence, and a geopolitical manoeuvre that will extend Russian power in Europe, increase the continent’s dependence on Russian gas and deliver a windfall for the Russian state’s gas company, Gazprom. The UK’s foreign secretary, Jeremy Hunt, shares these concerns. “There is a contradiction between asking America to spend more as a proportion of GDP on defence and contributing to NATO and, at the same time, doing an economic deal with Russia that is going to mean Russia is richer and more able to spend money on weapons that could potentially be used in an offensive way,” Hunt told the BBC last year. “We are very concerned about the Nord Stream 2 project, for precisely the reasons President Trump says.”

In addition to its worries about the geopolitical consequences of the project, Ukraine, currently acting as a thoroughfare for Russian gas exports into Europe, stands to lose $3bn per year in transit fees, equivalent to three per cent of its GDP. But the strategic implications for Kiev are perhaps even more alarming. By reducing Western Europe’s dependence on the country for gas transit, the pipeline will “reduce the importance of Ukraine for European countries”, says John Lough, associate fellow of the Russia and Eurasia programme at Chatham House and former NATO representative in Russia. The German Chancellor, Angela Merkel, has attempted to assuage these fears by promising that transit will continue through Ukraine even after the completion of the Nord Stream 2, but many fear that gas will nevertheless bypass the country, weakening it and undermining Europe’s readiness to defend against Moscow’s machinations. “They’ll see that there’s no longer a gas problem,” Lough says. “It’s a dual strategy. And it’s a very clever strategy. First it’s to weaken Ukraine, and weaken Ukraine’s influence in security policy thinking in the EU and NATO. Second, it co-opts Germany as a country that can be helpful to Russia, using the Germans to enhance their interests… So it’s a smart policy, if you can pull it off.” While much of the Western foreign policy establishment decries its blind transformation into Putin’s pawn, Germany is now isolated in NATO and the EU, institutions it has helped anchor for decades.

But for large segments of German industry and the German political class, Nord Stream 2 is backed as a purely commercial project, essential to European energy security. In a drive for lower emissions, Germany is phasing out coal-fired power. In the wake of protests after the Fukushima disaster, the country also announced it was winding down its nuclear energy production, and, in addition, has since banned hydraulic fracturing. Natural gas – touted as a “transition fuel” between more polluting hydrocarbons and renewable sources – is promoted as the solution to Europe’s energy needs.

While American opposition to the project is ostensibly political, large commercial interests are also at stake. The more gas Europe sources from Russia, the less it will import liquefied natural gas (LNG) from the US and its ally, Qatar. Trump’s rhetoric of a “captive state” may be an attempt to muscle a direct competitor out of a lucrative market – and it may have worked. In an attempt to alleviate tensions with the US, and in the face of White House threats to impose sanctions on Nord Stream 2 companies, including the Anglo-Dutch giant Shell, Germany has agreed to build its first LNG terminals, providing infrastructure for American companies to export gas to Germany. Unfortunately for the US, pipeline gas is cheaper than its own fracked LNG.

Richard Sakwa, another Russia expert at Chatham House and professor of Russian and European politics at the University of Kent, says the extent to which Russia has used its energy diplomacy to further its political and strategic interests is “massively exaggerated”. The country’s interests are “basically commercial,” he says. Sakwa contends that interruptions to Ukraine’s gas supply in 2006 and 2009 weren’t a result of Russian malfeasance, but down to Ukraine’s late payments and Russia tiring of “selling gas at hugely subsidised prices, not global commercial rates”.

“Attempts to stop Nord Stream 2 are a reflection of the new Cold War,” says Sakwa. “But even during the original Cold War, this went forward. So this new Cold War is far worse than the first one.” Throughout the latter stages of the Soviet era, when much of Eastern Europe beyond the Iron Curtain was occupied by the Red Army, natural gas and primary materials still flowed steadily from East to West. “If we got Russian gas already in the Cold War,” asked Merkel at the Munich Security Conference earlier this year, “...and the old German Federal Republic introduced Russian gas on a large scale – then I don’t know why times today should be so much worse that we cannot say: Russia remains a partner.” Some in Germany, particularly in quarters of the Social Democratic Party that have traditionally sought closer ties with Russia, see Nord Stream 2 as a means for positive engagement with a wayward neighbour, bringing them into the fold and stabilising relations, reinforcing mutual interests rather than creating unhealthy dependencies.

“Nord Stream 2 is an enormously revealing moment about the dynamics of international politics today,” Sakwa says. The divisions over the project are a symptom of long-held antagonisms between Anglo-American interests, Russian interests, the interests of new EU member states in the East, different political factions within Germany, and a Trump administration that – despite criticism for its links with the Kremlin – acts as Nord Stream 2’s number one detractor. For Sakwa, “the bottom line is that Western policy is contradictory, possibly mendacious, and we’re back into the 1980s, when the United States vigorously tried to stop Western Europe, Germany, France and Italy developing oil and gas pipelines.” In the 1980s, the pipelines went ahead regardless. So, it appears, will Nord Stream 2, as commercial interests override political interests, and Europe’s industrial powerhouse puts its own reading of realpolitik ahead of that of its neighbours.