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21st Apr 2019

Merkel: Nord Stream 2 is 'political'

  • Nord Stream 2: buyers' market or geopolitical mistake? (Photo: nord-stream2.com)

Germany has for the first time acknowledged allies' concerns on the "political" and "strategic" aspects of the Nord Stream 2 gas pipeline.

German chancellor Angela Merkel made the statement after meeting Ukrainian president Petro Poroshenko in Berlin on Tuesday (10 April).

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"It cannot be the case that Nord Stream 2 means Ukraine no longer has any significance with regard to the transit of natural gas," she said.

"It has strategic importance for Ukraine," she added.

"In our view, the Nord Stream 2 project is not possible without clarity of how Ukraine's transit role will continue. From this you can already see that this is not just an economic project, but that, of course, political factors must also be taken into account," Merkel said.

She spoke of the pipeline in the context of ongoing Russian aggression in east Ukraine. "Unfortunately, we have no real truce," Merkel said.

The chancellor's choice of words on Nord Stream 2 marked a change from her previous line that it was a purely "economic project".

The Russian pipeline is to concentrate 70 percent of Russian gas sales to the EU on the German route when it is built in 2019.

It has the potential to cost Ukraine $3bn a year in lost Russian gas transit fees at a time when Ukraine is fighting to align itself with the West.

It would harm EU energy security by enabling Russia to cut off member states such as Poland or the Baltic countries, its critics have said.

It would also make a mockery of EU sanctions on Russia over its invasion of Ukraine, critics have warned.

'Geopolitical mistake'

"Important from chancellor Merkel on Nord Stream 2, accepting it's not just 'an economic issue but there are also political considerations," Nato's former head, Anders Fogh Rasmussen, who now works as a consultant for Poroshenko, said on Tuesday.

"NS2 [Nord Stream 2] is a platform for Russian coercion and a geopolitical mistake," he said.

Latvian foreign minister Edgars Rinkevics said increasing EU dependence on Russian gas was a "no-brainer" in the current climate.

He told the Delfi news agency on Tuesday that Baltic states, Nordic countries, and Visegrad countries had formed a bloc on Nord Stream 2 inside the EU.

"We have always been united in our position regarding Nord Stream 2 and we believe that this is not an economic and business but a political project," he said.

He added that the US might impose fines on the five EU firms that are co-financing the Russian pipeline - Anglo-Dutch company Shell, Austria's OMV, France's Engie, and Germany's Uniper and Wintershall.

"Yes, the US can do it … such harsh steps can take place", Rinkevics said, speaking after a US summit with Baltic leaders last week.

US opposition to Nord Stream 2 was not to be underestimated, Andras Simonyi, an expert on transatlantic relations at the Johns Hopkins University in Washington, told EUobserver.

"I don't think the Europeans understand the long-term consequences of this [building Nord Stream 2] for the US-Europe relationship. This could turn really ugly," he said.

'Damage confidence'

Whether Merkel's words marked a U-turn in German policy or opened a door for minor concessions by Russia remained to be seen, other experts noted.

But her statement caused surprise in the context of her new coalition with the centre-left SPD party, which backs Nord Stream 2, and whose former leader, Gerhard Schroeder, now works for Gazprom.

It also rattled the Ost-Ausschuss, a Berlin-based lobby group for German businesses in Russia.

"The companies involved [in Nord Stream 2] have already invested more than €4bn in trust in legal certainty. Changing the legal basis [of the pipeline] in retrospect for political reasons would damage confidence in legal certainty in the EU," Wolfgang Buechele, the Ost-Ausschuss chief, told press.

The Nord Stream 2 consortium, a Gazprom vehicle, did not react to Merkel's comments.

Its website noted that Finland had granted a permit for Nord Stream 2 to go through its economic zone in the Baltic Sea, with permits pending from Denmark and Sweden.

The pipeline's EU financers also promoted it on economic grounds.

"It's not that Europe should buy Nord Stream gas, but that it could buy it - it's a buyer's market," Thilo Wieland, a board member at German firm Wintershall, said in an op-ed in Danish newspaper Altinget.dk on Tuesday.

"It was pipeline gas from Russia ... which covered the increased need in ice-cold days in Europe!", he said, recalling a cold snap in Denmark in February.

US yet to push on Nord Stream 2 sanctions

Washington would still like to block a planned gas pipeline between Russia and Germany but is not yet considering hitting companies involved in the project.

Analysis

Is Germany more hawkish on Russia?

Germany's socialist foreign minister just said the EU should "step up pressure" on Russia. Merkel aired "political" doubts on a Russian pipeline.

Germany bound to apply EU rules to Russia pipeline

Germany will need to make sure EU rules are being followed by Russia's controversial Nord Stream 2 gas pipeline, currently under construction, it was decided in negotiations between EU institutions on Tuesday evening.

Planned German coal exit boosts case for Nord Stream 2

German commission recommends phasing out coal power over the next 19 years - which will provide additional arguments to build the controversial Nord Stream 2 pipeline from Russia, which both the European Commission and the US have reservations about.

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