Monday

25th Mar 2019

Column / Crude World

Why Europe should fight Nord Stream II

  • Part of the first Nord Stream pipeline being laid off the coast of Swedish Gotland island. Risks to the Baltic Sea region should not be underestimated. (Photo: Nord Stream)

Last week the European Commission published its long awaited gas package. The usefulness of the proposed measures on security of supply and oversight on bilateral energy agreements notwithstanding, it was interesting to see the biggest elephant in the room being notably absent from any of the proposals.

The one development that threatens to unravel the entire Energy Union – the Nord Stream II pipeline – did not feature at all. Despite differences of opinion on whether or not EU law applies to the project, the risk that Nord Stream II confines the Energy Union to the dustbin is too high. For that reason, the commission would do well to not give ground and let the courts decide whether the project is in line with the law.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

Proponents of Nord Stream II claim that the project is strictly commercial. However, upon closer examination the project’s business credentials are dubious at best. At an estimated cost of €10 billion at a time when oil prices are at rock bottom, the consortium led by Russian state-owned gas company Gazprom would expand pipeline capacity when half of the existing transit capacity from Russia to the EU is in fact unused.

Also, gas demand in Europe has gone down due to the competition from renewables and coal. Convincing business case, huh? The real goal is geopolitical. The project is to circumvent Ukraine, which the Kremlin views as an unreliable transit state and interfering with its desire for control of its strategic markets. If the pipeline is built, the Ukrainian route would pretty much cease to exist.

Politics, not business

The existing supply route through Poland could similarly be at risk. Kiev would lose over $2 billion a year in transit revenues; a death-blow to its fragile economy and Poland could find itself at the mercy of Gazprom and Russia. Through Nord Stream II Gazprom’s market share in Germany would increase from 40 percent to 60 percent, at a time when Brussels actually wants to lessen its dependence on Russian gas.

What is more, with the Ukrainian route gone, as much as 80 percent of all Russian gas exports to Europe would flow via Nord Stream. Although the European Commission views destination clauses (i.e. contractual clauses that forbid the resale of imported gas to other countries) as illegal, it is not unimaginable that Gazprom will pump just enough gas through the pipes to supply Germany and perhaps a few other EU states, but not enough so that significant reverse-flow capacity would be available to Ukraine. This would mean that Kiev again has to knock on Putin’s door. Strictly business? I think not.

European Unity and Security at Risk

At a time when Europe buckles under the refugee crisis, Nord Stream II is an additional threat to the fragile unity that holds the EU together. The pipeline has alienated Germany from the Baltic States, Poland and other Central European countries. The German position, and particularly Angela Merkel’s support for the project, is downright peculiar given Merkel’s tough stance on Vladimir Putin over Russia’s aggression in Ukraine.

You cannot push other EU Member States to stay firm on sanctions, yet strike a pipeline deal with the Kremlin at the same time. Italy’s Matteo Renzi was right in pointing out Germany’s double standards. Worse, the project directly contradicts every political goal agreed upon at European level concerning EU energy policy. Germany’s Ostpolitik handling of Nord Stream II is doing no favours for Berlin or Europe.

Interestingly, hard security aspects appear wholly absent from the discussions at the EU level, despite the fact that naval movement in the Baltic Sea will be affected by the construction work throughout the whole building period.

The transport of pipes will disrupt maritime traffic above and below the sea level across the whole length of the Baltic Sea, from Northwest Russia in the Finnish, Swedish, German and Danish exclusive economic zones, and right off the coast of Poland, and the three Baltic States.

In light of the ongoing tensions with Russia, and the fact that building Nord Stream II will take many months and involves construction bases on Nato and EU territory, this is a factor to consider when assessing the broader security ramifications of the project. Perhaps this sheds a different light on why the Russian exclave of Kaliningrad is not used as a base for construction.

A scenario of Russian area denial tactics under the cover of pipeline construction poses a risk to lightly defended areas such as the Swedish island of Gotland which will not see the return of troops stationed there until 2018. Worse, area denial vis-a-vis non-Nato member states Sweden and Finland would render the defence of the three Baltic States – if required in the event of a few "little green men" paying a quasi-permanent visit – even more complicated than it already is.

These risks set aside, upon completion of the pipeline, you can expect the Russian navy to increase its presence in the area to "protect" Nord Stream II.

See you in court

According to the European Commission’s energy directorate general EU competition regulations apply to the whole project, including the offshore section. This would mean Gazprom has a problem, as it cannot simultaneously own the infrastructure, as well as supply the gas.

However, the European Commission’s legal service in a recent opinion claimed EU energy market rules in fact do not apply. Finding a conclusive answer to this question is essential to determine whether Nord Stream II can be built.

The European Court of Justice is an excellent place to settle disputes like these. Sure, you run the risk of losing the case, but the stakes are simply too high to rely on a political settlement which would likely undermine the Energy Union anyhow.

Moreover, from a security point of view, the risks to the Baltic Sea region should not be underestimated. Germany, which has acted as the custodian of the Minsk II agreement, really should know better than to engage in such harmful deals with Russia.

The new Crude World monthly column on Eurasian (energy) security and power politics in Europe’s eastern neighbourhood is written by Sijbren de Jong, a strategic analyst with The Hague Centre for Strategic Studies (HCSS), specialised in Eurasian (energy) security and the EU’s relations with Russia and the former Soviet Union

Column / Crude World

Petropolitics 2.0

If oil prices remain depressed long enough, Europe's eastern neighbourhood can quickly become an even more contentious place than it already is.

Nord Stream: The Sequel

Film studios like to back sequels as safe options, but why's Gazprom doing a follow-up to its German gas pipeline story?

Tusk: Nord Stream II doesn't help

Donald Tusk, the president of the European Council, has said Nord Stream II, a new Russia-Germany gas pipeline, is not in the EU’s interests.

Column / Crude World

Empty Gazpromises

Why let Gazprom take on Brussels alone, when it can have EU states do its bidding?

Russia and money laundering in Europe

After Danske Bank, both the US and the EU need to abandon the principle in bank regulation that it is all right to be a crook as long as you are big.

News in Brief

  1. May admits 'not sufficient support' for third Brexit vote
  2. Orban vows more EU 'information campaigns'
  3. May 'effectively out of power', says Scottish leader
  4. May under pressure to resign over Brexit endgame
  5. Million march against Brexit, five million sign petition
  6. Italy first G7 country to sign China Belt and Road deal
  7. EU leaders at summit demand more effort on disinformation
  8. Report: Corbyn to meet May on Monday for Brexit talks

Italy should capitalise on Brexit

Now that the UK is leaving, Italy can, and should, step up. It is the third largest country and economy in the EU. Spain and Poland follow, but they are significantly smaller economically and population-wise.

The Magnitsky Act - and its name

It is disappointing that so many MEPs in the Socialist and Green group caved in to Russian interests, in fear of challenging a plutocratic regime, by saying 'no' to naming the Magnitsky legislation by its rightful name: Magnitsky.

Stakeholders' Highlights

  1. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  2. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  3. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  4. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  5. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  6. Nordic Council of MinistersNordic commitment to driving global gender equality
  7. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  8. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  9. Nordic Council of MinistersNordic talks on parental leave at the UN
  10. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  11. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  12. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID

Latest News

  1. Romania presidency shatters EU line on Jerusalem
  2. The Spitzen process - a coup that was never accepted
  3. Russia and money laundering in Europe
  4. Italy takes China's new Silk Road to the heart of Europe
  5. What EU leaders agreed on climate - and what they mean
  6. Copyright and (another) new Brexit vote This WEEK
  7. EU avoids Brexit crash, sets new date for 12 April
  8. Campaigning commissioners blur the lines

Stakeholders' Highlights

  1. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  2. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  3. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law
  4. UNESDASoft Drinks Europe welcomes Tim Brett as its new president
  5. Nordic Council of MinistersNordic ministers take the lead in combatting climate change
  6. Counter BalanceEuropean Parliament takes incoherent steps on climate in future EU investments
  7. International Partnership For Human RightsKyrgyz authorities have to immediately release human rights defender Azimjon Askarov
  8. Nordic Council of MinistersSeminar on disability and user involvement
  9. Nordic Council of MinistersInternational appetite for Nordic food policies
  10. Nordic Council of MinistersNew Nordic Innovation House in Hong Kong
  11. Nordic Council of MinistersNordic Region has chance to become world leader when it comes to start-ups
  12. Nordic Council of MinistersTheresa May: “We will not be turning our backs on the Nordic region”

Stakeholders' Highlights

  1. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit
  2. International Partnership for Human RightsRaising key human rights concerns during visit of Turkmenistan's foreign minister
  3. Nordic Council of MinistersState of the Nordic Region presented in Brussels
  4. Nordic Council of MinistersThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  5. Nordic Council of MinistersThe Nordic gender effect goes international
  6. Nordic Council of MinistersPaula Lehtomaki from Finland elected as the Council's first female Secretary General
  7. Nordic Council of MinistersNordic design sets the stage at COP24, running a competition for sustainable chairs
  8. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  9. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  10. International Partnership for Human RightsCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  11. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  12. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All

Join EUobserver

Support quality EU news

Join us