Russian pipeline faces big hurdles amid tensions in Ukraine

FRANKFURT, Germany

The pipeline is built and filled with natural gas. But Russia’s Nord Stream 2 faces a bumpy road before any gas is on its way to Germany, with its new leaders adopting a more skeptical tone of the project and tensions mounting over the plan. accumulation of Russian troops on the Ukrainian border.

The pipeline that Ukraine, Poland and the United States oppose is awaiting approval from Germany and the European Union to bypass other countries and start shipping natural gas directly to Europe. The continent is grappling with a shortage that has driven prices up, fueling inflation and raising fears of what would happen next if gas supplies were to become extremely low.

The United States has highlighted the targeting of Nord Stream 2 as a way to counter any further Russian military action against Ukraine, and the project is already facing legal and bureaucratic hurdles. As EU and US leaders discuss how to handle Russia’s pressure on Ukraine, lingering political objections – especially from EU members like Poland – add another challenge to the one of the key projects of Russian President Vladimir Putin.

Former German Chancellor Angela Merkel backed the pipeline, and the country’s new leader Olaf Scholz did so as finance minister. But his new government took a more distanced tone after the Greens entered the government coalition. The Greens’ campaign stance was that the fossil fuel pipeline does not help tackle global warming and undermines the EU’s strategic interests.

Senior German officials, including Foreign Minister Annalena Baerbock, said the project violated EU anti-monopoly regulations.

“Nord Stream 2 was a geopolitical mistake,” Habeck recently told the Frankfurter Allgemeine Sonntagszeitung newspaper. “The question is open as to whether it will be able to start functioning,” adding that an additional “aggression” meant “nothing is out of place.”

As chancellor, Scholz has been cautious in his comments, and it is not clear whether he is ready to go as far as US Secretary of State Antony Blinken, who said he was “very unlikely That gas will circulate if Russia “renews its aggression” towards Ukraine.

Pressed on whether an invasion would shut down the pipeline, German government deputy spokesman Wolfgang Buechner said Nord Stream 2 is “a private enterprise that is largely completed” and regulatory approval “has not yet been completed. no political dimension ”. He stressed, however, that a military aggression would have “high costs and sanctions”.

Scholz “never sets the record straight,” said Stefan Meister, Russian energy policy expert at the German Council on Foreign Relations. “So I don’t know under what conditions he would really agree to shut down the pipeline.”

Yet, said Meister, there was “a new tone, a new rhetoric from the new German government.”

The pipeline would double the volume of gas pumped by Russian-controlled gas giant Gazprom directly to Germany, adding to a similar pipeline under the Baltic Sea and bypassing existing links through Poland and Ukraine. Gazprom argues that this would allow more reliable long-term supply and help save billions of dollars in transit fees paid to Poland and Ukraine. Gazprom says the pipeline is part of its role as a long-term, affordable energy supplier to Europe, which relies heavily on natural gas imports.

Critics of the pipeline say it increases Russia’s influence over Europe, pits member states against each other and deprives Ukraine of essential financial support. Europe also entered winter with meager gas reserves which pushed prices up to eight times what they were at the start of the year, with Putin taking advantage of the crisis to underline his willingness to endorse the project for good. .

Gazprom did not sell gas beyond its long-term contracts this summer, further increasing unease over Russian motives. Analysts say the existing pipelines have enough capacity for Gazprom to send more, but have filled national reserves first.

At this time, the pipeline approval process is on hold. German regulators say they can only approve a company formed there, so the Swiss company Nord Stream 2, owned by a subsidiary of Gazprom, is setting up a German branch. A decision will not come in the first half of 2022. The executive committee of the European Union must then review the project.

Analysts say these decisions are legal, bureaucratic and not subject to politics.

Critics say Nord Stream 2 fails to meet an EU requirement to separate the gas supplier from the pipeline operator to prevent a monopoly that could hurt competition and lead to higher prices for consumers.

Nord Stream said it “undertakes all necessary efforts to ensure compliance with applicable rules and regulations” and has clearances from the four EU countries it crosses.

Even if the pipeline clears regulators, it’s not necessarily clear due to opposition from Poland. EU members can sue in the European Court of Justice if they disagree with regulators, said Alan Riley, senior researcher at the Atlantic Council and lawyer specializing in European antitrust and energy issues . EU anti-monopoly rules could lead to years of litigation, or even a decision temporarily halting pipeline operations until the case is resolved.

“It could go on for a while,” Riley said. The final approval “is by no means a slam-dunk”.

Konstantin Kosachev, vice-president of the upper house of the Russian parliament, lamented the “artificial” obstacles to the rapid launch of Nord Stream 2. While some argue that Europe has become more dependent on Russian gas, the country has fulfilled all its obligations, he said. .

“Opponents of gas projects in Russia and EU countries do not fear that Russian supplies will fail, but on the contrary, that all the problems will be solved, leaving no possibility of accusing Moscow of having bad intentions. or use the energy as a weapon. Kosachev said.

While noting that German Foreign Minister Baerbock’s anti-Nord Stream 2 comments reflect her point of view and that of her party, Kosachev stressed that she now represents the whole country.

“Explaining the failure to provide cheap fuel exclusively with stories about what Russia supposedly could do would not be the best start for the ruling coalition in Berlin,” he said. “This is why I don’t think the ‘green’ minister’s stance would have a drastic impact on the fate of the pipeline, although it is obvious that she would not support or speed it up.”

Even if it never starts, Nord Stream 2 was worth it for the geopolitical goals of the Kremlin, as it sowed division between EU members and between Germany, the EU and the United States, said Meister of the German Council on Foreign Relations.

“Without being online, the pipeline has already paid off the Kremlin,” he said. “Politics and security always trump economy in Russia.”