Sun, Dec 26, 2021 page9

• Russian gas pipeline faces major hurdles amid Ukraine tensions

  Political wrangling is stalling approval of the Nord Stream 2 pipeline as Germany’s new leaders fear a Russian gas-supply monopoly, with military tensions providing further cause for hesitation

  • By David McHugh and Vladimir Isachenkov / AP, Frankfurt, Germany
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  The pipeline is built and being filled with natural gas, but Russia’s Nord Stream 2 faces a rocky road before any gas flows to Germany, with its new leaders adopting a more skeptical tone toward the project and tensions ratcheting up over Russia’s troop buildup at the Ukrainian border.

  The pipeline opposed by Ukraine, Poland and the US awaits approval from Germany and the EU to bypass other countries and start bringing natural gas directly to Europe. The continent is struggling with a shortage that has sent prices surging, fueling inflation and raising fears about what would come next if gas supplies become critically low.

  The US has stressed the targeting of Nord Stream 2 as a way to counter any new Russian military move against Ukraine, and the project faces legal and bureaucratic hurdles. As European and US leaders confer on how to deal with Russia’s pressure on Ukraine, persistent political objections — particularly from EU members such as Poland — add another challenge to one of Russian President Vladimir Putin’s key projects.

  

  Illustration: Constance Chou

  Former German chancellor Angela Merkel backed the pipeline, and the country’s new leader, Olaf Scholz, did so as her minister of finance. However, his new government took a more distanced tone after the Green Party joined the governing coalition. The party’s campaign position was that the fossil fuel pipeline does not help fight global warming and undermines strategic EU interests.

  New German Vice Chancellor Robert Habeck and German Minister of Foreign Affairs Annalena Baerbock have said the project does not meet EU anti-monopoly regulations.

  “Nord Stream 2 was a geopolitical mistake,” Habeck told the newspaper Frankfurter Allgemeine Sonntagszeitung. “The question is open if it will be able to start operating,” adding that further “aggression” meant “nothing is off the table.”

  Officials have not said what sanctions or other tools might be used on top of existing US sanctions against ships connected to the project.

  As chancellor, Scholz has been cautious in his comments, and it is not clear if he is willing to go as far as US Secretary of State Antony Blinken, who has said it is “very unlikely” that gas would flow if Russia “renewed its aggression” toward Ukraine.

  Pressed on whether an invasion would halt the pipeline, deputy German government spokesman Wolfgang Buechner said that Nord Stream 2 is “an undertaking of a private business that is largely completed” and that regulatory approval “has no political dimension.” He stressed that military aggression would have “high costs and sanctions,” without saying what those might be.

  Scholz “never makes things completely clear,” said Stefan Meister, an expert on Russian energy policy at the German Council on Foreign Relations. “So I am not sure under which conditions he would really agree to stop the pipeline.”

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

  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 circumventing existing links through Poland and Ukraine.

  Gazprom said it would allow more reliable long-term supply and help save billions in transit fees paid to Poland and Ukraine. Gazprom says the pipeline is part of its role as a long-term supplier of affordable energy to Europe, which is heavily dependent on natural gas imports.

  Pipeline critics say it increases Russia’s leverage over Europe, pits member states against each other and deprives Ukraine of key financial support. Europe also went into winter with scant gas reserves that have sent prices soaring to eight times what they were at the start of the year, with Putin using the crunch to underline his push for final approval of the project.

  Gazprom did not sell gas above its long-term contracts this summer, further increasing unease about Russian motives. Analysts say existing pipelines have enough capacity for Gazprom to have sent more, but it filled domestic reserves first.

  For now, the approval process for the pipeline is on hold. German regulators say they can only approve a company formed within Germany, so the Swiss-based Nord Stream 2, owned by a Gazprom subsidiary, is creating a German arm. A decision is not expected in the first half of next year. The EU’s executive commission then must review the project.

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

  Critics say that Nord Stream 2 does not meet an EU requirement to separate the gas supplier from the pipeline operator to prevent a monopoly that could hurt competition, and would result in higher prices for consumers.

  Nord Stream said it “undertakes all necessary efforts to ensure compliance with applicable rules and regulations” and has permits by the four EU countries it passes through.

  Even if the pipeline is approved by regulators, it is not necessarily in the clear because of Poland’s opposition. EU members can sue in the European Court of Justice if they disagree with regulators, said Alan Riley, senior fellow at the Atlantic Council and a lawyer specializing in European antitrust and energy issues. EU anti-monopoly rules could bring years of litigation, even a ruling temporarily halting pipeline operations until the case is decided.

  “This could go on for some time,” Riley said. Final approval “is not a slam-dunk by any means.”

  Konstantin Kosachev, a deputy speaker of the upper house of Russian parliament, deplored the “artificial” obstacles blocking a quick launch of Nord Stream 2. While some have said that Europe has grown more dependent on Russian gas, the country has met all its obligations, he said.

  “The opponents of gas projects by Russia and the EU nations fear not that Russian supplies would fail, but just the opposite, that all problems would be solved, leaving no opportunity to accuse Moscow of harboring ill intentions or using energy as a weapon,” Kosachev said.

  While noting that Baerbock’s anti-Nord Stream 2 comments reflect her and her party’s views, Kosachev emphasized that she represents the entire country now.

  “Explaining the failure to provide cheap fuel exclusively by tales about what Russia could allegedly do wouldn’t be the best start for the ruling coalition in Berlin,” he said. “That’s why I don’t think that the position of the ‘green’ minister would have a radical impact on the pipeline’s fate, although it’s obvious that she wouldn’t support it or speed it up.”

  Even if it never starts, Nord Stream 2 has been worth it for the Kremlin’s geopolitical goals because it has sowed division among EU members and between Germany, the EU and the US, Meister said.

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