European experts warn Germany that the completion of the Nord Stream 2 project will be a strategic mistake felt for decades to come. This is proclaimed by the European Values Think-Tank Public Appeal. Security experts from 18 European countries (including Lithuania) outlined six reasons why Germany should say no to the pipeline. RuBaltic.Ru decided to fact-check these arguments against the Nord Stream 2, joined by the leading expert at the National Energy Security Fund, an expert of a Financial University at the Russian Government Igor Yushkov.
Gas Lever
“We have seen the Kremlin use energy to blackmail European democracies numerous times in the past. While Germany‘s government is rightly the key driver behind European sanctions retaliating against Russia‘s aggression against Ukraine, the Merkel administration still has a blind spot.”
In Actuality
Nor Germany, nor any other leading European countries ever attempted any serious measures to cut down the Russian gas shipments, even after “Russian aggression against Ukraine.” They are not working on strict precautions to avoid shipment stoppage, and Ukraine-Russia gas conflicts have never led to a transit crisis. Germany never had any reason to doubt Gazprom’s reliability or fear that Russia will shut the valve at a critical moment.
If Russia was using energy in its political goals, then it must tell the Europeans (possibly around January): “Tomorrow we will shut down the gas flow to your countries and we won’t resume them until you lift sanctions and recognize Crimea.” That would be blackmail. And right now it appears to be the absolute opposite: Russia is under sanctions, threatened with cutting financing to energy companies or refusing to ship equipment for the oil industry. Moreover, Ukraine, Poland and the Baltics openly say that Russia must be stopped from building Nord Stream 2 until they concede to political demands. This is the politization of energy.
Nord Stream 2 will Circumvent Germany’s allies?
Nord Stream 2 enables Gazprom to partition markets and potentially charge higher prices in the CEE region. German analyst Georg Zachmann expressed this idea eloquently: “Most alarmingly, Gazprom would gain another tool to discriminate between countries. Gazprom could then credibly threaten to cut off gas supplies in Eastern Europe without threatening its markets in Western Europe.
In Actuality
Gazprom is a commercial company. In fierce competition, it can’t afford to lose clients and won’t voluntarily stop gas shipments to East European countries. What is the point? Russia (and USSR earlier) have been shipping gas to Europe for 50 years and nothing of the sort ever happened. On the contrary, Gazprom always points out the benefits of their terms, unlike, for example, the LNG shipments in Lithuania and Poland.
In addition to that, Gazprom can’t just set the prices as it sees fit. They have always been tied to oil prices. For example, when in 2014-2015 the oil prices dropped from 100$ to 35$ per barrel, the price dropped by over 400$ for 1000 cubic meters to less than 200$. If we follow the logic of Gazprom’s critics, then it should have kept the high prices. But the gas prices for European consumers dropped precisely because of the oil formula. And Gazprom didn’t even go to any court demanding they review the formula, like the European consumers did when prices rose during the expensive oil years.
Another fact: after the EU anti-monopoly investigation into Gazprom, the Russian company agreed to a system where prices in neighboring countries can’t differ substantially. The other condition of the EU anti-monopoly agency was also adopted: Gazprom does not ban re-export in its contracts. So purely theoretically, if Gazprom refuses to ship gas to Eastern Europe, then the Central European countries could just re-export it. Europe does have the necessary interconnectors to do so.
And why would Gazprom refuse to ship its gas into East Europe, particularly Poland, if around 40 billion cubic meters passes through it each year? It is not that hard to calculate. In 2017, 93.5 cubic meters went transit through Ukraine. If all of the circumventing pipelines were ready (Nord Stream 2 – 55 billion, Turkish Stream – 31.5 billion and the increased Nord Stream 1 – 4 billion), then the 3 billion still wouldn’t fit and they would have to send them through Ukraine. So Nord Stream 2 can’t be Gazprom’s solution that avoids East Europe.
A Deal With The Devil.
The Federal Republic of Germany will be de facto co-financing Russia’s war machine and Nord Stream 2 will further weaken the Alliance.
In Actuality
The experts’ Hottentot Morality is disproved by a simple fact: even the current regime in Kiev is “financing the aggressor” with trade turnabout between Russia and Ukraine significantly growing as of 2017. But the experts are somehow sure that it is Germany who must turn down the profitable cooperation with Russia.
Nord Stream 2 is merely a new route for the delivery of Russian gas to European consumers. And the amounts that Gazprom is getting paid for are currently going through Ukraine. So the ones writing such arguments must urgently call for a stop of transit through Ukraine. Because the Nord Stream 2 will be ready only by 2020, but they need to cut off the funding to the war machine right now!
The construction of the Nord Stream 2 is more of a measure that is essential to weakening the “Russian War Machine.” Because Gazprom will waste around 5 billion Euro on the project and will pay less dividends to the state. And the state spends that money on the military as well. So the critics should protest with signs saying “More Russian pipelines!”
Corruption is Transmitted via Pipelines
Nord Stream 2 will aggravate strategic corruption in Europe – as the Schroeder case shows. Security analysts have long sounded the alarm about the level of Russian intelligence penetration into Germany. None of the actors involved on the German side of the Gazprom deals in Germany, such as ex-Stasi officer Matthias Warnig or former Chancellor Gerhard Schroeder, have been the subject of official scrutiny or real isolation in the last decade.
In Actuality
The experts have dumped espionage and corruption into one mess. In any case, the word of the Russian officials’ corruption shouldn’t worry their European colleagues as long as they themselves abide by the law. Gazprom doesn’t have any favorable position in Europe – it is just a business partner of the importing countries. So it is confounding how the European Union members would get “infected” with corruption by trading with Russia.
If Gazprom or Russia are nurturing corruption in Europe – show us examples and put the criminals in prison. However, we don’t see a single criminal case, even though the anti-monopoly investigation had searched the Gazprom foreign offices in Europe.
Why would Gazprom even need to bribe European politicians or the business? What is the point of that? Lithuania started buying LNG from Norwegian Statoil for prices higher than Gazprom, with only the state company Lietuvos Energija doing it. But no one is accusing the Lithuanian government or the Norwegians of corruption. A similar case with Poland buying LNG from Qatargas: during the signing of the contract, Russian gas was 400$ for 1000 cubic meters, and Qatari gas was 800$. The thought of corruption rises when you notice the complete lack of any economic logic in both of those cases.
Excessive Luxury
“The EU energy agenda stresses the importance of diversification and the necessity of unbundling. Under the massive influence of the Federal Republic of Germany, the EU has also been promoting renewables. Experts have argued that the already existing gas infrastructure was more than adequate to guarantee transport of the necessary volume to the European market.”
In Actuality
Europeans have preached the laws of an open market and free competition. Russia follows these principles. Let the gas freely compete with other energy sources, there is no need to subsidize renewable energy. Companies should have the right to build any infrastructure as long as they follow the law. Nord Stream 2 follows all of the EU laws, so all of the countries, except Denmark (for now), have permitted construction in their sea territory, despite of their feelings on the project and Russia on a political level.
But is it enough for Europe’s gas infrastructure to be outside of politics? If this is a commercial project, then it can be realized. EU can either give it the money from the European funds or not give them anything. Gazprom is not asking for this money. And if they ban this infrastructure due to its excessiveness, then they should ban the construction of new LNG-terminals and demolish all of the new ones built in recent years, because the medium workload of the accepting LNG-terminals in Europe has been 20% for many years. So, around 80% capacity is unused.
Russian Toxic Gas
“Nord Stream 2 causes substantial environmental damage. Approximately 70% of all Russian gas imports to Europe will go through just two underwater pipelines that are vulnerable to terrorism, which are much less safe than existing landline routes.”
In Actuality.
The environmentalists have not had any complaints over Nord Stream 1, so it is strange that the second pipeline would somehow damage the region’s ecology. There are no issues with the Algerian pipeline at the bottom of the Mediterranean Sea, there are no issues with Norway’s pipelines or mining oil in the North Sea in general. Considering the rise of terrorism in Europe, maybe the Europeans need to ban pipelines and gas in general? Today they drive a truck into the crowds, tomorrow they will drive into a pipeline…
But there are no bans in effect. Not to mention the nuclear power plants in the EU, which could be targeted by terrorists. Another big issue is why the Europeans are so sure that the Ukrainian pipeline is secure. First off, it is an old structure and it is need of renovation. Second, radical groups could blow up the pipes and take over the gas compression stations. Those who laugh at this scenario should remember why the energy supply from Ukraine to Crimea stopped. Formally, the state never cut the power, just some activists blew up the station’s supports and were stopping the repair brigades.
Translated by Pavel Shamshiev
