Nord Stream 2: Central and Eastern Europe vs Germany

Nord Stream 2: Central and Eastern Europe vs Germany

The Nord Stream 2 project is a hot topic again. But there is a sense of déjà vu to these discussions. Once again, as in late 2015, a joint critique of the project has been forwarded to the leaders of the European Union. Once again it claims that the construction of the new gas pipeline from Russia to Germany will undermine Europe’s energy security and result in geopolitical instability.

And the same as before signatures can be found at the bottom of the letter. The leaders of the Czech Republic, Estonia, Hungary, Latvia, Poland, Slovakia, and Romania, as well as the president of Lithuania, are convinced that the Nord Stream 2 pipeline will have «potentially destabilizing geopolitical consequences» and «could pose certain risks to the energy security of Central and Eastern Europe».

In its report, Reuters states that a similar stance is being taken by Croatia (where the EU, at Washington’s suggestion, has plans to get a pilot LNG [liquefied natural gas] import terminal up and running at full capacity). Representatives from Zagreb allegedly signed one of the versions of the collective letter.

It’s interesting to note that the letter itself, addressed to European Commission President Jean-Claude Juncker, is dated March 7, but nothing was known of it until March 16, and only then from press reports.

In its response to the collective letter, Nord Stream 2 AG, the company in charge of the Nord Stream 2 project, describes the technical aspects of the plan. In a released statement, the company’s press office emphasizes that the letter to the head of the European Commission «is based on a number of misconceptions and allegations that do not stand up to objective scrutiny». According to Nord Stream 2 AG, «EU energy supply has never been more diverse than it is today» and «Russian gas imports compete with more international suppliers to the EU than ever before».

According to reliable statistical data for the period from 1990 to 2014, the percentage of gas imported by Western Europe from Russia dropped by almost half. As a result, approximately 30% of the gas the EU consumes today comes from Russia. The European Commission does not deny these numbers.

There is not the slightest basis for claiming that Russia has a monopoly on supply or that Russian gas poses a threat. Moreover, states that are largely dependent on a single source of energy can only benefit from the construction of a new gas pipeline, because gas demand is growing steadily at the same time that the North Sea reserves are dwindling.

However, the authors of the collective letter do make a few valid points. For example, they correctly state that the construction of Nord Stream’s new line will have a powerful impact on the development of the gas market and the blueprint for gas transit in the region, particularly affecting the transit route through Ukraine. This impact will be seen in the elimination of the transit risks that are inevitable when transporting gas across a country that suffers from chronic instability.

But of course the signatories of this new version of last year’s letter are perfectly well aware of this. This letter was triggered by the unwillingness of the leaders of the countries of Central and Eastern Europe (CEE) to allow Germany to become the principal distributor of Russian gas.

We mustn’t forget that Nord Stream 2, which will run under the Baltic Sea, should double the amount of gas flowing to Germany, to 110 billion cubic meters per year. The consortium responsible for completing the project includes, in addition to Russia’s Gazprom, the German companies E.ON and Wintershall, the British-Dutch Royal Dutch Shell, the Austrian OMV, and the French ENGIE. But it is Germany that will actually control the further distribution of the gas, which could include shipping it to the key Central European gas distribution hub in Baumgarten, Austria.

This fact worries the leaders of the CEE states. And they have cause for their anxiety. Back in late 2013, the European Commission singled out Germany’s «suspiciously high» trade surplus with the countries of that region. Notably, at the peak of the euro crisis in September of that year, that surplus hit a record high of 18.9 billion euros. The European Commission felt that this was due to an increase in exports that was artificial, given the economic problems in Germany’s major trading partners – the countries of CEE. As stated by the head of the European Commission at that time, José Manuel Barroso, such a situation does not help «the rebalancing of the European Union economy». But since then there have been no fundamental changes to that state of affairs.

What’s more, the relationship between Berlin and the states of CEE have only grown more complicated – mainly because of the refugee problem. As far as can be determined, the disclosure of the new letter criticizing Germany over the Nord Stream 2 project was specifically timed to coincide with the EU-Turkey summit, at which Brussels – under pressure from Angela Merkel – agreed to all of Ankara’s demands.

The geopolitical games being played with the project to build a gas pipeline from Russia to Germany, thus eliminating the risk of gas transit through Ukraine, cannot help strengthen energy security in Europe. Yet nonetheless these games continue and are growing more intense and multifaceted.

Tags: Nord Stream  Germany  Russia