Renewed opposition to controversial Nord Stream 2 pipeline as it nears completion

    Renewed opposition to controversial Nord Stream 2 pipeline as it nears completion

    Monday, 12 August 2019
    Russian state-owned energy giant Gazprom, set to both own and operate Nord Stream 2 once it comes online, is determined to finish construction on the remaining one-third of the line by the end of 2019.

    The consortium behind the contentious Nord Stream 2 pipeline has announced that the 510-kilometre long Swedish section of the line will be finished by October. Russian state-owned energy giant Gazprom, set to both own and operate Nord Stream 2 once it comes online, is determined to finish construction on the remaining one-third of the line by the end of 2019—but the pipeline’s opponents, from Washington to Copenhagen, are gearing up for a fresh fight against the undertaking.

    Last week, a U.S. Senate committee passed a bipartisan bill which, if passed by the full Senate and the House of Representatives, would slap sanctions on the companies laying Russian pipeline lengths on the seabed. The surgical sanctions would particularly target two European companies— Italy’s Saipem and Switzerland’s Allseas—which are currently helping Moscow implement the project. Given that there are only five companies in the world—none of which are Russian— with the necessary technical expertise to lay down the pipeline, such sanctions could indeed throw a wrench in Gazprom’s game plan.

    Opposition peppered throughout Europe

    Senator Jeanne Shaheen (D-NH), one of the bill’s cosponsors, noted that the bill was in part intended to reenergise European opposition to the project. While German politicians have by and large supported Nord Stream 2, the pipeline has spooked much of the rest of the continent.

    Large swaths of Eastern Europe, from Romania to the Baltic states, strenuously object to the project. In March, the European Parliament voted overwhelmingly (402 to 163) to oppose Nord Stream 2. Denmark has so far refused to give its agreement for the pipeline to pass through its territorial waters, while Gazprom and the European Commission are duking it out in court over an EU gas directive amendment that would require any pipeline importing gas into the bloc to not be owned directly by a gas supplier like Gazprom.

    A reliable energy partner?

    Europe has good reason to be wary of the pipeline—as well as the oft-repeated claims that it is a “purely commercial venture”. Even aside from the open question of whether the pipeline is necessary to meet European gas demand or economically beneficial for the continent, there are very real concerns about Russia’s reliability as an energy partner.

    Gazprom has a long history of falling in step with the Kremlin’s foreign policy, and has repeatedly shown itself willing to use its energy resources as a weapon against Moscow’s enemies. The synergy between Russian gas supplies and Putin’s geopolitical priorities has ranged from the relatively subtle—the take-or-pay clauses in Gazprom’s long-term contracts—to the blunt: repeatedly cutting off wintertime gas supplies to Ukraine. Gazprom’s perennial gas disputes with Kiev have already penalized the EU in the past, as the Russian supplier restricted gas flows to the EU in order to prevent reverse flows to Ukraine.

    Trouble on the EU’s eastern borders

    Some EU member states, such as Estonia and Finland, could lose a devastating 80% of their gas supply if Russia froze delivery. But even aside from the risk of Moscow directly using the pipeline as leverage against the European Union by threatening to shut off the taps, Nord Stream 2’s rerouting of European gas flows risks having ripple effects on the bloc.

    Critics of the Kremlin have suggested that the true purpose of Nord Stream 2 is to attack arch-rival Ukraine, heretofore the main conduit for Russian gas entering the EU. As opposition leader Gennady Gudkov commented, “Russia uses its energy [supplies] as a tool to pressure Ukraine. The pipeline is not economically necessary. It is a political show of ambitions, a way to punish Ukraine.”

    With Gazprom suggesting that Nord Stream 2 going into service would immediately cut gas volumes passing through Ukraine to a mere 15% of their current levels, Ukraine’s GDP could be weakened by as much as 3%—equal to the country’s entire defence budget—straining Kiev’s already vulnerable finances.

    Worse yet, some have suggested that removing Gazprom’s dependence on pipelines through Ukraine would give the Kremlin the green light to ramp up its aggression towards Kiev. A renewal of the conflict which has been largely frozen for five years would necessarily have a chilling effect on the EU member states situated along Ukraine’s borders.

    Fresh questions in Brussels

    In spite of this laundry list of security concerns, the EU has been unable to come to enough of a consensus to block the project. It remains unclear whether the proposed U.S. sanctions will make it through Congress and be signed into law by Donald Trump, and it’s equally uncertain what effect Washington’s 11th hour push to freeze construction on the pipeline will have on policymakers in Brussels.

    The EU is understandably weary of unilateral American sanctions, and some German politicians have balked at what they see as Washington’s meddling in European affairs. It’s nevertheless likely that the proffered sanctions will reignite the debate in Brussels over the project, throwing its completion into question even as the final lengths of pipe are laid in the Baltic Sea.