By Dasha Krasnodembskaya
In October 2012, Nord Stream 2 began construction after being financed by several European energy companies such as Uniper, with the largest share coming from the Russian energy company Gazprom. This €9.5 billion project centres around the installation of a direct gas pipeline across the Baltic Sea from Russia to Germany and other European countries such as the Czech Republic and Italy. In comparison to already existing pipelines in Europe, Nord Stream 2 has the capacity to transport double the amount of gas to a total of 110 billion cubic metres for low prices. Nevertheless, awareness should be raised upon the conflicting motives of the main parties involved in this project: Russia and Germany. The main driver behind Germany’s cooperation on this pipeline is undeniably economic. At the moment, 25% of Germany’s energy usage comes from gas, over 50% of which was imported from Russia. As oil reserves in Europe decrease, having a secure pipeline which will be able to withstand demand (in 2019 Germany was highest consumer of gas) and keep prices low, will be critical for future German prosperity. Looking at the other end of the pipeline, this project is a geopolitical investment by the Russian Federation. Firstly, if Germany’s dependence on gas continues to increase, then Russia’s role in Europe will simultaneously grow. Furthermore, this allows Russia to “show off” its higher position to Ukraine as Nord Stream 2 will not run through Ukraine’s borders. Now, with only 100km to go until completion, the future of Nord Stream 2 and German-Russian relations have arrived at a crossroad, following the recent poisoning of the prominent Russian opposition politician Alexei Navalny on a plane from Siberia to Moscow last month.
Since Germany was greatly involved in providing assistance to Navalny in a range of actions from medical assistance in the hospital Charité in Berlin and discovering the poisoning with Novichok, the decision regarding the continuation of Nord Stream 2 lies in the hands of Berlin. It is therefore critical to analyse the various influences (both international and domestic) which could play a role in Merkel’s final answer. Does Nord Stream 2 deserve to be terminated? Simply focusing on the international law, the attempted assassination of Alexei Navalny broke the Chemical Weapons Convention (an arms control treaty) as the use of the poisoning agent Novichok is prohibited. Thus, the freezing of Nord Stream 2 will serve as a justified punishment if Russia confesses to breaking an agreement regarding bioweapons. Realistically, as past events have shown such as Russia’s meddling with the 2016 US elections, a confession is very unlikely as this will lead to a lot of backlash, sanctions and other negative reactions. Unfortunately, with this attitude of stubbornness, Russia is sacrificing its reputation and further fuels the Western’s image of a “bad, corrupt, backwards” Russia.
On the domestic front, the Chancellor is also facing a lot of pressure from opposing parties such as the Green Party who believe the project of gas transmission is not necessary and carries serious environmental complication such as the substantial CO2 emissions Nord Stream 2 will produce and thus contradicts Germany’s plan on reducing carbon emissions by 2030. Moreover, Merkel faces criticism even from member of her own party such as Norbert Röettgen (a potential replacement of Merkel as leader in the Christian Democratic Party after the next federal elections in 2021) expressing hesitancy for Germany’s increased reliance on Russia. As a result, any leniency shown by Merkel towards Russia could further brew domestic opposition.
However, will everything be calm and normal if Nord Stream 2 does not continue? Yes, as perhaps anger within the German parliament would be tamed. Yet, Angela Merkel will now instead have to confront the discontent from neighbouring countries such as the Czech Republic due to the price implications which will follow with the lack of a pipeline. Furthermore, German businesses are criticising the potential hardening of German-Russian relations as this will further decrease their already limited access to the Russian market due to the strict sanctions imposed by Merkel upon Russia following the invasion of Ukraine in 2014. A similar worry is shared by Germany’s Economy Minister Peter Altmaier who criticises the effectiveness of sanctions.
Looking beyond Germany and Europe, Merkel has to also maintain stable relations with Washington DC. The US has remained one of the loudest critics towards Nord Stream 2 as it sees the pipeline as a weapon used by Russia to spread its influence over Europe by limiting diversified sources of energy supply. Naturally, this also uncovers the economic worry of the United States: the more gas comes from Russia, the less gas the US is able to sell to the EU. Therefore, by continuing with Nord Stream 2 Germany will have the opportunity to exercise autonomy from the United States and further restrict US’s involvement and access to the political stage of the EU and its internal market.
It is clear that Germany has found itself in a tug of war between domestic, international, political and economic interests. At the moment it is difficult to predict if a consensus will be achieved, if it does then sacrifices will definitely be made, and certain priorities will be pushed through more than others. However, these are interesting events to follow and observe as they highlight the fragility and the interconnectedness of the various branches of international politics. Perhaps this project is poisoned, but the recovery of it remains uncertain.
The views expressed in this article are the author’s own and may not reflect the opinions of The St Andrews Economist.