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Consensus on Nord Stream 2 could benefit Germany, Russia and Ukraine, but many obstacles remain
While the Iran-Pakistan-India pipeline, the Iran-India submarine pipeline and the Turkmenistan-Afghanistan-Pakistan-India pipeline remain illusory dreams, the Nord Stream 2 (NS2) connecting Russia to Germany through the Baltic Sea is now complete. despite the controversy. Manufacturing of NS2 began in 2016 and construction began in 2018. The 1,224 km, $ 11 billion submarine link is the shortest, most economical and most environmentally friendly route in the world. environment to double Russian gas exports to Germany. The pipeline provides stability to strategically important energy trade as Russia’s dependence on the European Union and vice versa is increased and this should promote realism.
Ukraine’s concerns
Energy is never taken out of politics. Russian authorities say NS2 can transport 55 billion cubic meters of gas each year, meet the needs of around 26 million households and replenish storage stocks, but Germany and Russia are subject to conditions resulting from a compromise between the United States and Germany and the EU. regulations.
Read also | US lifts sanctions on Russian company Nord Stream 2
European gas prices have broken records this year, approaching an all-time high of $ 1,000 per thousand cubic meters, putting pressure on many industries and food supply chains. This is due to the lack of viable alternatives to gas, low levels of storage due to a harsh winter and the post-COVID-19 economic push. Ukraine offered additional transit capacity for Russian gas to Europe at 15 million cubic meters per day for October, but Russia has reserved just 4.3%, citing domestic demand. Some European politicians accuse Russia of pushing to speed up the start of NS2, but the project needs European certification, which could take up to four more months. Germany has yet to issue an operating license, stating smugly that it will rule on the matter next January.
German Chancellor Angela Merkel is accused, mainly by Poland and Ukraine, of weakening the political unity and strategic coherence of the EU by giving Russia more weight through NS2. Ukrainian leaders are unhappy because they believe the pipeline is a Russian geopolitical weapon aimed at depriving Ukraine of crucial political traction and revenue. These concerns have been largely ignored by the EU, which has refused to give in to the demands of a third party. What Ukrainian President Volodymyr Zelensky got were assurances from the United States that it will impose more sanctions if Russia abuses the benefits of its new pipeline and Germany’s pledges to help Ukraine develop its energy sector and to pressure Moscow to pass its gas through Ukraine even after the current contract expires in 2024. Russian President Vladimir Putin has made it clear that this is acceptable but will depend on purchase contracts from European customers.
Behind the argument of protecting Western interests against Russia, Ukraine’s case is that if Russia cuts off its gas transport through Ukraine, Kiev will lose billions of dollars in transit fees, and fears that Russia does not reduce its energy supplies by cutting those needed by Ukraine. consumption. Ukraine has not diversified its economic fundamentals, the viability of which depends on Russia’s transport of fossil fuels on its territory. But the loss of cheap money earned from transit charges could benefit its economy in the long run.
The completion of NS2 suggests that no third party can affect the results of the project. Any flagrant violation of the business logic of NS2 by Russia would allow Ukraine to invoke the assurances given to it; it is therefore in Moscow’s interest to proceed in such a way as to avoid friction.
Aid to Ukraine
To allow a consensus on SN2, Germany has promised assistance to Ukraine for the development of hydrogen energy, but such commitments are less solid in their details; Berlin appears to be offering a modest € 206 million as seed capital to attract a potential investment of € 1 billion. President Zelensky considers this proposal inadequate, and his Foreign Minister Dmytro Kuleba has said bluntly: “This country has learned a number of bitter lessons that Western promises may not be kept. We don’t believe in promises.
Despite the lack of certainty about Germany’s financial promise, it should be taken seriously. The German elections could result in a coalition including the Greens, in which case the Greens could drop their opposition to NS2 in exchange for more substantial compensation for Ukraine. Since the hydrogen option is environmentally friendly, this helps meet the demands of German coalition policy and Ukrainian budget support and turns NS2 into a win-win proposition. It is a bad wind that benefits no one.
Krishnan Srinivasan is a former Minister of Foreign Affairs
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