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German MPs call for clarification on contentious Russian gas pipeline Nord Stream 2

As a German coalition government may emerge soon, a key issue that undid an earlier deal may now create more political havoc. Will Berlin accept a worsening of relations with eastern neighbors while securing cheaper gas?Seven German politicians from across the political spectrum have called on the German government to clarify its position on the politically contentious planned Nord Stream 2 gas pipeline linking Russian sources with German consumers.

“Real cooperation cannot mean that Germans and Russians agree anything over the heads of our EU partners, so the EU is split, and trust is lost,” the group wrote in a joint open letter to the German newspaper Frankfurter Allgemeine Zeitung.

“Russia sees energy and the economy as a political weapon,” Elmar Brok, a member of the European Parliament and co-author of the letter, told DW.

“Energy has always been a political weapon, as Putin himself has said, so this separation of politics and economics is extremely dangerous.” Adding: “We hope that there will again be a broad discussion in Germany and in other European countries.”

The pipeline would concentrate almost all Russian exports to the EU to one route and, they argued, make it easier for Moscow to cut off Eastern Europe or bypass their transit networks.

With Germany being the EU’s largest importer of Russian gas, the group of MPs also expressed fears that increasing the share of Russian gas in the German energy mix could give Moscow greater political leverage over Berlin.

Pipe dreams or nightmares?

If current plans go ahead the pipeline would complement the existing one, Nord Stream 1, with two extra lines and double the amount of gas transported from Russia to Germany.

These would run alongside the existing pipeline and are designed to carry 55 billion cubic meters of gas a year and be operational by 2019. The cost of the 1,200-km (746-mile) pipeline has been estimated at €9.5 billion ($10.3 billion) and construction is scheduled to begin this year.

Two German companies, Wintershall and Uniper, want to provide €950 million each to cofinance the project, although the bulk of the financing would be borne by Russian energy giant Gazprom, which would also supply the gas.

However, the majority of EU countries and the European Commission have been critical of the project. It is particularly opposed by Poland, Ukraine and the Baltic states over fears it would increase Europe’s dependence on Russian gas and cut Ukraine off from gas transit fees.

Sweden and Denmark are also concerned with regard to the Baltic Sea flora.

The EU Commission has promised to clarify bloc-wide legislation governing import pipelines from countries outside the EU’s internal market. Existing legislation — the Third Energy Package — applies to gas pipelines like Nord Stream 2, but companies can’t majority-own supply and distribution assets and must give competitors access to their pipelines.

The Commission has yet also to rule on whether offshore and onshore parts would be subject to EU energy laws.

Purely commercial

Germany and Austria have tended to focus on the commercial benefits of having more cheap gas, arguing there could be little harm from an additional pipeline.

Nord Stream 2 was among the most controversial projects of Germany’s last grand coalition government made up of Christian Democrats (CDU) and Social Democrats (SPD) and which is now in the process of being renegotiated.

The SPD supports the plan. In the previous government, they were driven mainly by Foreign Minister Sigmar Gabriel and ex-Chancellor Gerhard Schröder, who is now the CEO of Nord Stream 2 and also chairman of Nord Stream AG’s shareholder committee, which is responsible for Nord Stream 1.

Nord Stream 2 poses no threat to Europe’s energy security, Chancellor Angela Merkel said on Friday. “We had different views on the Nord Stream issue,” Merkel told reporters at a joint press conference with Polish Prime Minister Mateusz Morawiecki in Berlin last week. “We think this is an economic project. We are also for energy diversification. We also want Ukraine to continue to have transit gas traffic, but we believe Nord Stream poses no danger to diversification,” she said.

A struggle over European solidarity

Poland, the Baltic nations and other EU members have long argued the pipeline runs counter to European energy objectives, which are designed to diversify energy supply, reduce reliance on Russia and keep gas flowing through existing pipelines in Ukraine, which depends heavily on transit revenue paid by Gazprom.

“The political dimension is mainly determined by the question of whether it is opportune to develop relations with Russia in times of crisis in and around Ukraine,” Kirsten Westphal, an energy analyst at the Berlin-based German Institute for International and Security Affairs, told DW.

“The crucial question here is whether the project is not destabilizing Ukraine, which we actually want to bring closer to us, and if the project contradicts the goals of the energy union? Will it make Germany and Europe politically open to blackmail and economically vulnerable?” Westphal asked.

“The Nord Stream 2 project goes against provisions of the Third EU Energy Legislation Package, which assumes amongst others separation of gas transmission and trading and broader third-party access to transmission assets. Nord Stream 2 in full operation could make LNG terminals in Poland and Lithuania no longer economically viable,” an energy expert in Warsaw who wanted to remain anonymous told DW.

“This is gas from the same source, but via a different route. We indicate the risks related to cutting Ukraine from transit,” Prime Minister Morawiecki said, adding that Merkel’s comments on assuring Ukraine’s gas traffic fees were important.

The US enters the equation

Morawiecki has called for the US to impose sanctions on the planned pipeline, which Secretary of State Rex Tillerson said last month the US government sees as a threat to Europe’s energy security.

“Once Nord Stream 2 is going to be built Putin can do with Ukraine whatever he wants,” Morawiecki told reporters later on Friday. “And then we have potentially his army on the eastern border of the EU.”

While the Kremlin has denied providing military support for separatists in eastern Ukraine, the US has sanctioned Russian firms over Moscow’s role in the Ukraine conflict and foreign companies for helping Russian energy exploration.

In July 2017, the US House of Representatives passed a bill which will tighten existing sanctions against Russian companies and individuals. The bill states that Russia is using energy exports to coerce its neighbors and takes specific aim at Nord Stream 2. According to the bill’s authors, the Gazprom-led project has “detrimental impacts on the EU’s energy security.”

Wilbur Ross, the US commerce secretary, has suggested the EU “correct the transatlantic trade balance” by buying more US liquid natural gas (LNG). Since February 2016, about 1 billion cubic meters of American natural gas has reached Europe, equivalent to 2 percent of Nord Stream 2’s planned capacity.

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