Pipeline Politics: Novichok, Merkel and Nord Stream 29 min read

 In Analysis, Politics, Russia
When doctors at Berlin’s Charité hospital confirmed that Russian opposition leader Alexei Navalny had been poisoned with a military nerve agent, Novichok, speculation mounted over the future of the already contentious Nord Stream 2 gas pipeline. It has been suggested that the poisoning could prompt Germany’s Chancellor, Angela Merkel, to U-turn on the project that would deliver substantially more Russian gas to Germany.

Despite renewed speculation, and considerable pressure from Germany’s allies to force a rethink, Nord Stream 2’s days are by no means numbered. If the project was still in its early stages, perhaps Merkel would heed to calls from U.S. and European Union (EU) partners as well as domestic actors to change course. However, with the project more than 90% complete and billions of euros already invested, Merkel is unlikely to sacrifice such a costly and critical piece of infrastructure over a political dispute.

Germany’s energy conundrum

Nord Stream 2 is the €12 billion pipeline that will deliver gas from Kingisepp in Russia to Greifswald, Germany via the Baltic Sea. It would double the capacity of the existing pipeline that delivers gas directly to Germany: Nord Stream 1. Germany will benefit from this project as its energy infrastructure undergoes change. Currently gas is imported from Norway, Russia and the Netherlands, but the latter is set to cease production by 2030, leaving a gap in Germany’s supply. Under Merkel’s Chancellorship, Germany has committed to a bold energy transformation programme known as Energiewende: the transition to a more environmentally friendly energy system, achieved by phasing out nuclear and coal in favour of renewable sources. However, gas remains a vital energy source as coal and nuclear are quickly phased out, and is seen as a useful ‘bridging fuel’ on the road to a low carbon economy.

Beyond the question of the domestic energy landscape, economists predict Nord Stream 2 will lower overall gas prices across Europe; particularly in the West. Meanwhile, Germany would also benefit from transiting higher volumes of Russian gas to other European countries. German business interests are also overwhelmingly behind the project, with two German companies – Wintershall and Uniper – playing an integral part in the project as two of the five Western financial investors in Nord Stream 2, and an overall consensus among the German business community that Nord Stream 2 makes good economic sense.

Why is the pipeline so controversial?

The main source of opposition to Nord Stream 2 stems from the geopolitical concerns of Germany’s transatlantic allies. Critics of the project argue it poses a threat to European energy security as it increases Europe’s dependence on Russian energy sources. In turn, Nord Stream 2 strengthens Gazprom’s position as Europe’s dominant gas supplier and consequently gives the Russian state greater leverage over the continent.

Among EU member states, the strongest critic of the project is Poland which adopts a classically mistrustful position towards Russia. Reiterating the Polish government’s position on Nord Stream 2 and calling on Germany to abandon the project, the Polish Deputy Foreign Minister Pawel Jablonski described Nord Stream 2 as ‘mostly a political project, and it can also be used as a military tool, as warfare, in case Putin would decide to stop the gas flowing through Ukraine’.

Poland’s position on Nord Stream 2 is supported by a 2018 study commissioned by the European Parliament Committee on Foreign Affairs. The study concludes that Nord Stream 2 is a ‘diversionary pipeline’ designed to bypass Ukraine, which Russia is currently forced to pay to transport its gas to Europe. As such, it argues that Russia uses its position as Europe’s apex energy supplier as both an offensive and defensive foreign policy tool. In a worst case scenario, it gives the Russian state, through Gazprom, the power to cut off gas supplies for tens of millions of Europeans.

A second source of opposition to Nord Stream 2 comes from Washington, which has already imposed sanctions on Russian companies involved in the project. Initial sanctions were targeted against deep-sea pipe-laying vessels involved in the project. Washington has recently stepped up its efforts to block the project’s completion, with sanctions expanded to further target firms providing services or funding for vessels working on the pipeline. A bipartisan issue, successive U.S. administrations have opposed the project as a means for the Kremlin to deprive Ukraine of transit revenue, after relations between the two countries seriously deteriorated in the aftermath of Russia’s annexation of Crimea in 2014. Instead, the U.S. has called for greater diversification of gas supplies to Europe. This can be seen in the context of U.S. ambition to increase its already-growing share of LNG exports to the European energy market.

In Germany, the legacy of the pragmatic principle of Ostpolitik and the obvious economic benefits of the project have meant that, hitherto, voices of opposition to the pipeline have been insignificant, though Russian-German relations have soured since the Ukraine crisis in 2014. With Navalny’s poisoning, widely suspected to be Kremlin-backed, voices of opposition in the political establishment have grown stronger. The German government has called on the Kremlin to launch an official investigation into the poisoning. For the first time, the German Foreign Minister Heiko Maas has openly brought the future of Nord Stream 2 into question, stating ‘I hope the Russians don’t force us to change our position on Nord Stream 2’. Overall however, most ruling party figures have largely avoided raising the question of Nord Stream 2, with CDU MP and member of Germany’s Foreign Affairs Committee, Roderich Kiesewetter simply telling DW news that Germany’s response should be “a European answer to show that we are closely aligned with the international rules-based order which was severely violated by this event in Russia”.

Too late to U-turn

Neither a Russophile nor a Putinversteher [Putin understander], Angela Merkel is essentially a pragmatist. Although firm in her condemnation of Navalny’s poisoning, she has also stated that the issue of the Kremlin’s suspected involvement and Nord Stream 2 should be ‘decoupled’. In the Chancellor’s view, one is a fundamentally political matter while the other is business, and they should thus be treated as two separate issues.

The political establishment in Germany has so far not budged significantly on the question of the pipeline. The Greens have used the poisoning of Navalny as an opportunity to reaffirm their opposition to the project, arguing that Germany should be more cautious towards the Kremlin. Yet, parties across the political spectrum have been critical of the Green’s proposal to halt the project, and the Alternative für Deutschland (AfD) tabled an opposing motion calling on the government to commit unequivocally to the project. Both motions have been referred to the Bundestag’s Economic Affairs and Energy committee.

Overall, Merkel is aware that a majority of Germans continue to support the project’s completion. If U.S. imposed sanctions on Nord Stream 2 led to a greater U.S. share in the European gas market, gas would likely become more expensive, contradicting the notion that politics and economics should remain separate. The import of American shale gas could also face strong opposition from the electorate given the level of environmental awareness in Germany, and concerns over the ecological impact of fracking.

On the international stage, things are admittedly less clear for Merkel. Washington, and a host of EU member states, though notably not France, oppose the project. However, opposition among these states is longstanding and the project’s completion won’t radically change that.

Merkel is a strong supporter of EU sanctions against Russia over the Ukraine crisis, and Germany is Ukraine’s second largest nation-state donor. From this perspective it is perhaps contradictory for Merkel to also give the go ahead to Nord Stream 2, given it could economically weaken Ukraine. However, given the massive economic benefit of the project for Germany, Merkel has pragmatically chosen to go ahead with the pipeline until now despite this contradiction, while continuing to assist Ukraine by other means. Ultimately, if the illegal annexation of territory from a neighbouring European country and the ensuing international crisis didn’t stop the pipeline back in its early stages, it is unlikely that one more Russian internal political scandal would tip the balance towards cancellation.

Observers would do well to remember that Russia’s political and economic relations with Germany have, for most of the post-Soviet era, been warmer than Russia’s relations with much of the West. Even during the height of the Cold War, the Soviet Union supplied Europe with Russian gas. With Merkel’s political career coming to an end in 2021, she would probably rather live without a legacy of decisively putting an end to this cooperation.

In the end, what difference does Navalny make?

The poisoning is only the latest in a series of alleged Kremlin violations of international norms that makes doing business with Russia inherently less palatable. The fact that Navalny has made a recovery makes life easier for Merkel. Besides, given that the project has already progressed while relations between Russia and Germany have deteriorated elsewhere means there is no reason to believe this incident changes Merkel’s position.

Merkel is set to stand firm on Nord Stream 2. Over her time as Chancellor she has consistently pursued a Russia strategy that balances competing pressures. Simultaneously, Merkel has led support for EU sanctions against Russia and allowed Nord Stream 2 to progress, remaining resolute in pursuing Germany’s interests in the face of U.S. pressure to change course. Moreover, the recent Russia-Ukraine gas transit deal which agrees the terms of transporting Russian gas through Ukraine over the period 2020-2024 – negotiated partly through German diplomatic efforts – will offer Merkel at least some peace of mind, knowing every effort to pursue a fair deal for all parties has been made.

Merkel will leave a formidable political legacy irrespective of Nord Stream 2. Indeed, as Merkel comes to the end of her fourth and final term, a recent study by the Pew Research Center finds that international confidence levels are higher in Merkel than in any other world leader, and around 81% of Germans expressing confidence in the Chancellor. Giving the nod to Nord Stream 2 may be controversial in Europe, but the continent is deeply divided on a multitude of issues, and ultimately the pipeline will not dent the legacy Merkel is set to leave when she leaves office in 2021.

Featured image: Nord Stream 2 pipeline route and chemical weapons / Adapted by Amanda Sonesson from Euractiv and The Associated Press
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