Despite tensions in Ukraine, Russian pipeline faces major hurdles

FRANKFURT (Germany) -- The pipeline has been completed and is being filled with natural gas. Russia's Nord Stream 2 will face a difficult road before any gas flows into Germany. Its new leaders are more skeptical of the project, and tensions are rising over Russia's troop buildup near the Ukrainian border.

Despite tensions in Ukraine, Russian pipeline faces major hurdles

The U.S., Poland, and Ukraine oppose the pipeline. Germany and the European Union must approve the project to allow natural gas to be brought directly to Europe. A shortage has caused prices to rise on the continent, increasing inflation and raising concerns about what will happen if supplies of natural gas drop to critical levels.

The U.S. has emphasized the importance of Nord Stream 2 to counter any Russian military moves against Ukraine. However, the project is already facing legal and bureaucratic obstacles. Persistent political objections, especially from EU members such as Poland, pose a challenge to one the key projects of Russian President Vladimir Putin.

The former German Chancellor Angela Merkel supported the pipeline. Olaf Scholz was appointed her finance minister. His new government adopted a more distant tone after the Greens joined the coalition. The Greens campaign position was that the fossil-fuel pipeline does not help combat global warming and is detrimental to strategic EU interests.

High-ranking German officials, including Foreign Minister Annalena Bock, said that the project does not meet EU antimonopoly regulations.

Habeck said recently that Nord Stream 2 was a geopolitical error. "It is not clear if it will be able start operating," Habeck said, adding that "nothing" was off the table.

Scholz, as chancellor, has been cautious in his comments. It's unclear if he is willing to go as far U.S. Secretary Antony Blinken who said that it was "very unlikely" that gas would flow if Russia "renewed aggression" towards Ukraine.

When asked whether an invasion of the pipeline would stop it, Wolfgang Buechner, deputy German government spokesperson, said that Nord Stream 2 was "an undertaking by a private company that is largely complete" and that regulatory approval "has not been given any political dimension." However he stressed that military aggression would result in "high costs and severe sanctions."

Scholz "never makes it completely clear," stated Stefan Meister, an expert on Russian foreign relations and energy policy at the German Council on Foreign Relations. "So, I don't know under what conditions he would agree to stop the pipeline."

Meister stated that there was a "new tone, a different rhetoric" from the German government.

Gazprom, Russia's largest gas company, would pump twice as much gas directly to Germany through the pipeline. It would also add to an existing pipeline under the Baltic Sea. The pipeline would bypass existing connections through Ukraine and Poland. Gazprom claims it will provide a more reliable supply over the long-term and save billions on transit fees to Ukraine and Poland. Gazprom claims the pipeline is part its long-term supply of affordable energy to Europe which is heavily dependent upon natural gas imports.

Critics of the pipeline claim it increases Russia’s influence over Europe, pits member countries against each other, and deprives Ukraine from key financial support. Europe entered winter with a shortage of gas reserves, which has caused prices to soar to eight times their levels at the beginning of the year. Putin used the crunch to push for final approval.

Gazprom did not sell gas beyond its long-term contracts this year, increasing concern about Russian motives. Analysts believe that Gazprom's existing pipelines are capable of sending more gas, but that it first filled its domestic reserves.

The approval process for the pipeline has been put on hold. German regulators have stated that they cannot approve a company established in Germany. Therefore, the Swiss-based Nord Stream 2, which is owned by a Gazprom subsidiary and is creating a German arm, has been put on hold. The decision will not be made in the first half 2022. The project must then be reviewed by the executive committee of the European Union.

Analysts believe that these decisions are legal and not subject to political interference.

Critics claim that Nord Stream 2 fails to meet the EU's requirement to seperate the gas supplier and the pipeline operator in order to prevent a monopoly, which could lead to lower prices for consumers and less competition.

Nord Stream stated that it has made all efforts to comply with the applicable rules and regulations and is granted permits by the four EU countries through which it travels.

Even though the pipeline is cleared by regulators, it may not be in good standing due to Poland's opposition. EU members can sue the European Court of Justice when they disagree with regulators, according to Alan Riley, senior fellow at Atlantic Council and a lawyer who specializes in European antitrust issues and energy. EU antimonopoly rules could lead to years of litigation. Even a temporary halt to pipeline operations may not be enough.

Riley stated, "This could continue for some time." Final approval is not a "slam-dunk" by any means.

Konstantin Kosachev is a deputy speaker in the Russian upper house. He deplored the "artificial obstacles" to the rapid launch of Nord Stream 2. He said that while some may argue that Europe is becoming more dependent upon Russian gas, Russia has fulfilled all its obligations.

Kosachev stated that "the opponents to gas projects by Russia or the EU nations do not fear that Russian supplies will fail but that the entire problem would be solved and that there would be no chance to accuse Moscow for harboring ill intents or using energy as an weapon."

Kosachev acknowledged that Baerbock, the German Foreign Minister, made anti-Nord Stream 2 remarks. However, she said that her views and those of her party are hers.

He stated that explaining the lack of cheap fuel solely through stories about Russia's alleged actions would not be the best way to start the ruling coalition in Berlin. "That's why, I don't believe that the position of 'green minister' would have a significant impact on the fate of the pipeline's fate. However, it is obvious that she would not support it or speed up its progress.

Even if Nord Stream 2 never begins, it was worth it for the Kremlin’s geopolitical goals, because it caused division between EU members, Germany, the EU, and the U.S. said Meister from the German Council on Foreign Relations.

He stated that the pipeline had already paid the Kremlin for its online absence. "Politics, security and the economy always win in Russia."

Updated Date: 22 December 2021, 11:16

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