Germany, Russia and Ukraine may benefit from consensus on Nord Stream 2, but many obstacles remain
While the Iran-Pakistan-India Gas Pipeline, the Iran-India Undersea Pipeline, and the Turkmenistan-Afghanistan-Pakistan-India Pipeline remain pipe dreams, Nord Stream 2 (NS2) Running from Russia to Germany across the Baltic Sea is now complete, despite the controversy. The construction of the NS2 began in 2016 and construction began in 2018. The 1,224 km, $11 billion underwater link is the shortest, most economical and environmentally friendly route for doubling Russia’s gas exports to Germany. The pipeline provides stability to the strategically important energy trade as Russia’s dependence on the European Union and vice versa increases and should promote realism.
Ukraine’s concern
Energy never goes away from politics. Russian officials say the NS2 could transport 55 billion cubic meters of gas each year, meet the needs of about 26 million homes, and restore storage inventories, but Germany and Russia are both the US and Germany and Germany. are subject to conditions arising out of an agreement between the European Union. Regulations.
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European gas prices have hit records this year, nearing an unprecedented $1,000 per thousand cubic metre, putting many industries and food supply chains under strain. This is due to the lack of viable alternatives to gas, low storage levels due to severe winters and the post-COVID-19 economic boom. Ukraine offered additional transit capacity for Russian gas at 15 million cubic meters per day for October, but Russia booked only 4.3% of it, citing domestic demand. Some European politicians accuse Russia of pressuring Russia to accelerate the launch of the NS2, but the project requires European certification, which could take four more months. Germany has yet to issue an operating license, saying it will rule next January.
German Chancellor Angela Merkel is mainly accused by Poland and Ukraine of undermining the political unity and strategic cohesion of the European Union by giving Russia more advantages through the NS2. Ukraine’s leadership is unhappy because it believes the pipeline is a Russian geopolitical weapon intended to deprive Ukraine of political traction and significant revenue. These concerns have been largely disregarded by the European Union, which has refused to heed the demands of third parties. What Ukraine’s President Volodymyr Zelensky has achieved is assurances from the US if Russia abuses the benefits of its new pipeline and Germany’s undertakings to help Ukraine develop its energy sector and If pressure pressures Moscow to move its gas through Ukraine, it will impose more sanctions. 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 for defending Western interests against Russia, Ukraine’s case is that Kiev will lose billions of dollars in transit fees if Russia cuts off the transportation of gas through Ukraine, and fears that Russia will lose Ukraine. may cut off the required energy supply. consumption. Ukraine has not diversified its economic fundamentals, the viability of which depends on Russia moving fossil fuels through its territory. But the loss of cheap money gained through transit fees could benefit its economy in the long run.
The completion of NS2 shows that no third party can influence the outcome of the project. Any open violation of the commercial justification of NS2 by Russia will enable Ukraine to implement the assurances given; Accordingly it is in the interest of Moscow to proceed in such a way as to avoid friction.
aid to ukraine
To build consensus on NS2, Germany has promised aid to Ukraine for the development of hydrogen energy, but such commitments are less robust in their details; It appears that Berlin is offering a modest €206 million as seed money to attract a potential corporate investment of €1 billion. President Zelensky considers the proposal inadequate, and his Foreign Minister Dimitro Kuleba has bluntly stated, “This country has learned many bitter lessons that Western promises may not have been fulfilled. We do not believe in promises.”
Despite the lack of evidence in Germany’s financial promises, there is reason to take it seriously. The German elections could result in a coalition including the Greens, in which case the Greens could drop their opposition to the NS2 in exchange for more substantial compensation for Ukraine. Since the hydrogen option is environmentally friendly, it presents room for accommodating the requirements of German coalition politics and support for the Ukrainian budget and turning the NS2 into a win-win proposition. It is a sick wind that does no one any good.
Krishnan Srinivasan is former foreign secretary
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