Nord Stream 2
With just over 150km remaining, Nord Stream 2, the natural gas pipeline that runs from Russia to Germany, has again returned to the spotlight. After the poisoning of Kremlin critic Alexey Navalny in late August, pressure has mounted on German Chancellor Angela Merkel to reconsider the pipeline, which is set to provide up to 55 billion cubic meters of natural gas per year beginning in 2021. Concerns are in part a manifestation of different views on the role of ideology (or lack thereof) in strategies for economic and energy security. Can Germany and Russia maintain a deal on strictly economic terms, or are Russia’s politics a breaking point for Germany and the E.U.? Here we overview the state of play of Nord Stream 2 construction and politics.
Domestic disapproval has mounted in Germany since the Navalny poisoning. Germany politicians from across the political spectrum have demanded that the project stop, citing the poisoning of Navalny – allegedly at the hands of the Putin government – as the [rationale]. German MP Norbert Röttgen, head of the parliament’s foreign affairs committee, argued that Germany needs to “respond with the only language that Putin understands, the language of natural gas and selling natural gas.” The response has varied across the EU, but European Commission President Ursula von der Leyen condemned the pipeline: “To those that advocate closer ties with Russia, I say that the poisoning of Alexei Navalny with an advanced chemical agent is not a one-off. […] This pattern is not changing – and no pipeline will change that.” The debate continues on whether Nord Stream 2 and the Navalny poisoning should be linked.
Nord Stream 2 is already under a U.S. sanctions regime. The December 2019 sanctions, which target companies that assist Gazprom to build the pipeline, successfully slowed down and complicated pipeline construction. The E.U. and Russia condemned the sanctions. In recent months, U.S. lawmakers have been pursuing additional sanctions. In mid-September, Die Zeit reported that in early August, Germany had offered to spend $1.2 billion on the construction of two new LNG terminals in exchange for the unhindered construction and operation of the pipeline. In late-September, Fitch assessed the possibility of further sanctions against Nord Stream 2 as very likely, given the consensus between U.S. legislators and President Trump. Russia has repeatedly stressed its commitment to completing the pipeline.
Prepared by Seth Farkas
October 1, 2020
Note: S&P Global Platts published a comprehensive infographic illustrating the current state of affairs with respect to Nord Stream 2.
Chambers, Madeline. “Germany Pressed to Rethink Nord Stream 2 Pipeline after Navalny Poisoning.” Reuters, September 3, 2020. https://www.reuters.com/article/us-russia-politics-navalny-germany-nord-idUSKBN25U0UF.
Chazan, Guy. “Angela Merkel Stands Firm on Nord Stream 2 despite Navalny Poisoning.” Financial Times. September 23, 2020. https://www.ft.com/content/a26cacdf-7238-4417-b0b7-696eeeeb239c.
———. “Germany Offered €1bn for Gas Terminals in Exchange for US Lifting NS2 Sanctions.” Financial Times. September 16, 2020. https://www.ft.com/content/3d028b63-31da-450e-ae73-13b25ecd0032.
———. “Merkel Faces Calls to Scrap Nord Stream 2 after Navalny Poisoning.” Financial Times, September 3, 2020. https://www.ft.com/content/81e7d355-e478-49fc-ba75-49f43cbfc74f.
Elliott, Stuart. “Infographic: Political Debate over Nord Stream 2 Gas Pipeline Enters Overdrive.” S&P Global Platts, September 23, 2020. https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/092320-infographic-nord-stream-2-pipeline-russia-germany-halt-navalny.
“Germany Offered to Build LNG Terminals to Avert U.S. Pipeline Sanctions – Die Zeit.” Reuters, September 16, 2020. https://www.reuters.com/article/germany-usa-russia-idAFL8N2GD2N0.
Harenbrock, Karl. What Will Happen If Nord Stream 2 Is Halted? Deutsche Welle, 2020. https://www.dw.com/en/what-will-happen-if-nord-stream-2-is-halted/av-54810990.
Inozemtsev, Vladislav. “Why the Cancellation of Nord Stream-2 Will Punish Russian Citizens, Not the Kremlin.” Institute of Modern Russia (blog), September 24, 2020. https://imrussia.org/en/opinions/3172-why-the-cancellation-of-nord-stream-2-will-punish-russian-citizens,-not-the-kremlin.
Kramer, Andrew E. “Pipeline Politics: Why Nord Stream 2 Is Back in the Spotlight.” The New York Times, September 16, 2020, sec. World. https://www.nytimes.com/2020/09/14/world/europe/nord-stream-2-russia-germany.html.
Leyen, Ursula von der. “State of the Union Address.” Text presented at the European Parliament Plenary, September 16, 2020. https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_20_1655.
Mackinnon, Amy. “Could Navalny’s Poisoning Spell the End for Nord Stream 2?” Foreign Policy, September 4, 2020. http://foreignpolicy.com/2020/09/04/could-navalnys-poisoning-spell-the-end-for-nord-stream-2/.
———. “The U.S. Is Close to Killing Russia’s Nord Stream 2 Pipeline.” Foreign Policy, August 6, 2020. http://foreignpolicy.com/2020/08/06/nord-stream-2-russia-pipeline-sanctions-gas/.
“Nord Stream 2: Trump Approves Sanctions on Russia Gas Pipeline.” BBC News, December 21, 2019, sec. Europe. https://www.bbc.com/news/world-europe-50875935.
“Open Letter: For the Sake of Transatlantic Security, Stop Nord Stream 2.” Newsweek, September 17, 2020, sec. Opinion. https://www.newsweek.com/nordstream-two-stop-transtlantic-russia-1532703.
Stark, Holger. “Nord Stream 2: Rettet Olaf Scholz die Gasröhre durch die Ostsee?” Die Zeit. September 16, 2020, sec. economy. https://www.zeit.de/2020/39/nord-stream-2-olaf-scholz-usa-sanktionen-gasmarkt-baustopp.
“В Fitch указали на вероятность усиления санкций против «Северного потока-2».” Росбалт, September 29, 2020. https://www.rosbalt.ru/business/2020/09/29/1865692.html.
“В правительстве Германии оценили ситуацию вокруг ‘Северного потока — 2.’” РИА Новости, September 28, 2020, sec. Новости. https://ria.ru/20200928/potok-1577887680.html.
Ткачёв, Иван. “Fitch оценило вероятность новых санкций против России.” РБК, September 29, 2020. https://www.rbc.ru/economics/29/09/2020/5f7316469a7947dc9bf69e45.
Ткачёв, Иван, and Юлия Кошкина. “Международные страховщики отказались работать с судами для Nord Stream 2.” РБК, September 23, 2020. https://www.rbc.ru/economics/23/09/2020/5f69e6b39a794751d9e40022.