Why the controversial Nord Stream 2 pipeline has returned to the public eye

With democratic senators in the U.S. siding with the president, the “Protecting Europe’s Energy Security Implementation Act” that U.S. Republicans introduced to impose mandatory sanctions on the Nord Stream 2 pipeline failed. Still, if Europe wants to claim sovereignty with its economic might, the need remains to view economic relations, in this case with Russia, through a geopolitical lens. Germany, in particular, should challenge its traditional approach of limiting the issue of energy to economic aspects.

A U.S. Republican senator sponsored the bill imposing asset freezes and travel bans on entities and individuals responsible for the planning, construction, or operation of the NS2-pipeline. Democratic senators, essential in light of the narrow majority in the U.S. Senate, overwhelmingly sided with the White House and the State Department, who argued that the bill’s implementation would damage relations with Germany and that with mandatory sanctions, important leverage against Russia might be lost.

“Wandel durch Handel” (change through commerce) does not work

Pursuing an economic strategy that does not integrate the national security prospective looks misguided especially in light of the continued military build-up of Russian forces at the Ukrainian border.

In Germany, the rift over more dialogue vs. more sanctions runs right through Berlin’s new coalition. Nonetheless, neither Germany nor the EU can afford to separate economic relations from foreign policy. It will be essential to interconnect both and steer towards a united and pro-active European approach. Only then will the EU have leverage whenever Moscow threatens European security.

The question of national security trumping economic issues is back with might

For now, however, the NS2-pipeline seems more like Russian leverage against Europe, with the Kremlin informing the EU that current natural gas shortages could be easily overcome if Germany was to speed up the pipeline approval and review process – in spite of the fact that politicians and observers widely agree on the analytic: Recent energy price hikes are not linked to a shortage of pipeline infrastructure but to Russia holding back gas on the spot markets.

Fatih Birol, head of the International Energy Agency, started the New Year 2022 with his most pointed comments yet: “We believe there are strong elements of tightness in the European gas market due to Russia’s behavior. I would note that today’s low Russian gas flows to Europe coincide with heightened political tensions over Ukraine. Russia could increase deliveries to Europe by at least one-third – this is the key message.”

The Kremlin has perfected the habit of turning facts upside down

The future of European security was discussed this past week in a series of diplomatic meetings between Russia and the U.S. (Geneva), Russia and NATO (Brussels), and within the OSCE (Vienna). In each case, the focus was on Russian demands for a revision of the European security architecture as it was built with Moscow’s participation towards the end of the East-West conflict.

While Russia keeps citing security concerns, the only real threat to the Kremlin is Ukraine’s attempt to build a democratic state. More precisely, this is a threat to Mr. Putin’s rule, which is why the Russian president fuses geopolitical power and personal rule. The military build-up and verbal threats both serve to safeguard his own position against the background of a changing Russian society. Only because of the massive propaganda campaigns does the current regime receive enough reliable support.

Loss of control is what autocrats fear most 

The image Mr. Putin has invoked to justify his own rise and political style – of a Slavic nation needing a “power vertical” – has cracked. It would be completely exposed as nonsense if “brotherly” Ukraine leaves its troubles behind, stabilizes, and prospers. Russian Foreign Minister Lavrov denounced the Summit for Democracy initiated by President Biden to counter the repercussions of authoritarianism as an “odious project” that bends the rules to Russia’s detriment. This reflects the extent to which the current Russian regime feels the threat of its own citizens invoking compliance with international norms.

It is not the U.S. Administration’s fault that the EU doesn’t bring much to the table

Criticism by some European commentators that the U.S. is leaving out Europe masks that there is no European strategy in the face of Russia’s challenge. Even though the past years made the need to deter Russia crystal clear. In addition to the better-known interventions in Georgia and Ukraine, there has been a “soft-pedaled” quest for dominance by Russia in its neighborhood shared with the EU. The Kremlin has been experimenting with a step-by-step transgression of rules to assert its interests in the region, cautiously testing how far it can go without encountering any serious counter-reaction. While the EU does hold economic (sanctions) elements of containment, some member states and, therefore, Brussels seem to be alien to the concept of deterrence.

Further, the EU member states have not even been able to demonstrate unity to the outside world in a tense situation. Some public comments are grist to Russia’s mills. Europe is far from being “sovereign.” As long as the economic interests of individual EU member states determine the course of EU foreign policy and member state governments do not realize that their interests only stand a chance against assertive actors like Russia or China if they stand in unity.

Transatlantic division is one of Mr. Putin’s overarching goals

The argument brought out again and again by some in Europe about the unreliable nature of the U.S. under President Trump is wearing off. The current White House consulted intensely with allies and intended to bring them in – to the extent possible. The NATO-Ukraine Commission convened in Brussels ahead of the meetings with Russia. President Biden has moreover demonstrated his commitment to cooperation with European allies when refraining from NS2-sanctions earlier, even though this made his political stance in the U.S. more difficult.

All of the above shows how important it is that transatlantic partners stand together, fighting internal and external challenges to democracy.

It is naïve to believe that one can convince Mr. Putin to take a softer course merely through dialogue

While there are good reasons to keep channels of diplomacy open, especially during times of tension, diplomacy is an instrument of foreign policy, not an end in itself. The political attitude displayed by Mr. Putin to the international community since 2007 leads one to believe that a constructive atmosphere can only be created by confronting the Kremlin’s representatives from a position of strength. Identifying ways to attain such a position must be the aim of Western foreign policy for diplomacy to function efficiently.

With Ukraine held hostage militarily, Mr. Putin is demanding the recognition of an exclusive Russian zone of influence stretching from Central Asia across the Caspian Sea to Eastern Europe. Ukraine, the Republic of Moldova, and Belarus form a buffer zone in this process. All former Soviet republics, independent states for 20 years now, are to become a kind of no-go area for “the West” to a varying extent.

If economic strength is used as leverage, then concrete proposals must be made as to how it can be brought into play

In this test situation, “the West” should get out of the reactive corner. The threat of economic sanctions and a “heavy price” in the event of a Russian invasion is an important signal of deterrence. But it does nothing to deny Mr. Putin the escalation initiative.

The U.S.’s prepared response (a set of financial, technological, and military sanctions against Russia that Washington says would go into effect within hours of an invasion of Ukraine) seems more concrete than European reactions. Besides holding up an unspecified price tag, the EU has yet to prove that it can utilize its enormous market power and is prepared to shoulder losses.

The EU must take a pro-active stance

Instead of speculating about what Mr. Putin may mean by “military-technical” responses” if Russian demands remain unanswered, the EU could exert pressure – with the unequivocal statement that the not-yet-certified NS2-pipeline will not be put into operation, and the certification process will be suspended unless Russia deescalates. If Russia follows suit, the process continues.

Further, gas storage facilities should be covered by the energy unbundling rules. This is what the current situation suggests, where Gazprom depletes its European storage facilities. The EU has been successful both in eliminating unilateral dependences on natural gas and in opening a diversity of different sources of supply and transport routes. Ownership of gas and the transportation infrastructure has been “unbundled”; moreover, the owner of a pipeline must make its use available to other providers. Extending those rules to gas storage facilities would build on the past achievements.

Russia has used the high-level meetings to underscore its goals pursued with the Minsk agreements

With European societies in mind, it is recommended that the EU member states refute Mr. Putin’s false narrative of NATO’s alleged threat to Russian security. European governments might underscore the basic facts about Moscow’s foreign policy behavior: its illegal occupations, its increasing cyberattacks, and its various international treaty breaches. This would be especially important in Germany, where a significant segment of society seeks closer cooperation with Russia.

In the most active of the many conflicts Russia has initiated in the past three decades in the EU’s neighborhood, the war in Eastern Ukraine, Russia is still considered by many as a well-meaning actor interested in ending a war that it does not control. Countering that narrative, the EU’s Foreign Policy High Representative Josep Borrell lately used clear language when traveling to the Donbas region for the first time: “There can be no doubt that Russia is a party to this conflict and not a mediator as it often claims.”

What may seem like a detail is of crucial importance. The sanctions currently in place and already controversially discussed in Germany are tied to “Minsk-2”, the package of measures for the implementation of the Minsk agreements that did not end but froze (in varying intensity) the conflict that began when Russia annexed Crimea.

Economic sanctions

In the context of Western economic and financial market sanctions, Russia has pursued a new economic strategy. It now follows an ultra-stability-oriented fiscal and monetary policy meant to secure geopolitical leeway. That, in turn, limits growth prospects and makes it very unlikely that the Russian political system will be able to (re)achieve some legitimacy through economic progress in the foreseeable future – which does not bode well in terms of stability either.

Playing the long game

“The West” has invested heavily in the development of Ukraine, politically and financially – which has, itself, entailed a foreseeable low level but broad-spectrum conflict with Russia. There was no third way between standing up for fundamental democratic values and liberal principles and interests on the one hand and recognition of an exclusive Russian zone of interest in the neighborhood the EU and Russia both share on the other. It is now crucial to have the political will to stick with the choice, if only out of self-interest.

More resolve to foster connectivity and build resilience

A strategic framework for proving European sovereignty is finally provided by the Global Gateway initiative, the EU’s approach to global infrastructure support. The initiative aims to combine what used to be planned and implemented separately: development cooperation, transformation, and geopolitical interests. So the EU has the instrument with which it can strategically underpin its diverse concepts and activities – based on its own standards and rules, to the benefit of all partners and with the potential to compete with other actors’ influence.

The EU has yet to prove that it can implement what it announces. The latest developments in Kazakhstan, where Russia, China, and the US are the dominant players even though interest in more European engagement has been voiced, contribute to the acknowledgment that making connectivity corridors a success would be a timely endeavor to shape the EU’s role and forge partnerships with like-minded actors.

Both factors, unity in the EU and effective transatlantic cooperation as well as a proactive stance, are key to adequately cope with what will certainly not be the last threatening situation Russia stages. Working strategically and persistently towards resilience with as many partners as possible is the final long-term task if the leitmotif of a sovereign Europe is not to remain mere wishful thinking. The new German government would contribute to its success if it finally saw the NS2-pipeline in the context of foreign and security policy and considered the vital interests of all partners.