13 September, 2020 14:01

The Navalny case is undermining Nord Stream 2 just after the crisis in Belarus had strengthened it: Petrostrategies

The article was published in the World Energy Weekly (September 14 issue), a publication of Petrostrategies, a French think-tank specializing in energy issues. 

Russia’s Nord Stream 2 gasline project is facing its biggest threat ever, and its support in Germany, the country which has so far backed it against all attacks, is being shaken. On September 8, during a closed meeting of her CDU party’s parliamentary group, German Chancellor Angela Merkel said that the question of whether or not to cancel (or suspend) the Nord Stream 2 gasline project, in response to Russia’s latest actions, is now open and would be submitted to the European Union (EU). The Russian government is strongly suspected of being behind the attempted murder by poisoning of opposition leader Alexei Navalny, which came to light on August 20. Over the last few days, many in Germany, even within the CDU itself, have called for Nord Stream 2 to be shut down, and comments attributed to Merkel have suggested that she herself may be considering such a move. On September 2, the Chancellor declared that there was now “unequivocal proof […] that Alexei Navalny was the victim of a crime” and that “this has given rise to some very serious questions that only Russia can and must answer”. She told CDU MPs, however, that Navalny’s poisoning wasn’t “an attack on Germany itself”. Consequently, “a common European reaction» is needed, and «Germany should take action as an EU Member-State”.

Angela Merkel has always maintained that Nord Stream 2 is a purely commercial and economic project, so some may have believed that she would refuse to link it to the Navalny case. But such a position has become increasingly difficult to uphold, due to mounting pressure to shut down Nord Stream, either temporarily or permanently. The Greens (Germany’s secondlargest political party) were the first to forcefully demand that the construction of Nord Stream 2 be halted. Taking the opposite tack, the SPD (which is part of the government coalition) considered that the Navalny affair shouldn’t be linked to the Nord Stream 2 project and that the latter should go ahead. “The government must continue to support Nord Stream 2“, said the SPD’s leader on September 3. The left-wing party Die Linke believes that cancelling Nord Stream 2 would only benefit the United States. The Chancellor’s party and government are divided. Two potential candidates to succeed Merkel within the CDU (and thus as Chancellor) have demanded either a definitive cancellation of Nord Stream 2 or a two-year moratorium. The Minister of Defense (CDU) concurs. But Economics Minister Peter Altmaier, also a member of the CDU, has defended Nord Stream 2. “We are withdrawing from coal and nuclear power in Germany, so we will need more gas in the medium term. And where will we get the gas from?”, he asked on September 3. The leader of the CDU parliamentary group urged caution on Nord Stream 2.

The most serious clue that Angela Merkel may decide to cancel Nord Stream 2 is the attitude of her Minister of Foreign Affairs, Heiko Maas. In an interview with Bild published on September 6, he declared that “we will have to discuss a response with our partners. […] The Russian side must now respond. […] I hope the Russians won’t force us to change our position regarding the Nord Stream 2”. However, Maas also pointed out that “more than a hundred companies from twelve European countries are involved [in Nord Stream 2], about half of them from Germany”, and this fact will have to be taken into account. On the followng day, Merkel’s spokesman confirmed that she shared her minister’s position, giving rise to speculation that the Chancellor may decide to halt the gasline project if the Russians fail to provide satisfactory answers to Berlin’s questions (as well as assurances about the future, no doubt).

Germany’s European partners are also divided on the issue of Nord Stream 2. Opposition from the former socialist countries is long-standing and steadfast. On the other hand, Austria is defending the project tooth and nail, and has just reaffirmed its position in the aftermath of the Navalny affair. Emmanuel Macron’s France has adopted a “reserved” attitude. There are thus several different opinions within the EU, and many make no explicit link between the Navalny case and Nord Stream 2, as Angela Merkel remarked on September 8. The EU may discuss this issue at its next summit, scheduled for September 24 and 25. Will the Russians be able to separate the Navalny affair from the Nord Stream 2 project by then, and offer Merkel any really convincing assurances about their future behavior?

Paradoxically, before news of the Navalny affair broke, the post-election political crisis in Belarus had strengthened the position of Nord Stream 2 supporters in Germany over the last few months. While Europe was discussing the possibility of sanctions against him, the Belarusian President, Alexander Lukashenko, threatened (on August 28) to hinder the passage of goods transiting through his country to Russia and the EU (including the Baltic States). Russia exports oil not only to Belarus, but also through that country to Europe via the Druzhba pipeline (1.4 million b/d), one of the biggest in the world. Belarus also receives gas (33 bcm/annum) from the Russian Far East via the Yamal gasline, some of which transits through the country to Poland and Germany.

In early 2020, a dispute broke out between Moscow and Minsk over the price of Russian oil and gas delivered to Belarus. The latter then threatened to tap into Russian gas transiting through the country. In February, US Secretary of State Mike Pompeo visited Minsk and said: “The United States wants to help Belarus build its own sovereign country. Our energy producers stand ready to deliver 100% of the oil you need at competitive prices”. An initial shipment of US oil was indeed delivered to Belarusians in early June, via the Lithuanian port of Klaipeda. The Belarusian foreign minister said at the time that this was not a one-off import but the start of longterm deliveries.

Although developments in Belarus (along with Lukashenko’s threats to goods in transit and Pompeo’s statements) were primarily a challenge to the Russians, they were of course not lost on the Germans either. While the issue of Russian gas transit through Ukraine seems to be resolved for the time being, thanks to the RussianUkrainian agreements of December 2019, another potential dispute is now brewing which, this time, could affect oil and gas transit through Belarus. From Angela Merkel’s point of view, this must have made Nord Stream 2 look even more important. But at the very moment when the threat of further US sanctions against the gasline is looming on the horizon (Congress will decide in December), along comes the Navalny case to make matters even worse.