France Pays for “Nord Stream-2” Using Ukrainian Money

Translated by Ollie Richardson & Angelina Siard


The story of the construction of “Nord Stream-2” is, in fact, a saga about the fight of European greed against American russophobia. The former so far not only wins, but also creates topics that are unique in their phantasmagoria, whereby either Ukraine or the ordinary Ukrainian consumer acts as the main affected party.

Analysts of the US Bloomberg agency calculated that over the next year European companies will lose one billion dollars of income for deliveries to Ukraine, and it is the Stockholm arbitration court, which forced Kiev to purchase natural gas from “Gazprom” according to the principle “take or pay”, that is to blame for this.

Many observers were surprised by the verdict of the court, which sided with the Russian company in the dispute with “Naftogaz”, although the political logic dictated a completely different decision (which Kiev expected). The matter is that arbitrators were faced with a choice between short-term or long-term benefits. An unfair decision against “Gazprom” would forever destroy trust in the Swedish arbitration, for the creation and development of which a huge amount of time, forces, and means were spent. Choosing between the political situation and strategic prospect, Stockholm preferred the latter, and now European companies calculate the profit that was half-received because of the disrupted deliveries to Ukraine, which will now be compelled to buy Russian gas.

In the context of this important court decision, Bloomberg’s journalists found an amusing fact: the main European supplier of gas to Ukraine (i.e., which is actually the main seller of Gazprom natural gas on the Slovak border) is the French company Engie. The irony is that this same Engie is a shareholder of “Nord Stream-2” and one of the companies financing the construction of the pipeline. Thus, it turns out that the money that Ukraine overpaid for the illusion of energy independence from Russia (i.e., spent on purchasing “European gas” at inflated prices) in reality went on the construction of the pipeline, which is supposed to “kill” the gas transmission system of the country.

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The French company is not just a shareholder in “Nord Stream-2”, but a rather loud critic of any attempts to block its construction for political reasons. The President of Engie Gérard Mestrallet even stated at the Gaidar forum that he will push forward the project despite everything: “We are partners in Nord Stream 2, we support and we will continue to support it under any conditions”.

However, the leadership of the French energy giant doesn’t consider that “Nord Stream-2” will indeed fall under American sanctions, and refers to the explanations of US State Department, which officially stated that the restrictions won’t extend to projects that were launched before August 1st, 2017.

The unwillingness to sacrifice the income of their companies for the sake of realising American and Ukrainian political ambitions is peculiar not only for France, but also for Germany. As the “Vedomosti” newspaper, with reference to the copy of the legal conclusion, reports: the German authorities oppose attempts to transfer negotiations over the construction of “Nord Stream-2” to the competence of the European Commission.

Moreover, the government of Germany stated that the European Commission couldn’t present “any explanations or clear arguments that would show how the offered changes can assist the purposes of the energy union”. If the question of constructing and accessing “Nord Stream-2” was resolved by the European Commission in accordance with the provisions of the “third energy package of the EU” (which Poland actively insisted on), the construction of the gas pipeline would enter into an institutional deadlock, and its prospects would be foggy in the very least. However, the lawyers of the German government fairly consider that the Polish (in reality — American) demands concerning the pipeline “are not applicable either from the point of view of European or international law”.

Despite the fact that now in Germany there is no capable government, the political bureaucracy continues to persistently defend the position of German energy concerns. It is precisely by this that functional State systems differ from unaccomplished post-Soviet countries: politicians leave, while national economic interests remain.

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It is also worth noting that the US’ chances of blocking “Nord Stream-2” would be much higher if American banks shared the Russophobic moods of a certain layer of the political elite. But in practice it turns out that the pragmatism of financiers supersedes the instructions of the State Department.

For example, in November, 2017, the JP Morgan Chase bank together with the Japanese Mizuho Bank Ltd. and Sumitomo Mitsui Banking Corp. issued credit to “Gazprom” worth one billion euros. This means that the possibilities of the White House to restrict the access of Russian corporations to international financing are very limited.

Since even the most persistent opponents of “Gazprom” came to the conclusion that “Nord Stream-2” is profitable for them, and that Russian liquefied natural gas appears in the markets of Britain and the US, it becomes clear that the American strategy of deterring Moscow in the energy sphere finds itself on the brink of collapse. It doesn’t mean that we will be welcomed everywhere, but this shows that Russia successfully passed a quite strict geopolitical examination. In addition, it is possible to ascertain that the revolt of German and French energy companies became the result of the political pressure that American put on Europe.

It also doesn’t mean that we can rest on our laurels and to believe that “the pipeline will pay for everything”. However, successes in the energy market allows to hope that our country will have financial opportunities to provide the stability and modernisation of other sectors of the economy.

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