The Political Meaning of the Fight for “Nord Stream 2”

Many spears were broken over “Nord Stream-2”, up to a dozen states are involved in the conflict. At the same time, it is clear that although its opponents managed to delay the commissioning of the gas pipeline for almost two years (originally planned for the end of 2018), the pipe will be completed.

Why? Because completion has long become not only (and perhaps not so much) an economic issue, but a political issue. In the current situation, if the pipeline is not completed, Gazprom will lose its investment, but politically Russia will still win.

Let me remind you that the fighters against the “Russian gas monopoly on the European market” managed to block the construction of “South Stream” (Bulgaria refused to lay a pipeline on its territory when the construction on the Russian side had already reached the waters of the Black Sea). As a result, everything that was built was used in the project “Turkish Stream”, which in fact duplicated “South” and the same Bulgaria had to fight to join it as one of the branches.

If a state makes a political decision to bypass some territory, only war (and it is lost) can stop it.

Since it is impossible to win a war against Russia (only a “draw” is realistic, after which mankind will either disappear or return to the Stone Age), none of its projects will be completed. It’s only a matter of time and investment. In the case of “Nord Stream 2“, Gazprom‘s partners are the largest gas companies in the leading EU countries (Italy, Germany, France, Austria). I.e., if the US manages to block the construction, it will lose not only Gazprom (for which it will be unpleasant, but non-critical), European gas companies will lose (and taking into account the loss of invested funds and unreceived benefits, some may simply ruin). Accordingly, blocking construction will lead to additional irritation of the European elites by Americans (and Europe is already on the brink) and create an additional common-with-Russia problem for the EU that Moscow can help solve. I.e., the US will come to what it tried to prevent – the unification of Europe and Russia on an anti-American basis.

In terms of the volume of gas sold abroad (and therefore, taxes that go to the treasury) Russia will not lose, as in December 2019 it is planned to put into operation the gas pipeline “Power of Siberia” with an export capacity of 38 billion cubic meters. In addition, Russia currently has 3 liquified natural gas production facilities with a total capacity of 27.5 million tons of liquefied gas per year, exports from which last year amounted to 26 billion cubic meters. In 2020 2 more liquified natural gas facilities with a total capacity of 20 million tons will be put into operation.

This is about 20 billion cubic meters of potential exports. In 2022, the next liquified natural gas production facility with a capacity of 18 million tons is expected to be put into operation. Not without some tension, but with the use of all available capacities (including liquified natural gas production), Gazprom’s contractual obligations to the EU countries can be fulfilled if the Ukrainian gas transit system is not operated under the conditions of the non-operational “Nord Stream-2”. At the same time, it should be borne in mind that in case “Nord Stream-2” becomes a critically unresolvable situation under the current conditions, it is possible to return to the “South Stream” project (endless expansion of the Turkish Stream is possible, but undesirable, as it again concentrates a significant share of transit in one hand). Gazprom alone would not have pulled out the situation, but with the political support of the state it will cope.

Thus, in the short term (2-5 years) projects to bypass Ukrainian (and Polish) territory with new gas pipelines (and new gas delivery options) will be completed. This project is clearly political in nature. It offsets the “cordon sanitaire” with which the United States tried to separate Russia from Europe. By the middle of the 20th century, we will have to see a very different energy arrangement in Eastern Europe, connected with the creation by Russia and the EU of new (direct, without intermediaries) links with each other. The role of Poland, Ukraine, and the Baltics is zero, and even the return of Democrats to power in the United States in 2024 will not change this situation. They will have to look for other vulnerabilities from Russia, and the region will return to a state of geopolitical marginalisation (in which it has stayed for most of its history).

But we know that a variety of Western European supporters of “Nord Stream 2”, including the German Federal Chancellor Angela Merkel, argue that the project is straight economics, and there can be no talk of any politics. They are lying?

In principle, they can, but in this case they aren’t lying. The question is how you view the problem. Merkel & Co rest on the fact that Russian pipeline gas is more profitable to buy (cheaper than any other), which means that the construction of gas pipelines bypassing bad partners and unstable territories (and also linking Germany and Russia directly, without greedy transit) is a purely commercial deal. And that’s what they’re right about. If Russian gas would not be so beneficial for the Western European economy, the EU as a whole and Germany in particular would not enter into a political confrontation with the United States.

But note, even when talking about purely economic problems, we have come to politics, because US pressure is purely political, and therefore the answer to it lies outside the economic plane. Who would doubt that the United States would crush not only Western European gas producers, but also Gazprom, if the company did not receive strong political support from their governments. Moreover, the problems of gas transit through Ukraine and Poland were initially inspired by the United States, it is no coincidence that Kiev and Warsaw act in unison, even to the detriment of their own financial and economic interests.

One can, of course, say that Washington’s interests are purely economic – it wants to enter the European market with its liquified natural gas. But, firstly, the US is unable to close Gazprom’s entire supply of even more expensive gas (30-40% at best), and, secondly, after the commissioning of Russian liquified natural gas plants, Russian liquified natural gas, which is clearly cheaper than American liquified natural gas, will still be a priority for European buyers. I.e., economically, the game has long lost its meaning. In addition, the use of political pressure to market a non-competitive product (such as American liquified natural gas) clearly transfers the problem into the political plane.

Finally, initially, the problem of Russian (and previously Soviet) gas supplies to the EU alarmed the US exclusively as political one, though externally purely economic. The supply of relatively cheap gas, firstly, increased the competitive potential of the European economy vis-à-vis the American economy and, secondly, created conditions for development on the basis of economic and political cooperation between the EU and Russia (and earlier with the USSR). For the United States, the withdrawal of the EU from the position of a junior partner and unconditionally subordinate ally was unacceptable, as it undermined their global military-political hegemony, which ensured the financial-economic interests of the American elite and domestic political stability in the United States.

As we can see, in any case, we have returned to the closest intertwining of political and economic interests. No political action is carried out without economic justification – victory in conflict should bring profit (though this does not always arrive). However, in the process of a launched political confrontation, specific short-term economic benefits can be sacrificed for a strategic victory that should pay for everything. This was the way the British acted in their time, who were ready to suffer losses for decades for the sake of the military-political defeat of their economic competitor (the defeat of which compensated the winner for all losses and brought huge profit).

Thus, in the interests of absolute correctness, it is worth talking about political and economic solutions, in the course of which political and economic problems and challenges can come to the fore. The winner is the one who competently balances their political and economic interests without infringing on the economy for the sake of “pure politics,” but also without falling into economic determinism, when short-term profits are more important than gaining strategic advantages.

Rostislav Ishchenko

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