WORLDCRUNCH

Why Washington May Detour Russia's Big Pipeline Project

Opposition to the planned Nord Stream 2 gas project had been limited to Europe. But now the Trump administration is challenging it too — with possible sanctions.

Nord Stream 2, already in the pipes
Nord Stream 2, already in the pipes
Alastair Gill

-Analysis-

The political heat over Russia's proposed Nord Stream 2 gas pipeline to Germany is now coming from far afield, after the United States announced plans to sanction companies working with Moscow's state-owned gas giant Gazprom on the controversial project.

Speaking in the Ukrainian capital Kyiv, where he was heading a delegation attending the inauguration of Ukrainian President Volodymyr Zelenskiy, U.S. Energy Secretary Rick Perry said on Tuesday that Congress was set to begin drafting a bill on sanctions, Bloomberg reported.

"I expect over the course of the not-too-distant future that the U.S. Senate as well as the U.S. House will send a bill to the president of the U.S. that will have some very, very onerous restrictions on companies that continue to do business with the Nord Stream 2 development," said Perry in Kyiv. "So stay tuned."

Initiated by Russia in 2015, the pipeline is set to travel 1,220 kilometers under the Baltic Sea from Ust-Luga in Russia's Leningrad Region to the German port of Griefswald. Running parallel to the already existing Nord Stream pipeline, which links the Russian Baltic port of Vyborg to Griefswald, Nord Stream 2 will double the amount of gas supplied to EU countries via Germany to 110 billion cubic meters per year. Germany, which is heavily dependent on Russia for energy, is a strong backer of the project, which is scheduled to be completed by the end of the year.

If completed, Nord Stream 2 will cement European reliance on Russian natural gas.

Russia says Nord Stream 2 is necessary in order to secure reliable energy supplies to Europe and give it more direct access to the EU market. But as tensions between Moscow and the West have soared over the annexation of Crimea and the Russian-backed rebellion in eastern Ukraine, doubts have emerged over whether the Kremlin's motives are purely economic, with critics in Europe arguing that the pipeline could become yet another weapon in Russia's "hybrid warfare" arsenal.

Europe currently receives 40% of its gas from a pipeline that crosses Ukraine. Kyiv not only earns up to $3 billion annually in transit fees as of 2017, but also has the power to turn off the taps if its own supply is threatened. On more than one occasion in recent years, Gazprom's European customers have fallen victim to tariff disputes between Moscow and Kyiv — always timed to coincide with winter cold — that have seen Ukraine blocking the westward flow of gas in protest.

Nord Stream 2 would bypass Ukraine, Poland and the Baltic States, thus effectively allowing Moscow to hold Kyiv — and potentially other nations — to ransom over energy, providing it with a useful weapon in its standoff with NATO in Eastern Europe.

Publicly, at least, the United States is taking the same line as the pipeline's critics in Europe: that if completed, Nord Stream 2 will cement European reliance on Russian natural gas while providing Moscow with a lever to exert political pressure on its neighbors.

But in comments made to the Kommersant FM radio station, Kremlin press secretary Dmitry Peskov made it clear that Moscow sees other motives behind Washington's efforts to frustrate the completion of the pipeline. Peskov argues that there is a clear link between U.S. opposition to Nord Stream 2 and Washington's intentions to export American gas to Europe.

Gazprom itself appears uncowed by warnings of U.S. sanctions, and says that none of its partners have withdrawn from the project as a result of American threats. The project's financial partners include Uniper SE, Engie SA, Royal Dutch Shell Plc, OMV AG and BASF SE's Wintershall.

Andrei Kochetkov, an analyst from the Moscow-based Otkrytie Broker company, told Russia's leading business daily Kommersant on Tuesday that in the event of sanctions, Gazprom would be ready to complete the project using its own resources. "The project is currently being carried out by a consortium of several (Western) companies," he noted. "But the Russian company has already stated on numerous occasions that if its European partners are unable to continue participating, then it can complete the project on its own."

In the end, the fate of Nord Stream 2 may be decided not in Washington, but in Copenhagen. The pipeline requires approval from each country whose territorial waters it passes through, and while Finland, Sweden, Germany and Russia have already given the green light for construction, Denmark has been stalling.

Copenhagen has asked the Nord Stream 2 consortium to look into alternative routes. Rather than kill the project, however, Denmark's maneuverings will probably just delay it. Whatever happens, it appears the U.S. has arrived too late to influence the outcome. That leaves Russia set to profit — perhaps at Europe's expense.

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Geopolitics

Erdogan And Boris Johnson: A New Global Power Duo?

As Turkey fears the EU closing ranks over defense, Turkish President Erdogan is looking to Boris Johnson as a post-Brexit ally, especially as Angela Merkel steps aside. This could undermine the deal where Ankara limits refugee entry into Europe, and other dossiers too.

Johnson and Erdogan in NYC on Sept. 20

Carolina Drüten and Gregor Schwung

-Analysis-

BERLIN — According to the Elysée Palace, the French presidency "can't understand" why Turkey would overreact, since the defense pact that France recently signed in Paris with Greece is not aimed at Ankara. The agreement covers billions of euros' worth of military equipment, and the two countries have committed to come to each other's aid if they are attacked.

Although Paris denies this, it is difficult to see the agreement as anything other than a message, perhaps even a provocation, targeted at Turkey.

Officially, the Turkish government is unruffled, saying the pact doesn't represent a military threat. But the symbolism is clear: with the U.S., UK and Australia recently announcing the Aukus security pact, Ankara fears the EU may be closing ranks when it comes to all military issues.

What will Aukus mean for NATO?

Turkey has long felt left out in the cold, at odds with the European Union over a number of issues. Yet now President Recep Tayyip Erdogan is setting his sights on another country, which also wants to become more independent from Europe: the UK.

Europe's approach to security and defense is changing dramatically. Over the past few months, while the U.S. was negotiating the Aukus pact with Britain and Australia behind the EU's back, a submarine deal between Australia and France, which would have been worth billions, was scrapped.

The EU is happy to keep Erdogan waiting

Officially, Turkey is keeping its cards close to its chest. Addressing foreign journalists in Istanbul, Erdogan's chief advisor Ibrahim Kalin said the country was not involved in Aukus, but they hope it doesn't have a negative impact on NATO. However, the agreement will have a significant effect on Turkey.

"Before Aukus, the Turks thought that the U.S. would prevent the EU from adopting a defense policy that was independent of NATO," says Sinan Ülgen, an expert on Turkey at the Brussels think tank Carnegie Europe. "Now they are afraid that Washington may make concessions for France, which could change things."

Macron sees post-Merkel power vacuum

Turkey's concerns may well prove to be justified. Outgoing German Chancellor Angela Merkel always argued for closer collaboration with Turkey, partly because it is an important trading partner and partly because it has a direct influence on the influx of migrants from Asia and the Middle East to Europe.

Merkel consistently thwarted France's plans for a stricter approach from Brussels towards Turkey, and she never supported Emmanuel Macron's ideas about greater strategic autonomy for countries within the EU.

But now she that she's leaving office, Macron is keen to make the most of the power vacuum Merkel will leave behind. The prospect of France's growing influence is "not especially good news for Turkey," says Ian Lesser, vice president of the think tank German Marshall Fund.

Ankara fears the defense pact between France and Greece could be a sign of what is to come. According to a statement from the Turkish Foreign Ministry, the agreement is aimed "at NATO member Turkey" and is damaging to the alliance. Observers also assume the agreement means that France is supporting Greece's claims to certain territories in the Mediterranean which remain disputed under international law, with Turkey's own sovereignty claims.

Paris is a close ally of Athens. In the summer of 2020, Greece and Turkey were poised on the threshold of a military conflict in the eastern Mediterranean. Since then, Athens has ordered 24 Rafale fighter jets from France, and the new pact includes a deal for France to supply them with three frigates.

Photo of French President Emmanuel Macron and Greek Prime Minister Kyriakos Mitsotakis on September 27 in Paris

French President Emmanuel Macron and Greek Prime Minister Kyriakos Mitsotakis on September 27 in Paris

Sadak Souici/Le Pictorium Agency/ZUMA

Erdogan’s EU wish list

It's not the first time that Ankara has felt snubbed by the EU. Since Donald Trump left the White House, Turkey has been making a considerable effort to improve relations with Brussels. "The situation in the eastern Mediterranean is peaceful and the migrant problem is under control," says Kalin. Now it is "high time" that Europe does something for Turkey.

Erdogan's wish list is extensive: making it easier for Turks to get EU visas, renegotiating the refugee deal, making more funds available to Turkey as it continues the process of joining the EU, and moderniszing the customs union. But there is no movement on any of these issues in Brussels. They're happy to keep Erdogan waiting.

Britain consistently supported Turkey's ambition to join the EU

Now he is starting to look elsewhere. At the UN summit in September, Erdogan had a meeting with British Prime Minister Boris Johnson at the recently opened Turkish House in New York. Kalin says it was a "very good meeting" and that the two countries are "closely allied strategic partners." He says they plan to work together more closely on trade, but with a particular focus on defense.

 Turkey's second largest export market

The groundwork for collaboration was already in place. Britain consistently supported Turkey's ambition to join the EU, and gave an ultimate proof of friendship after the failed coup in 2016. Unlike other European capitals, London reacted quickly, calling the coup an "attack on Turkish democracy," and its government has generally held back in its criticism of Turkey.

At the end of last year, Johnson and Erdogan signed a new free trade agreement, which will govern commerce between the two countries post-Brexit. Erdogan has called it "the most important treaty for Turkey since the customs agreement with the EU in 1995."

After Germany, Britain is Turkey's second largest export market. "Turkey now has the opportunity to build a new partnership with the United Kingdom and it must make the most of it," says economist Ali Kücükcolak from the Istanbul Commerce University.

Erdogan is well aware of this, as Turkey is in desperate need of an economic boost. Inflation currently stands at 19%, and the currency's value is consistently falling. Turks are feeling the impact on their daily lives: food and rent are becoming increasingly expensive, while salaries remain unchanged.

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