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Russia

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 theKommersant 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 dailyKommersant 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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Economy

Lex Tusk? How Poland’s Controversial "Russian Influence" Law Will Subvert Democracy

The new “lex Tusk” includes language about companies and their management. But is this likely to be a fair investigation into breaking sanctions on Russia, or a political witch-hunt in the business sphere?

Photo of President of the Republic of Poland Andrzej Duda

Polish President Andrzej Duda

Piotr Miaczynski, Leszek Kostrzewski

-Analysis-

WARSAW — Poland’s new Commission for investigating Russian influence, which President Andrzej Duda signed into law on Monday, will be able to summon representatives of any company for inquiry. It has sparked a major controversy in Polish politics, as political opponents of the government warn that the Commission has been given near absolute power to investigate and punish any citizen, business or organization.

And opposition politicians are expected to be high on the list of would-be suspects, starting with Donald Tusk, who is challenging the ruling PiS government to return to the presidency next fall. For that reason, it has been sardonically dubbed: Lex Tusk.

University of Warsaw law professor Michal Romanowski notes that the interests of any firm can be considered favorable to Russia. “These are instruments which the likes of Putin and Orban would not be ashamed of," Romanowski said.

The law on the Commission for examining Russian influences has "atomic" prerogatives sewn into it. Nine members of the Commission with the rank of secretary of state will be able to summon virtually anyone, with the powers of severe punishment.

Under the new law, these Commissioners will become arbiters of nearly absolute power, and will be able to use the resources of nearly any organ of the state, including the secret services, in order to demand access to every available document. They will be able to prosecute people for acts which were not prohibited at the time they were committed.

Their prerogatives are broader than that of the President or the Prime Minister, wider than those of any court. And there is virtually no oversight over their actions.

Nobody can feel safe. This includes companies, their management, lawyers, journalists, and trade unionists.

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