NS2-Deal: Toad with Sugar Coating

The impact of the Biden-Merkel-Agreement on Nord Stream 2 in Ukraine is simply disas­trous. Espe­cially among western oriented, reform-minded people trust in Germany and the US fell at a record low. China is already filling the vacuum, offering big invest­ments and trade deals, specif­i­cally in agri­cul­ture and tech. Germany and the US must reconfirm their support for the security, economic modern­iza­tion and demo­c­ratic tran­si­tion of Ukraine and Central Eastern Europe at large. We document Ralf Fücks’ todays commen­tary for spiegel.de.

Now it is official: Germany and the USA have settled their dispute over the Nord Stream 2 gas pipeline. The Biden admin­is­tra­tion has given the green light to a highly contro­ver­sial project that has strained German-American relations and opened up deep rifts within Europe. What the German govern­ment is cele­brating as a diplo­matic success is, however, a compro­mise to the detriment of Ukraine and the climate: The Nord Stream 2 toad is being coated with plenty of sugar. This does not make it any more palatable.

It starts with the fact that the Germans and the Americans have nego­ti­ated over the heads of Ukraine — at whose expense Nord Stream 2 is going. That is rotten style. The European allies of the USA and Germany are being confronted with a fait accompli — and Ukraine is being put of with non-binding decla­ra­tions of intent and financial conso­la­tion plasters. The decla­ra­tion contains many well-sounding procla­ma­tions and few concrete oblig­a­tions on the part of Germany.

Nord Stream 2 was a geopo­lit­ical project of Vladimir Putin from the very beginning. It gives the Kremlin a free hand to increase political and military pressure on Ukraine without jeop­ar­dizing the gas deal with the EU. The current deal with Wash­ington leaves this flank open.

Worse still, the German govern­ment rejected the American proposal to include a so-called “kill-switch clause” in the operating agreement for the pipeline. This would have made it possible to interrupt the gas supply runs if the Kremlin took aggres­sive steps against unruly neighbors. This fear is all too justified in view of Russia’s recent military maneuvers and Putin’s repres­sive policies — he recently wrote in an essay that the border between Russia and Ukraine had no histor­ical or moral justi­fi­ca­tion. The German govern­ment has thus removed the only provision from the Nord Stream 2 agreement that would have unam­bigu­ously linked the operation of the pipeline and the security of Ukraine.

Germany’s vague announcements

This borders on a free ticket for Putin. The joint statement by the United States and the German govern­ment contains vague announce­ments that Germany will “act at the national level and press for effective measures, including sanctions, in the European Union” in response to new aggres­sive measures by Russia.

It could hardly be more unbinding. One can imagine how impressed the hard­liners in the Kremlin will be by this announce­ment. They know the score in Berlin. One only has to recall the disen­chant­ment that Robert Habeck’s loud musings triggered, namely that Ukraine could not be denied military equipment for self-proliferation.

In a joint statement, the Ukrainian and Polish foreign ministers put their finger on the problem. They reaffirm their countries’ oppo­si­tion to Nord Stream 2 as long as there is no answer to the security risks it entails. And they rightly point to Ukraine’s futile efforts to join the EU and NATO. Here, too, Germany has played and continues to play a key role. The bitter­ness of many Ukrainians that they are being left out in the cold by the West is all too understandable.

The German-Ukrainian agreement is full of vague pledges to Ukraine, but poor in concrete commit­ments: It states, for example, that Ukraine’s gas supply should be secured inde­pen­dently of Russia if necessary. In addition, a “Green Funds” for Ukraine is announced, which is to promote energy effi­ciency, renewable energies and the entry into the produc­tion of hydrogen.

The sums committed are unim­pres­sive. The German govern­ment is to contribute $175 million to the “Green Funds”. Other donors and the private sector are expected to provide further invest­ment of up to one billion dollars, but these are vague promises for the future. Even this sum would be far from suffi­cient for greening the Ukrainian energy system and its inte­gra­tion into a European hydrogen alliance. In any case, this is a prospect only for the distant future — unless we accept the produc­tion of “yellow hydrogen” based on elec­tricity from Ukrainian nuclear power plants.

The Kremlin links future gas transit via Ukraine to Kiev’s “well-behavior”

The planned contin­u­a­tion of gas transit through Ukraine beyond 2024 is on shaky ground. The Kremlin has already announced that it will make future gas exports via Ukraine dependent on the well-behavior of Kiev. Econom­i­cally, after the comple­tion of NS2 there is no need for this. Nord Stream 2 and the newly constructed Turk Stream pipeline together have a capacity of 90 billion cubic meters per year. They can completely replace the current gas transit through Ukraine. And that is precisely their purpose.

Also from an envi­ron­mental point of view, there is no need for addi­tional gas pipelines. If the new, ambitious German and EU- climate goals are to be taken seriously, natural gas consump­tion must fall signif­i­cantly before the end of this decade. Without the two to three billion dollars in revenues from gas transit, however, Ukraine will lack the means to modernize its extensive pipeline system and convert it for natural gas exports.

A triumph for Putin

If this pseudo-compro­mise goes through, it will be a triumph for Putin: Despite the continued inter­ven­tion in eastern Ukraine, despite Russia’s threat­ening politics, despite his cronyism with Lukashenko, despite the massive repres­sions in Russia and the repeated criticism of the European Parlia­ment, the Germans will go through with their bilateral project with Russia. Russia is more dependent on energy exports to Europe than vice versa. These exports finance the state budget and secure political influence. It is incom­pre­hen­sible why Wash­ington and Berlin are giving up the leverage to tie the commis­sioning of Nord Stream 2 to substan­tial conces­sions by Moscow.

It remains to be seen how Congress will react to this conces­sion by President Biden. In political terms, Biden has received nothing in return: neither a more decisive German stance toward China nor a clear commit­ment to increase Germany’s contri­bu­tion to NATO. With only a few weeks to go before the elections, this federal govern­ment would no longer have a political mandate to do so.

The question remains why Angela Merkel has put every­thing on the line to push this unsea­worthy project through in the last few meters of her term of office — without any conces­sion from the Kremlin. Her commit­ment to Nord Stream 2 over­shadows her previous Ukraine policy. In the past, she has shown a clear will­ing­ness to stop the Kremlin with sanctions if necessary. She has stood up for perse­cuted opponents such as the feminist protest band Pussy Riot and helped save Alexei Navalny’s life after he was poisoned. But in the end, she did every­thing she could to help a project succeed that would strengthen Russia’s influence in Europe in the long term. That is not a good legacy. 

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