I was wrong about Nord Stream
I did not see that the Nord Stream pipeline could play a key role in a conflict between Europe and Russia. Yet, the mistakes I made can help us understand what Europe did wrong.
In a never-published piece that I wrote for another media centered on EU policies, I argued that Nord Stream and the European imports of Russian fossil fuel were nothing more but a standard commercial deal.
I wrote this article even months before the start of hostilities in Ukraine this year. I never thought that Vladimir Putin would be so bold and foolish to attack Europe or its neighbors.
In the first weeks of the conflict, it became clear that the Nord Stream pipeline and other means of transferring gas from Russia to Europe were, in effect, tools of the conflict and field the military machine of Putin’s regime.
I was dead wrong. Yet, I think to understand why I made this mistake is useful to understand the EU’s energy relationship with Russia for the past 10 years.
Initial issues with Nord Stream
The idea to construct a natural gas pipeline under the Baltic sea originated in 1997, at the instigation of Gazprom and the Finnish oil company Neste. Together, they formed North Transgas Oy, a joint venture whose goal was to build and operate a gas pipeline from Russia to Germany. North Transgas Oy later approached Ruhrgas (the future E.ON) on the German side.
Work did not start on the Nord Stream pipeline until the end of 2005 in Russia. Since then, Neste had left the original project, leaving Russian-based Gazprom the sole shareholder of North Transgas Oy. North Transgas was later dissolved into North Stream AG, a swiss company created in November 2005.
Nord Stream could have been a European consortium project, much like Airbus for planes. But already at the start of the construction of the pipeline, control was left to Russian state-controlled Gazprom. A first hint that the pipeline could become a problem for its clients.
North Stream had to overcome a mountain of legal and administrative difficulties before making the pipeline a reality. The company had to apply two times to obtain construction permits in Swedish waters. The final authorization arrived from Denmark only in October 2009, four years after the first stone was laid in Russia. European authorities were already weary of the geopolitical issues the pipeline would cause.
Very quickly, it appeared that the pipeline would face difficulties. Most notably, Germany, the first recipient of the Russian gas imports, was the only country that pushed forward despite concerns and delays.
Revolving doors and collusion with public authorities
Former chancellor Schöder was later appointed president of the newly created Nord Stream AG’s shareholders committee - only a few weeks after stepping down from office in November 2005.
[…] He is not the only high-ranking official to have been hired by the company. In August 2008, former Finnish prime minister Paavo Lipponen became a consultant for the pipeline, intending to speed up the application process in Finland and serve as a link between Nord Stream and the Finnish authorities. After she departed from the government in 2007, Ulrica Schenström, former undersecretary to the Swedish prime minister, is recruited at Nord Stream AG. She joined Dan Svanell, press secretary for different Swedish ministers.
Indeed. Nord Stream did hire former officials as consultants, probably as a way to ease the construction process. The Ukraine crisis was an occasion for Germany to reflect on the heritage of former chancellor Gerhard Schöder. The Social-Democrat leader might have been closer to the Kremlin than a Western head of state should have.
Nord Stream 2 emphasised the problems with a Russia-EU gas pipeline
In 2011, as the Nord Stream project was completed, Nord Stream AG started to think about the expansion of the pipeline […]. In 2015, Gazprom sat with Royal Dutch Shell, E.ON, OMV and ENGIE to agree on the construction of a second set of pipelines: Nord Stream 2. The intention was confirmed in April 2017 […].
[…] Issues accumulated quickly again […]. In 2019, the United-States urged companies involved in the construction of Nord Stream 2 to cease work or face sanctions. In August 2020, Poland fined Gazprom €50 million for its lack of cooperation regarding a pending investigation by the anti-corruption authority, arguing that the company started working on the new pipelines without express authorization from Polish authorities. These problems added to the overall critics against Nord Stream 2 that started to take ground in the European public opinion.
[…] After an inquiry by the European Parliament, the Commission admitted that “Nord Stream 2 does not contribute to the objectives of the energy policy of Europe, such as energetic security of diversification of supply and, for that reason, does not endorse its construction”.
Europe started, with the Nord Stream 2 extension, to see the issue that a dependency on Russian natural gas could cause to the continent’s security. Yet, Germany, under the Merkel administration, pushed through with the project and quickly issued the necessary authorisations.
Why was the project allowed to proceed?
Gazprom ignored the sanctions and pushed through. It was a risky bet, but a successful one, as the two new pipelines were completed in June and September 2021. In the summer, the American administration could only acknowledge the inevitability of the project. In July 2021, Joe Biden and Angela Merkel agreed to lift the US sanctions against German aid to former transit countries - the ones that had the most to lose from the pipeline.
Why was I, and a large part of Europe’s energy community, so wrong?
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