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    Nord Stream 2: Energy Security For Europe Or Prelude To Russian Aggression In The Baltic? [GGP]

Summary

Nord Stream 2 (NS2) has been subject to a vigorous debate and much disagreement on whether it provides an opportunity for diversification of gas supply to the European union or facilitates Russian dominance.

by: Anna Mikulska & Robert Hamilton

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Complimentary, Global Gas Perspectives

Nord Stream 2: Energy Security For Europe Or Prelude To Russian Aggression In The Baltic? [GGP]

Nord Stream 2 (NS2) has been subject to a vigorous debate and much disagreement on whether it provides an opportunity for diversification of gas supply to the European union or facilitates Russian dominance. But some go even further, suggesting that NS2 could become excuse for Russian expanded military presence or even military aggression in the Baltic Sea.

The Project in a Nutshell

The Nord Stream 2 (NS2) project consists of two pipelines running across the bottom of the Baltic Sea carrying Russian natural gas to Germany. Once completed the two pipelines would offer 55 billion cubic meters (bcm) in annual capacity.  As such, NS2 is an attempt at duplicating the success of Nord Stream that has been operational since 2012. Together the pipelines would allow for the up to 110 bcm of Russian gas flowing directly to Germany every year. 

Gazprom, Russia’s national oil and gas company that has monopoly over the export of Russian gas via pipelines, is the sole investor in Nord Stream 2 AG. This contrasts with the more diverse stakeholder composition in the first Nord Stream project, where Gazprom owned the controlling stake (51%) but was joined by German Ruhrgas (15%) and BASF/Wintershall (16%) as well as Dutch Gasunie and France’s GDF Suez. Though initially intended, a similar joint venture between Gazprom and West European oil and gas companies - ENGIE (France), OMV (Austria), Shell (Netherlands), Uniper (Germany) and Witershall (Germany) – was blocked by Poland that evoked competition and market power concerns. Instead the companies engaged in the investment by providing financing to the project. The $12 billion construction that began in May of 2018 has been slated to conclude at the end of 2019. However, the controversy surrounding NS2’s purpose has resulted in delays that may impede Gazprom’s ability to meet this deadline.

The Controversy

Gazprom promotes NS2 as supporting the EU’s energy security at the time when Europe is: 1) running out of domestic natural gas supplies (particularly from the Groningen field); 2) trying to replace more CO2 emitting coal and; and—in some cases—3) substituting less emitting but potentially dangerous and aging nuclear generation. 

According to Gazprom, NS2 would also make gas supply to Europe more secure. By allowing Gazprom to avoid Ukrainian transit, the pipeline would insulate Europe from unexpected breaks or cuts in gas supply such as those that occurred in the peak demand season in 2005/2006 and 2008/2009. In both instances, Gazprom refused delivery of gas to Ukraine due to disputes over gas pricing and payment of Ukrainian debt. The company decreased the pipeline pressure to allow only the amount of gas contracted by its other European customers. By syphoning the gas for its own purposes, Ukraine made the fulfillment of those obligations impossible.

Many of the West European countries that have been Gazprom’s customers going back all the way to the Cold War, share the company’s assessment and welcome the new natural gas route as a commercial venture and route diversification that contributes to greater security of supply. This is certainly the viewpoint of the receiving country—Germany, which could use the steady flow of natural gas to help with accomplishing the goals of their energy reform—Energiewende, which has struggled with decarbonizing the economy (removing coal generation) while also phasing out nuclear power.

A purely market-based motivation underlying Russia’s investment in NS2 has been strongly refuted by several countries in Central and Eastern Europe (CEE). Years of Russian influence have made countries like Poland, Ukraine, and the Baltic Republics acutely aware, if not at times oversensitive, to any Russian move that could potentially increase its influence in Europe and expose the continent to Russia’s nefarious behavior. They see interruptions in natural gas supply to Europe as motivated by Russia’s desire to control Ukraine’s policy and Ukraine’s increasingly closer relationship with NATO and the EU.  And in their assessment NS2 is a tool that Russia will use to continue or even expanding its geopolitical influence in the region, if not in the EU as a whole.

This assessment does sometimes go even further after Russia’s 2014 aggression against Ukraine, its subsequent annexation of Crimea and military occupation of Ukraine’s Eastern regions. In the wake of the 2018 seizure of Ukrainian ships in the Sea of Azov, some have suggested that Russia could use NS2 as an excuse to intervene militarily. With claim to its property, Russia could assert protection by mobilizing special security measures and increase its military presence in the Baltic Sea.

Russia’s Objectives for NS2

The assertion that NS2 could give Russia an excuse for military intervention in the Baltic Sea region assumes that such an intervention is a Russian goal. However, there is nothing in Russia’s post-Soviet history pointing to a desire for direct military intervention in the Baltic Sea or its littoral states.  Indeed, most of the evidence points to the fact that Russia sees the Baltic region as part of Europe, not as part of the post-Soviet space, and that it therefore plays there under “European” rules.  While it routinely attempts to undermine social cohesion in the Baltic States —as it does elsewhere in the West—it has scrupulously avoided hinting at military aggression there.  This stands in stark contrast to its behavior elsewhere in the former Soviet Union.

In the early 1990s Russia supported separatist movements in Georgia and Moldova. But even though there was a clear pretext for Russian engagement in the Baltics— when Latvia and Estonia’s new citizenship laws denied citizenship to many Russian-speaking residents, causing considerable social unrest—Russia folded.  In the summer of 1993, when the Russian-speaking regions of eastern Estonia held a sovereignty referendum and the central government annulled it, Russia also stood on the sidelines. It did not unleash armed groups of factory workers or send in “volunteer” fighters from Russia—as it had done in Georgia and Moldova.

And Russia’s hands-off attitude toward the Baltics was not an indication that it was satisfied with the lot of Russian-speakers there. On the contrary, it routinely raised their plight in the United Nations, the Organization for Security and Cooperation in Europe (OSCE) and other institutions. Russian Foreign Minister Andrey Kozyrev even wrote a New York Times editorial urging the world to “heed a Russian cry of despair” there, and compared Estonia’s treatment of its Russian-speaking minority as “policies reminiscent of ethnic cleansing.”  But at no time did Russia attempt to—or even signal that it might—use military force to assert its prerogatives.

Russia also took in stride the 2004 accession of the Baltic States to NATO.  Meanwhile, when in 2008 NATO signaled its intention to admit Georgia and Ukraine, Russian military interventions followed: almost immediately in Georgia (August 2008) and later on in Ukraine (2014).  Among the goals was to convince NATO member states that accepting Georgia and Ukraine into the Alliance was a risky move that could result in war with Russia.

Why Ukraine and Georgia but not the Latvia, Lithuania, or Estonia?

To begin, Russia has long viewed Georgia and Ukraine as part of its “Near Abroad,” an area where it asserts special privileges.  Tellingly, Russian descriptions of the “Near Abroad” almost always omit the Baltic States—a tacit admission that Russia does not assert special privileges there. Conversely, the West has long signaled that its interest in Ukraine and Georgia does not include ensuring their sovereignty and territorial integrity.  The West’s paralysis in the face of Russian interventions in both countries told Russia much more than NATO’s 2008 declaration that both would someday be Alliance members.  More recently, the Trump Administration’s block on the release of $250 million in security assistance funds for Ukraine confirms Russia’s assumption that the West does not see Ukraine as a vital security interest. But Western equivocation has never extended to the Baltic states, and Russia knows this.  

Now, when Baltic States are part of NATO and are currently hosting three NATO battle groups with troops from 20+ NATO members—including nuclear powers of the U.S., UK and France—the Kremlin understands that any military intervention has a good probability of sparkling a military response by NATO. Such a war could be doubly dangerous for Moscow as it might also draw in Sweden and Finland, militarily-capable non-NATO states that constrain Russia’s access to the Baltic Sea and—in Finland’s case—share a long border that Russia would need to protect. 

Finally, if Russia is looking for a reason to assert military rights in the region, the existing Nord Stream pipelines already provide it. And Russia has direct access to the Baltic Sea via the Kaliningrad Oblast, an administrative region that is completely cut off from the Russian territory and is seen by Russia as strategic in the region.  It’s unclear what additional justification for intervention NS2 would provide, over and above that already provided by the current Nord Steam pipelines and strategic but vulnerable Kaliningrad.

Conclusion

Whether NS2 goes ahead or not, Russia will continue to attempt to undermine social cohesion and confidence in democracy in Baltic littoral states, as it does throughout the West. It is a low-risk, low-cost way to erode the cohesion and stability of Russia’s Western adversaries.  But election-meddling and social media disinformation campaigns are hardly a predictor of Kremlin military aggression.

Russia’s decision to militarily intervene in Georgia and Ukraine was almost certainly based on low probability of a military response from the West. Such a response is much more probable—if not virtually assured—in case of aggression toward a NATO member(s). The stakes are too high since by undermining one of NATO guiding principles—collective defense—nonresponse could effectively destroy the entire alliance.

At least for now, it seems unlikely that Putin would seek a full-blown conflict, if only for the fact that Russia is objectively a weaker party in a potential conflict with NATO. At the same time, Russia has seen measurable benefits from activities such as election meddling, media trolling, and disinformation campaigns. 

Of course, it’s impossible to know whether such assessment would apply long-term. But this is typical in international relations, where countries’ power ebbs and flows and alliances can shift sharply as unexpected events occur.

For now, NS2 completion should not make Russian military aggression in the Baltic region any more likely than it otherwise is, at least not in the short to medium term. However, NS2 could potentially nurture Russia’s dominant position as Europe’s largest natural gas supplier and contribute to Russia’s geopolitical influence in the region. This underlines the importance of European countries fostering an open, global, and fungible trade in natural gas with access not only to a variety of supply routes but also to a variety of suppliers.

Anna Mikulska & Robert Hamilton

Anna Mikulska is a nonresident fellow for the Center for Energy Studies at Rice University’s Baker Institute for Public Policy & senior fellow at the Kleinman Center for Energy Policy, at the University of Pennsylvania. Follow her on Twitter @anna_b_mikulska and LinkedIn

Robert Hamilton is the Professor of Eurasian Studies at the U.S. Army War College and a Black Sea Fellow at the Foreign Policy Research Institute. Follow him on Twitter @bobham88.

The statements, opinions and data contained in the content published in Global Gas Perspectives are solely those of the individual authors and contributors and not of the publisher and the editor(s) of Natural Gas World.