With the completion of the gas pipeline "Nord Stream 2" (NS2) connecting Germany and Russia, a new movement has emerged.(Map quoted from Gazprom's official website)
The U.S. and German governments have recently issued a joint statement, and while the U.S. effectively approves the project, Germany supports Ukraine, which is increasingly concerned about the disruption of gas supply from Russia and the reduction of transit fees due to the completion of NS2.
Ukraine and Poland, which have opposed the NS2 plan as well as the United States, have expressed discomfort with the agreement, although there are widespread views that it has put an end to the long-standing conflict.
NS2 is a 1,200-kilometer-long natural gas submarine pipeline project that connects Ustiriga (Leningrad, Russia) on the Baltic coast with Greifswald in northern Germany. From the beginning, European energy companies such as Engie, Uniper and OMV have been jointly involved in the construction work.
On the other hand, the United States, Ukraine, Poland, etc., which are concerned about the increase in energy geopolitical risk due to Russia, have consistently expressed their intention to oppose construction.
On January 1, this year, the US Senate re-passed the Defense Authority Act, which outlines the defense budget for fiscal year 2021, with a majority in favor. The US House of Representatives also had a re-approval settlement at the end of December last year, but it was re-passed because former President Trump had vetoed it. The bill also included Nord Stream 2 as sanctions.
At that time, Republican Senator Ted Cruz (Texas), a member of the US Senate Foreign Relations Committee, said on the official website, "The Russia-led Nord Stream 2 project threatens US national security and is completed. Don't let them do it. "
Democratic Senator Jeanne Shaheen (New Hampshire) has also warned that "Russia is threatening energy self-sufficiency in Ukraine and Europe," and bipartisan lawmakers have been restraining Russia.
While strengthening economic sanctions on Russia, the United States sought to strengthen relations with neighboring countries in the energy sector. Since the merger of Crimean by Russia in 2014, the Ukrainian government hastened to break away from dependence on natural gas from Russia. Ukraine will import at least 5.5 billion cubic meters of US LNG on an annual basis.
Meanwhile, Russia has been quietly proceeding with the laying business, such as announcing plans for the construction of natural gas-related facilities in anticipation of the completion of NS2.
According to reports such as European energy magazines, NS2 construction work is 99% complete now. Under these circumstances, the US administration of Biden is said to have embarked on work under the hood to solve the NS2 issue. If the US sticks to the hard posture as it is, NS2 will be completed soon and will start operation with the passage of time. If that happens, the United States will not only be Russia, but its relations with Germany will be further deteriorated.
If the NS2 project is accepted at this stage, it will be possible that the US will create an obligation to Russia, which depends on the energy resources of oil and natural gas, and it has been decided that a wedge can be driven into the honeymoon relationship between Russia and China. The acceptance of the US for the NS2 project is also part of its strategy toward China.
Attending the North Atlantic Treaty Organization (NATO) summit in Brussels, Belgium on June 14, the Biden administration, reaffirming its focus on Europe, seems to have rushed to restore relations with Germany.
President Joe Biden attended the NATO summit meeting, and then on June 16th, he took part in the first summit meeting with Russian President Vladimir Putin in Geneva, Switzerland. In addition, he invited German Chancellor Angela Merkel, who is about to retire, to hold a US-German summit meeting at the White House on July 15. It goes without saying that the NS2 issue was one of the main agenda items at the table.
Regarding the series of movements, a political analyst living in Washington said, "It is not an action that suddenly came up. Mr. Biden announced in May this year that sanctions will be postponed to NS2 companies and others, and construction work is virtually tolerated. It should be considered that the negotiations proceeded based on a well-prepared scenario. "
On the other hand, following the agreement between the United States and Germany, the Ukrainian and Polish governments issued a joint statement on July 21 with Ukrainian Foreign Minister Dmitrow Kleber and Polish Foreign Minister Zbignev Lau. They criticized NS2 for creating political, military and energy threats to Ukraine and Central Europe as a whole.
According to Ukraine's multimedia reporting platform "UKRINFORM" (July 22nd), both Ukraine and Poland "will continue to work with allies and partners to prevent the start of NS2 operation”.
The NS2 project, which successive US administrations have consistently opposed. This time, President Biden's efforts have put an end to the composition of the conflict. However, it is also true that there are concerns.
If Russia decides to stop supplying gas to Ukraine, Germany has agreed to take sanctions, but how much can Russia guarantee that it will not put pressure on Ukraine? In addition, there are some parts that cannot be said to be calm at first glance, such as the distrust of European countries toward Germany rather than against Russia.
The White House officially announced on July 21 that President Biden would invite Ukrainian President Zelensky to the White House for a summit meeting on August 30. It is expected to seek understanding from the Ukrainian side.
Naoya Abe
Global Commodity Watcher.
Tokyo bureau chief at Capitol Intelligence Group (Washington D.C.)
Former correspondent at Bloomberg News
