Merkel’s hypocritical pipeline pact with Putin undermines the Western alliance

Berlin will pay high price for endorsing Nord Stream gas pipeline – the Russian president’s “plunder project” that Brussels covered up

. 25 March 2021

Less than 100 miles remain to complete Russia’s Nord Stream 2 pipeline to the Baltic region of Mecklenburg, and from there to supply Germany with natural gas in a sweetheart deal that undercuts the central purpose of Nato and the Western alliance.

The project may never be finished. If it is finished, gas may never flow, unless Germany is willing to risk irreparable damage to relations with the US and Eastern Europe. The five European companies that took part in the consortium and acted, wittingly or not, as agents for Vladimir Putin’s foreign policy are now in the cross-hairs of an enraged Washington. Shell is one of them. 

The Biden White House and both parties in Congress deem Nord Stream 2 to be alliance treachery – the ‘Molotov-Ribbentrop pipeline’ as it is known in Poland. They are on the warpath

The adult argument for Nord Stream 2 is that it helps to bind Russia into the Western system and therefore to head off the strategic dangers of a deep Sino-Russian pact; and that it also provides badly needed gas as a transition fuel to displace coal.

It sounds plausible. It is untrue. “The pipeline is purely diversionary. It does not supply a single molecule of extra gas,” said Professor Alan Riley from the Atlantic Council.

Instead it enables Russia’s monopoly Gazprom to circumvent the Ukrainian Brotherhood pipeline, depriving Ukraine of its chief source of revenue and its strategic leverage. The pipeline is operating far below capacity and can meet any plausible gas needs in the future.

Nord Stream 2 has only two purposes: one is to isolate and suffocate Ukraine, and also to injure Poland by diverting the flows from the Yamal pipeline. It is an instrument of Mr Putin’s revanchiste ambitions. Far from locking him into the West, it makes him more dangerous. 

The other purpose is made clear in a withering (and brave) report by Russian lender Sberbank entitled Tickling Giants. Gazprom is a device to steer boondoggle contracts of no economic logic to Vladimir Putin’s circle, destroying value on an epic scale in the process. “Nord Stream is a plunder project,” said Prof Riley.

We learned why Berlin is so eager to do Putin’s bidding in a leaked EU report in 2018. It revealed that Gazprom had been selling discount gas to Germany at €200 per 1,000 cubic metres while Poland was forced to pay €350, and Bulgaria was treated as a colony. https://cf-particle-html.eip.telegraph.co.uk/378dd4bd-288a-47fd-aca2-0f127495673d.html?i=1&ref=www.telegraph.co.uk/business/2021/03/25/merkels-hypocritical-pipeline-pact-putin-undermines-western/&channel=business&id=378dd4bd-288a-47fd-aca2-0f127495673d&isapp=false&isregistered=true&issubscribed=true&truncated=false

It concluded that Gazprom had infringed EU laws systematically, engaged in “abusive behaviour”, charged “unfair prices”, leveraged its “dominant position”, and acted as a foreign policy enforcer for the Kremlin. Commission officials wanted to impose huge fines.

What happened? Brussels covered it up. Competition chief Margrethe Vestager, lionised for confronting Apple and Google, was a pussycat with Gazprom. Berlin prevailed. Rarely do you get such an unvarnished display of how the EU really works.

Unphased by this, German president Frank-Walter Steinmeier says Nord Stream 2 must go ahead as moral imperative because of the Nazi victims in the Second World War. This has raised eyebrows in Kiev. It was Ukraine that bore the full brunt of the slaughter. 

The Social Democrats (SPD) have long had an eastern itch, rooted in Willy Brandt’s Ostpolitik during the Cold War and tinged with reflexive anti-Americanism. Ex-Chancellor Gerhard Schroder is on Nord Stream’s board, taking the Kremlin shilling. The pipeline will create jobs for the impoverished backwater of Mecklenburg, an SPD bastion.

Angela Merkel’s Christian Democrats (CDU) are lukewarm but her designated successor gushes approval. The backslapping Armin Laschet is a Putinversteher – Putin apologist – to the point where he justified the annexation of Crimea and took Russia’s side over the Skripal poisoning in Salisbury.

He also took Bashar-al-Assad’s side and backed Putin’s intervention in Syria, against the US, the UK and France. Some friend he. Mr Laschet insists that 1,200 companies in his state of North-Rhine Westphalia have dealings with Russia, and that must come first.

What lies behind this infatuation with Russian gas is deep angst over energy security, made worse by Chancellor Merkel’s rush to phase out German nuclear power after Fukushima. The neighbouring Dutch gas fields are near depletion. Norway’s fields are running low.

But while it is possible to make an alarmist case, there is no shortage of gas. The US has swung in decade from major importer to mega exporter, bursting on the world scene with liquefied natural gas (LNG) from cheap shale.

This has ended the era of gas pipeline supremacy. LNG can go anywhere. It trades like crude and it has destroyed Russia’s pricing power in Europe. Gazprom had to cut its prices to Lithuania by 23pc days after the country opened its ‘Independence’ LNG terminal.

The greater absurdity is that gas itself is an endangered fuel. It can displace coal for a few years, halving plant emissions, but will then meet the same fate. It is incompatible with net-zero targets and it is already running into stiff competition from renewables as EU carbon prices hit €40 a tonne. These contracts will be over €60 by year’s end because there are not enough permits. Utilities can already see the writing on the wall and switching their investments.

There will be a role for gas in making ‘blue hydrogen’ with carbon capture but it will not last much beyond the early 2030s and it will not be in Germany. The country lacks the offshore sequestration sites to make this viable at scale, or the civic consent for carbon storage on land. Gazprom’s extra capacity will never be needed.

For Germany, the diplomatic cost of pursuing this madness has risen exorbitantly over recent days. Berlin thought it could fob off objections from Washington by offering to buy some LNG from the US, as if that were the issue. 

Berlin had also been assuming that Joe Biden – though a friend of Ukraine – would not let Nord Stream stand in the way as he tried to restore cordial relations with Europe after the Trump storm. Germany blithely resumed final construction on the pipeline after Mr Biden’s election. This was a misjudgment.

The White House is irritated with Berlin for rushing headlong into a Sino-European investment deal – a Chinese ploy to split the West – preempting Mr Biden’s efforts to create a democratic front to combat Xi Jinping’s predatory behaviour.   

Above all, Putin has crossed too many lines: the (Russian) SolarWinds cyber attackopi on nine US agencies; the US intelligence report last week on Russian meddling in the 2020 election; the fake news campaign to discredit Western vaccines; and violations of the 1991 Chemical and Biological Weapons Act in the attempted murder of Alexei Navalny

The provocations have become a test of Mr Biden’s resolve, akin to John Kennedy’s early test over the Berlin Wall in 1961. Senate hardliners led by Ted Cruz have vowed to block confirmation of his nominees one by one until the US puts Nord Stream out of business. 

“I’ll release my hold when the Biden administration meets its legal obligation to sanction the ships and companies building Putin’s pipeline. Follow the law. Stop being soft on Russia,” he said. Mr Biden’s pick for CIA director scraped through but only after assurance that action is coming.

The pace is now quickening. Secretary of State Anthony Blinken told his German counterpart today in Brussels that the US intends to escalate. “I made clear that firms engaged in pipeline construction risk US sanctions. The pipeline divides Europe, it exposes Ukraine and central Europe to Russian manipulation and coercion, it goes against Europe’s own stated energy goals,” he said.

European companies cannot escape the long arm of the US Treasury. If subjected to the ‘scarlet letter’, they will be shut out of the world’s dollarised payment system. World finance will stop lending to them, or insuring them,  or buying their debt issuance. They will be crushed.  “If the Americans want to stop the gas flowing, it will stop flowing,” said Tim Ash from Standard Bank.

The problem may solve itself soon enough. The Greens have vowed to end the project if they sweep into power at the head of a Left-leaning coalition in September. Such an earthquake is no longer out of the question. The Christian Democrats have crashed to 27pc after botching vaccination. The Greens are running second at 22pc.

But the bad taste will linger whatever happens. When you stand back and compare Borisian Britain with Putin’s Germany, which is the real renegade of the European political and alliance system? 

“You can say what you want about Brexit, but at least the Brits are not working hand in hand with a hostile state against the security interests of EU member states,” said Prof Riley.

The pace is now quickening. Secretary of State Anthony Blinken told his German counterpart today in Brussels that the US intends to escalate. “I made clear that firms engaged in pipeline construction risk US sanctions. The pipeline divides Europe, it exposes Ukraine and central Europe to Russian manipulation and coercion, it goes against Europe’s own stated energy goals,” he said.

European companies cannot escape the long arm of the US Treasury. If subjected to the ‘scarlet letter’, they will be shut out of the world’s dollarised payment system. World finance will stop lending to them, or insuring them,  or buying their debt issuance. They will be crushed.  “If the Americans want to stop the gas flowing, it will stop flowing,” said Tim Ash from Standard Bank.

The problem may solve itself soon enough. The Greens have vowed to end the project if they sweep into power at the head of a Left-leaning coalition in September. Such an earthquake is no longer out of the question. The Christian Democrats have crashed to 27pc after botching vaccination. The Greens are running second at 22pc.

But the bad taste will linger whatever happens. When you stand back and compare Borisian Britain with Putin’s Germany, which is the real renegade of the European political and alliance system? 

“You can say what you want about Brexit, but at least the Brits are not working hand in hand with a hostile state against the security interests of EU member states,” said Prof Riley.

4 comments

  • Germany is a horrendous enemy country and has been since ‘reunification’. Instead of the east joining the west, the west reversed into the Russian controlled east and became a covert asset run by vile Russia shills, of which Merkel is only the latest in a long line. The corpulent quisling will be replaced incredibly by someone even worse: the loathsome
    Armin Laschet. What an appalling lash-up!

    Liked by 5 people

  • onlyfactsplease

    “If it is finished, gas may never flow, unless Germany is willing to risk irreparable damage to relations with the US and Eastern Europe.”
    Germanystan has already taken into account that it will step on everyone and anyone’s feet to get this pipeline finished simply by going on with it in the first place and this despite numerous protesting voices over the years. The US must get hammer sanctions passed and this quickly, to end this bullshit once and for all.

    Liked by 5 people

    • Ribbentrop-Molotov is back in play.

      Liked by 5 people

      • I’ve long referred to it as Molotov-Ribbentrop 2.0 and this article also reminds us that this pipeline will not increase overall shipping to Europe because both Nord Stream I and the existing Ukrainian lines are less than half utilized. This is simply a political exercise that Germany is lying about. Period. Steinmeier, Schroeder and Merkel should be forced to suck that gas until they turn green.

        Liked by 2 people

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