Russia outmanoeuvred Germany on Nord Stream 2 and now the whole of Europe is paying the price
It is ironic that a project supported by Berlin as good for European energy security has encouraged Gazprom to hold back gas supplies.
JOHN LOUGH 22 September 2021
Russia supplies around 40 per cent of Germany’s gas consumption and Germany is by far its largest export market. Berlin has fewer concerns than its allies about its dependency on Russian gas because it sees the energy relationship as mutually beneficial. It believes that Russia needs to sell gas to Germany as much as Germany needs to buy the gas and that this alignment can prevent tensions from spiralling out of control.
This view has its roots in West Germany’s Ostpolitik of the 1970s that laid heavy emphasis on building a gas relationship with the USSR as part of a policy of reducing tensions in Europe by increasing trade and recognising borders. Strongly opposed by Washington at the time, the gas business was a commercial success for both sides but did not prevent a new spike in East-West confrontation in the early 1980s.
However, many in Germany’s political class continue to think that the Ostpolitik model for handling relations with the USSR should remain the basis for dealing with Russia today. They believe that it paved the way for the dramatic changes in Soviet foreign policy under Mikhail Gorbachev that led to German unification.
This peculiarly German approach has hampered EU efforts to develop an energy security strategy based on diversity of supply. Keen to draw Russia closer to Europe, Chancellor Gerhard Schröder pushed for the construction of the Nord Stream pipeline directly connecting Russia and Germany under the Baltic Sea, brushing off objections from several EU allies to its east, including Poland.
These countries saw dangers in expanding the gas relationship with Moscow when it had not hesitated to use gas supplies as a political weapon in its immediate neighbourhood and had cut off gas supplies to several southern European countries in 2008 over a dispute with Ukraine about gas transit. Lithuania, a vocal opponent of the project, had experienced multiple politically motivated cut offs of Russian energy supplies over the years.
While Schröder had struck up a personal friendship with Vladimir Putin, Angela Merkel was on her guard. Her East German background gave her an instinctive appreciation of Putin’s personal diplomacy shaped by his KGB training. However, she failed to respond to the clear signs after 2012 that Russia was not just moving away from Europe, it was preparing for confrontation.
When Russia annexed Crimea in 2014 and tried to foment a counter-revolution in Ukraine, Merkel discarded German policy orthodoxies and rallied EU countries around a policy of economic sanctions aimed at putting pressure on Moscow to think twice about further escalating conflict in Donbas. The worst was avoided in Ukraine while German business swallowed a bitter pill with barely a murmur.
However, old instincts quickly re-emerged. In 2015, two German companies were part of a European consortium that signed a deal with Gazprom to double the capacity of the Nord Stream pipeline. The project had clear negative consequences for Kyiv since it earned significant revenues from gas transit and wished to preserve it as a means of self-protection against Russia.
Despite multiple opportunities to kill the project, Merkel allowed it to proceed in the face of fierce opposition not just from Ukraine and several central European countries but also from a powerful bi-partisan consensus in the US. She correctly anticipated that the Biden administration would not sanction an ally and would instead agree a flimsy deal with Germany to protect Ukrainian interests.
It is ironic that a project supported by Germany as a contribution to European energy security has encouraged Gazprom to hold back gas supplies to persuade German and EU regulators that they should allow the now completed pipeline to become operational as soon as possible.
Against a background of skyrocketing gas prices, the incoming German government will have no time to re-evaluate the project. Not for the first time in recent years, Moscow is giving Europe a lesson in the art of strategy.
John Lough is an Associate Fellow of the Russia & Eurasia Programme at Chatham House and author of Germany’s Russia Problem (July 2021, Manchester University Press)