The Geopolitics of North Stream 2: With EU Already Divided, New US Sanctions Will Do More Harm

The Geopolitics of North Stream 2: With EU Already Divided, New US Sanctions Will Do More Harm

Nord Stream 2 is poised to boost Russia’s influence over its neighbors and divide the European Union internally. Yet, American sanctions against the project will do more harm than good.

In July, the White House tightened existing sanctions against Russian firms and individuals and made it more difficult to relax them. According to the bill passed by the US House of Representatives, Moscow is using energy exports to coerce its neighbors, specifically targeting Nord Stream 2, a planned pipeline that would cross the Baltic Sea and deliver natural gas from Russia to Germany. The bill further states that the project would have “detrimental impacts on the EU’s energy security”.

Nord Stream 2 is a very problematic project. Gazprom claims that Europe needs more pipeline imports because domestic European production is declining but Nord Stream 2 would hardly bring more Russian gas – instead it just offers an alternative route for the already existing gas. For observers, this seems to mainly benefit Gazprom but the Russian company said that it wanted to stop gas supplies through Ukraine by 2019 since it does not see the country as a reliable transit route.

Yet, the subsequent loss of revenue made by transit fees would weaken Ukraine’s economy, decrease its energy security and undermine the EU’s policy towards the country. Moreover, it would also cast shadow over Europe’s own security since about 80% of the Russian gas exports to Europe would flow directly to Germany through one set of pipelines. Subsequently, Central European gas supplies would also be endangered, which had also prompted the European Council’s President Donald Tusk to criticize the project.

The European Commission has complained about the recent American bill, saying that Washington does not have the right to interfere in its internal energy market. So far, Brussels’ energy security policy has been based on diversification, and market regulation, liberalization, but not on politicizing resource supplies. However, the US sanctions would do precisely that – drag Nord Stream 2 into the geopolitical battlefield where the legally minded European Commission has much less traction.

Moreover, there are also concerns that the bill is meant to push Washington’s hidden agenda and adjust US’ large deficit with the EU. Wilbur Ross, the US commerce secretary, has specifically suggested that Europe could import more US liquid natural gas (LNG) and thus correct the transatlantic trade balance.

Gazprom commented in its recent prospectus that the American sanctions could delay or completely halt the construction of the pipeline. Perhaps, Nord Stream 2 should have never been built in the first place. Yet, the very fact that Washington is making decisions about Europe’s energy choice triggered some outrage in Brussels. The European Commission, not the White House, is the chief regulator of the European energy market.

‘Nord Stream 2 Will Divide EU, New US Sanctions Will Do More Harm’ – Opinion by Rem Korteweg – Clingendael / Netherlands Institute of International Relations.

(The Opinion can be downloaded here)