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Germany Seeks to Calm Trump's Nord Stream Concerns By Protecting Ukraine Gas Route

This article is more than 5 years old.

Following Donald Trump’s blistering criticism of Germany’s decision to approve a new Russian gas pipeline under the Baltic Sea bypassing Ukraine, Berlin is today hosting a meeting with Russian and Ukrainian officials to try to calm the waters.

Trump opened his explosive appearance at a Brussels NATO summit last week by saying it was unfair that the United States is expected to protect Germany from Russia, but at the same time Berlin is making gas deals with Moscow worth billions of euros which will make the country very dependent on Russian energy.

Trump repeated the criticism yesterday at a press conference following a meeting with Russian President Vladimir Putin in Helsinki, saying Germany and other European countries should instead be importing American liquefied natural gas (LNG).

The controversy surrounding the proposed pipeline is not new. The European Union says construction of the pipeline cannot go ahead until it gives approval, and this approval is being blocked by Eastern European countries led by Poland, who say it is detrimental to EU energy security. Washington is urging the objectors on.

The US is also concerned that the pipeline is an effort to punish Ukraine by cutting it out of the loop, sending gas to Europe via the Baltic Sea and shutting off the taps to the existing Southern route via Ukraine.

Deep freeze

Berlin has argued that the new pipeline will enhance the EU’s energy security – specifically the security to not be plunged into the cold whenever Moscow and Kiev are having a dispute. In 2009 the taps were shut off after one such dispute, leaving several EU countries in Central and Eastern Europe with almost no gas supplies.

Germany says the new pipeline, which would follow the route of an existing pipeline called Nord Stream 1, doubling the route’s capacity, would protect the EU from such interuptions. But this is also the biggest criticism of the pipeline, because it suggests that Moscow could more easily shut off the taps to Ukraine during future disputes without objections from the EU.

If Ukraine were completely shut out of the loop, it would lose billions of dollars in gas transit fees. Earlier this year the existing pipeline surpassed the Ukraine route becoming the main supply route to the EU for Russian gas. It now supplies 36% of the total volume, compared to 34% through Ukraine.

At the meeting today in Berlin, German officials will urge Russia to guarantee that it will continue sending gas through Ukraine after Nord Stream 2 comes into operation, and that the route will continue to be commercially viable. In particular, today’s talks will focus on extending the gas transit contract between Moscow and Kiev, which expires at the end of 2019, and on guaranteeing minimum volumes that Russia will deliver through Ukraine.

But given the huge capacity that the new double-pipeline would have, any guarantee may fly in the face of economic reality.

Many objectors

Angela Merkel has showed signs that she is souring on the pipeline, saying in April that it should not go ahead unless Moscow gives guarantees that Ukraine will be protected. Although Berlin had been previously loathe to admit that political concerns should be part of the consideration for approving the pipeline, in recent months that stance has softened.

Washington cannot veto the pipeline, so it is their proxies that must be convinced. The hardest to convince will be Polish Prime Minister Mateusz Morawiecki, who earlier this year called the pipeline a “weapon of hybrid warfare”. The leaders of the Baltic states also strongly object.

EU Energy Vice-President Maroš Šefčovič, who will be leading the talks for the EU side today, is also against the pipeline. Šefčovič, who is from Slovakia, has said the pipeline is not in line with the EU’s strategy to diversify gas supply routes.

The issue is unlikely to be resolved today, as talks are expected to focus on trying to resolve an arbitration dispute between Ukraine’s Naftogaz and Russia’s Gazprom. Ukraine has threatened to seize Gazprom assets as a way to recoup a $2.6 billion verdict award from an international arbitration panel in Stockholm earlier this year.

The panel found that Gazprom violates contracts with Haftogaz in 2009, but Russia is disputing the verdict.