Russia’s hand in Nord Stream 2 could be nightmare alley for EU

The European Union needs to boost energy security and provide alternatives and others, Justin Urquhart Stewart, co-founder of UK Regional Investment Platform Regionally, told New Europe.

In an interview on August 20, the day German Chancellor Angela Merkel met Russian President Vladimir Putin on her last official visit to Russia before retiring as chancellor next month, Urquhart Stewart said Europe should be concerned about energy security after Russia completed the construction of Gazprom’s Nord Stream 2 gas pipeline to carry gas from Russia to Germany under the Baltic Sea.

“I think all these serious concerns people have had over the past few years about Nord Stream and the behavior and the fact you’re putting your neck on the line of Russia’s attitude towards your economy, is going to be increased for fear. The concerns people have had I think can be easily realized if Russia decides to turn nasty on things, then that I’m afraid is going to be a clear source of economic blackmail,” the London-based expert argued.

He said the EU needs to be more assertive towards Russia. “I think the European Union has lost its leadership and it’s been incredibly weak over it. One of a few areas of criticism I had of Merkel would be because of this and she should have been much stronger on this but hasn’t been and I can’t see anyone in Germany at the moment who’s got the strength and character to try and take on the Russians on this. So, I think Europe has got to be very careful because they find themselves at the moment looking politically much weaker than before,” Urquhart Stewart argued.

At her meeting with Putin in Moscow, Merkel pressed the Kremlin leader on Ukraine’s status as a transit country. Two days later, Merkel visited Kyiv where she offered reassurances that Ukraine would not suffer from Nord Stream 2. Reuters quoted Merkel as saying “gas should not be used as a geopolitical weapon” by Russia and that Germany could impose new sanctions on Moscow if necessary.

“It is important that Ukraine remains a transit land,” she said after talks with President Volodymyr Zelenskiy. She called for Ukraine’s existing transit deal with Russia to be extended beyond its 2024 expiry, adding that Germany would support Ukraine’s gradual transition to renewable energy.

Zelenskiy’s government sees Nord Stream 2 as a threat to European security. “I believe that this is a weapon. I believe that not to notice that this is a dangerous weapon, not only for Ukraine but for the whole of Europe, is wrong,” Zelenskiy was quoted as saying in a joint press briefing. “As for the continuation of transit through Ukraine after 2024, I think that so far these things are too general.”

On August 23, the energy ministers of Ukraine, Germany and US met to discuss Ukraine gas transit. The three ministers discussed “a number of steps that can be taken together in terms of real guarantees for Ukraine regarding the preservation of transit,” Reuters quoted Ukraine’s Energy Minister Herman Halushchenko as saying. “We proceeded from the position that was declared and voiced by the president of Ukraine – that we cannot allow the Russian Federation to use gas as a weapon,” he told reporters.

German Economy and Energy Minister Peter Altmaier told reporters, “From today’s perspective we shouldn’t reject any suggestions, but also not create any insurmountable obstacles”.

Ukraine has bitterly opposed a deal between the US and Germany over Nord Stream 2, which led to Washington eventually waiving sanctions against the Russian-controlled builder of the pipeline. The deal between Washington and Berlin included a commitment to helping Ukraine continue to receive transit fees once Nord Stream 2 becomes operational.

In a resolution at the European Parliament recently, MEPs said the EU needs to cut its dependency on Russian gas and oil and other raw materials, at least while President Putin is in power. The European Green Deal and the boosting of new resources will play a crucial geopolitical role in this regard, the European Parliament said.

MEPs also said the EU must also build its capacity to expose and stop the flows of dirty money from Russia, as well as to expose the resources and financial assets of the Russian regime’s autocrats and oligarchs hidden in EU member states.

Urquhart Stewart told New Europe that Russia “is trying to reassert its influence”. “Though politically they would have done that, during the days of the Cold War they had political control. Now they can do it by way of economic and fuel control,” he argued. “And if you can do that by way of controlling commodity availability that’s a very powerful tool indeed and a smarter form of politics for Russia to use,” he opined.

Nord Stream 2, however, is facing further obstacles. On August 25, a German court ruled Nord Stream 2 is not exempt from EU rules. That means Gazprom would have to auction off half the capacity in the pipeline to third parties.

The Duesseldorf Higher Regional Court rejected a challenge brought last year by the operators of the Gazprom-backed project, which claim the project has been unfairly targeted. Financial investors in Nord Stream 2 include Germany’s Wintershall Dea and Uniper, Austria’s OMV, France’s Engie, and Royal-Dutch Shell.

EU rules require the companies that produce, transport and distribute gas within the bloc to be separate, or unbundled. The ruling is about a 2019 revision to the EU’s Gas Directive, which governs the bloc’s internal gas market.

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