Nord Stream 2

by Robert Romano

Is the world about to go to war in Ukraine to stop a natural gas pipeline from Russia to Germany?

That’s a question members of Congress should be asking themselves as the fate of the Nord Stream 2 natural gas pipeline hangs in the balance amid stark warnings from President Joe Biden that Russia is about to invade Ukraine.

Owned and operated by Nord Stream AG, a subsidiary of Russia state-owned energy giant Gazprom, in 2005, former German Chancellor Gerhard Schroder approved construction of the Nord Stream 1 pipeline, which was finished and went online in 2012. Nord Stream 2 was built in 2018 and finished construction in Sept. 2021 at a cost of $11 billion, and would double the current pipelines’ distribution of 1.9 trillion cubic feet a year to 3.9 trillion cubic feet a year. In Nov. 2021, Germany delayed the final regulatory approval of the pipeline project to about March 2022.

Germany already purchases about 55 percent of its natural gas from Russia before the new pipeline has even gone online.

Throughout construction of the project, the U.S. and UK have expressed very strong concerns over Europe becoming over-reliant on Russian gas. More recently, Ukrainian President Volodymyr Zelensky endorsed legislation in the U.S. Senate by Sen. Ted Cruz (R-Texas) that would have restored sanctions against the pipeline. Ukraine makes good money off of gas transit fees from its pipeline network that delivers Russian gas to Europe. If more gas moves through Nord Stream 2, Ukraine makes less money, and Ukraine says it isolates them economically and makes the country more vulnerable to Russia.

But the legislation went nowhere. President Joe Biden signaled to Senate Democrats to kill the measure in the Senate so that he could instead use the pipeline in negotiations with Russia, Germany and Ukraine.

Suddenly, in Dec. 2021, the U.S. began highlighting the threat of an imminent invasion by Russia of Ukraine, a danger that Ukraine has since sought to downplay, noting that the amount of forces on the border would not be enough to launch a full-scale invasion, it says.

Within a few weeks of the invasion talk, Germany had agreed with the U.S. to declare that the Nord Stream 2 pipeline would be ended if Russia invaded Ukraine. Outwardly, the current rounds of diplomacy give the appearance of the West pressuring Russia, and in part using pipeline economics to stop an imminent invasion.

And that might be what the public thought about the issue, except Ukraine keeps saying an invasion is not necessarily imminent. Here, Zelensky’s challenge to Biden is more fundamental, saying in essence, “We don’t believe you” on the intelligence.

To be fair, not even Biden sounds fully convinced. Publicly, he said the inteligence is like “reading tea leaves” and then admitted he doesn’t know what Putin wants, stating, “this is all Putin.  I don’t think even his people know for certain what he’s going to do.”

Moreover, Biden merely threatened sanctions and explicitly took military force off the table when it comes to Ukraine, stating, “We have no intention of putting American forces or NATO forces in Ukraine.  But we — as I said, there are going to be serious economic consequences if he moves.”

Meaning, Biden hasn’t made a show of force to defend Ukraine. Then why’d he ring the invasion bell?

Will Biden next publicly present China’s plans to invade Taiwan, only to later suggest that the U.S. means to only apply minimal sanctions, or impose more tariffs on imported goods if they do happen to invade?

Ukraine might have been better off without Russia knowing if we were willing to go to war over Ukraine. Biden said no.

Weakness is provocative.

Certainly, the troop movements, said to total about 100,000 troops on Russia’s borders with Ukraine and Belarus, appear real enough, but the lack of intelligence on Putin’s strategic intent could be what’s giving the Ukrainians pause in talking up the invasion threat. But it could be more bark than bite.

Elsewhere, there is real pressure on Berlin over the pipeline. Maybe the threat of war helps, even imagined.

Readers should recall that Germany has been a party with France in the Minsk peace talks between Russia and Ukraine since 2014 when the civil war there begun after the U.S. helped push former Ukrainian president Viktor Yanukovych out of power to get a European Union trade deal ratified – Biden wrote about it in his book – and Russia annexed Crimea. If Berlin were to kill the pipeline, it could undercut its present role as a mediator in deescalating the conflict.

Moreover, Germany has committed itself to reducing the country’s carbon footprint. Coal has gone from 46 percent of Germany’s electricity production in 2008 to just 26 percent in 2021. By 2038, plans call for all coal plants to be eliminated. Now they will need more natural gas to offset their coal and nuclear electricity plant closures. That’s an important point, because transitioning from coal to natural gas is a policy preference shared by Biden and his Democratic predecessor former President Barack Obama.

But Biden’s global climate ambitions might not work without at least some Russian gas in the mix. That may be why the Biden administration green lit the pipeline and waived sanctions on it in May 2021. It knows Germany needs gas to go green.

So, perhaps we’re trying to leverage Moscow on Nord Stream 2. Again, Biden initially greenlit the project but then appears to have had Germany do a 180 and delay final approval.

There are certainly winners and losers depending on what happens if sanctions are lowered.  The threat of war could keep sanctions up and kill the pipeline. Is that what’s happening here?

Two keys to watch are both Ukraine and Germany.

On Ukraine, Biden clearly miscalculated going public with the invasion talk without the prospective ally, Ukraine, on board. Now he’s warned of an imminent invasion and needs Putin to deliver the war so that the U.S. doesn’t look foolish.

If we’re wrong about the invasion, will Ukraine be more or less inclined to listen to U.S. intelligence in the future?

And then there’s Germany, which still has a vested interest in importing more natural gas. It also values its role as a peacemaker between Russia and Ukraine.

On energy, the U.S. is already the largest supplier of natural gas to Europe in the world, but it’s still not enough to offset Germany’s need for Russian gas. For example, a planned liquified natural gas terminal at the city of Brunsbuttel, a project former President Donald Trump was fond of as a potential alternative to Nord Stream 2, which originally was supposed to be done by 2022, may not get off the ground until 2025, if it happens at all, amid regulatory delays and a withdrawal of investor support, meaning, for the foreseeable future, Germany will depend on Russian gas from the Nord Stream pipelines.

Which might be why the pipeline ultimately gets approved and perhaps also why there won’t be another invasion of Ukraine. Maybe the Germans think the gas will be cheaper than war.

Cross-Posted with Conservative Firing Line