German exports to Russia expected to shrink 5 per cent in 2016

It was nowhere to be found on the agenda, its name carefully excised from the summit statement and barely uttered by the European Union's top politicians. And yet, Nord Stream 2 left EU leaders at each other's throats as they met in Brussels this week.

The planned expansion of the 1,224-kilometre-long Nord Stream gas pipeline has all the makings of geopolitical drama.

It is part of an effort by the Russian energy giant Gazprom to deliver gas to Europe by circumventing Ukraine, a country Moscow has been accused of meddling in, encroaching on and dragging into civil war.

The project involves Germany, the most powerful political player in Europe, who is now being accused of conveniently sweeping aside lofty values when economic interests are at stake.

And it comes at a time when the EU is trying hard to wean itself off Russian gas, a dependence that has become a political liability as relations with Moscow have slumped to a post-Cold War low over the crisis in Ukraine.

"The project raises a serious question about the state of the union at a time when cooperation is crucially needed," European Policy Centre analyst Annika Hedberg wrote this week. "Energy is not just a commodity but always has a strong political dimension when deals are made with Russia."

Nord Stream runs from Russia beneath the Baltic Sea into Germany. Its planned expansion would see the construction of two new underwater pipelines to deliver an additional 55 billion cubic metres of gas annually to Germany and other EU countries.

The pipelines are due to be constructed in cooperation with major European companies E.ON, OMV and Anglo-Dutch Shell, but Gazprom will be the biggest stakeholder in the project.

Russian President Vladimir Putin said Thursday that Russia would benefit from increased flow through Nord Stream in the future and that completely diverting natural gas transit away from Ukraine may not be needed after all.

Russian officials have also argued that Europe stands to benefit.

"The fact that the global energy majors participate in the project bespeaks its significance for securing reliable gas supply to European consumers," Gazprom chief Alexey Miller said in September at the signing of the shareholders agreement.

But Ukrainian President Petro Poroshenko could not disagree more. This week, he described Nord Stream 2 as his country's "greatest concern," a project that he predicted would "undermine Ukraine and European ... energy security and solidarity."

Enthusiasm in EU political circles is also limited, especially among eastern countries that have felt threatened by Russia's actions in Ukraine and have long been wary of Moscow.

"Nord Stream has no commercial objectives or sense, we can only talk about an attempt to bypass Ukraine and have an instrument of pressure for some European countries," Lithuanian President Dalia Grybauskaite was quoted as saying Friday by the BNS news agency.

Pushback on Nord Stream 2 has also come from the south of the EU, where countries are still smarting from the scrapping of the South Stream gas pipeline, which was supposed to supply Italy, Greece and Austria with Russian gas through a Black Sea pipeline.

"If South Stream was blocked because of Ukraine, why it is not considered so in the Nord Stream case?" Hungarian Prime Minister Viktor Orban told journalists in Brussels after discussing the issue with his EU counterparts at the summit.

"While a year ago we said 'no' to South Stream, ... suddendy there was an attempt to approve the principle of Nord Stream 2 by stealth, in total silence," Italian Prime Minister Matteo Renzi added.

He also found it "in dubious taste" that this was happening just as the EU was preparing to quietly prolong economic sanctions on Russia.

"It is right ... to expose the contradiction between the sanctions on Moscow to punish its actions in Ukraine and the doubling of the Nord Stream, through which Germany, France and the Netherlands want to secure even more gas bypassing the same Ukraine," the Italian daily Corriere della Sera wrote in an editorial on Friday.

Germany has insisted that Ukraine continue to play a role as a gas transit country, but has also thrown its support behind Nord Stream 2. German Chancellor Angela Merkel underlined Friday that it is simply "an economic project."

Friday's summit talks on Nord Stream were "very tough" and "very emotional," said EU President Donald Tusk.

Whether the gas pipeline will become the next big clash for the EU remains to be seen. If so, the battered bloc at least has a wealth of experience in crisis management to draw on.

"Every year has its own challenges. It was economic crisis, debt crisis, Greek situation. Now we have different ones," Grybauskaite told journalists in Brussels. "It's normal for Europe, it's life."

Last update: Sat, 19/12/2015 - 01:11

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