From Russia with Gas: Why Germany Should Stop Nord Stream 2

Thomas O. Falk

The German government has openly been contemplating an end to Nord Stream 2 for the first time since its construction. Rightfully so. Alternatives to the pipeline already exist. Most importantly, however, Berlin would finally penalize Russia efficiently.

The Nord Stream 1 Agreement

On September 8, 2005, Germany and Russia sealed the agreement for the pipeline’s construction at the bottom of the Baltic Sea. The agreement between them was finalized under Chancellor Gerhard Schröder, who, one year earlier, had called Putin a “lupenreiner Demokrat,” a flawless Democrat. It is a sentence that has not aged well, just as the fact that once Schröder lost the election a few days later to Angela Merkel, he accepted a well-paid position within the Nord Stream Group. To this day, he calls Putin a dear friend and occupies key positions within Russian state-owned companies.

Nord Stream 1 has been in operation since 2012. The construction of a second pipeline was planned quickly afterward, this time under CDU leadership, and today Nord Stream 2 is nearing completion.

German-Russian Friendship?

Although Putin, in his speech in 2001 in the Bundestag, allowed Germans and Russians to dream of a new friendship, Putin was criticized as early as 2005. His authoritarian traits were too prominent. However, German naivety hoped that these traits would change for the better and that Putin could turn towards Europe as a democracy and as a friend of the West.

Of course, it did not happen that way. Putin, a former KGB agent who called the fall of the Soviet Union “the greatest geopolitical catastrophe of the century,” waged war in Georgia, Ukraine, Syria, annexed Crimea and rigged elections in Europe and America. Opposition and regime critics died mysteriously domestically, as in other countries, or were poisoned, most recently, Alexej Navalny.

The Navalny Poisoning

At first, even the poisoning of Navalny did not seem to shake the German commitment to Nord Stream 2. Instead, Chancellor Merkel assured that Nord Stream 2 ought to be finished. The government concurred that the Navalny case and the pipeline should be handled separately. Meanwhile, however, the mood has changed. Foreign Minister Heiko Maas was the first top German politician to clarify that the Navalny case could well impact Nord Stream.

The core argument of those who seek to finish building the pipeline has always been that stoppage will harm German interests, as, without Nord Stream 2, Germany’s increasing gas demand would not be covered in the future. Moreover, natural gas for German consumers is said to become more expensive without Nord Stream. And indeed: the drying up of European sources and increasing demand will result in a gas deficit of 120 billion cubic meters within 20 years.

An Alternative to Nord Stream 2

Such a gap needs to be bridged. Hence the Nord Stream 2 pipeline. However, an alternative already exists: liquefied natural gas (LNG). LNG charging stations around the world already exist, including a total of 36 within the EU. Germany is currently building its own. Right now, 40 percent of the gas demand in Europe could already be met with LNG.

Meanwhile, the benefits of Nord Stream remain inconclusive. Proponents of Nord Stream argue that Nord Stream 2 will save consumers billion euros every year. However, different studies indicate that Nord Stream 2 will reduce the gas price by a maximum of five percent in ten years, while others estimate the savings even lower.

With the risk that energy prices would rise by a few percent in a pessimistic scenario, Germany could certainly survive an end of Nord Stream 2 and rely more on liquefied gas, which, unlike the Russian supply, liquified gas comes from all over the world. Germany could freely choose and switch suppliers, and it would be more independent.

Nord Stream is About More Than Just Money

Most importantly, however, Nord Stream is not just about monetary saving, but about security interests. To this day, Putin has remained unimpressed by European sanctions – the Navalny incident has proved that once again. However, losing Europe and particularly Germany as customers could be a message even the Kremlin couldn’t ignore.

Angela Merkel’s two-pronged policy on Russia, of sanctions, on the one hand, and maintenance of the pipeline projects on the other, has failed. For once, Germany ought to not merely pay lip service but make peaceful Russian intentions its sine qua non. Hence, the most recent Russian crime should not be left unanswered, even at the cost of exiting the pipeline project.