The Nord Stream 2 pipeline will be difficult to block. After the consent of Germany it is possible to start construction on the territory of the European Union. Meanwhile, Russia is testing the patience of the West, through the unexpected organization of military exercises on the future pipeline route – writes Wojciech Jakóbik, editor-in-chief of BiznesAlert.pl.
BiznesAlert.pl was the first in Poland to announce that the Russians decided to start fleet exercises within 18 km from the territorial waters of Sweden, in international waters between the Danish island of Bornholm and the Swedish island of Øland, i.e. near the planned Nord Stream 2 route, the contentious gas pipeline from Russia to Germany with a capacity of 55 billion cubic meters, which Gazprom wants to build by the end of 2019.
It happens that it was the Swedes and the Danes who raised concerns about the influence of the gas pipeline on security in the Baltic. The Swedish press reported the fear of the local armed forces against „little green men” in Gotland, or in general against the threat of unconventional actions of the Russian armed forces using the pretext of constructing Nord Stream 2. Denmark, on the other hand, adopted a law that allows blocking the construction of the section in its territorial waters for security and foreign policy reasons. Theoretically, such action will involve a revision of the Nord Stream 2 route and a delay that can be estimated from several months to several years.
It is not known whether the unexpected exercises of the Russians near the Nord Stream 2 route are the basis for NATO’s reaction. The Alliance reacted to numerous incidents involving the Russian fleet, which in the past was accompanied by energy investments. Its exercises made it difficult, for example, to build a NordBalt power connection from Sweden to Lithuania. Activity in the waters under which Nord Stream 2 is to be located is to meet the concerns voiced by the Scandinavians.
Perhaps Russia is just probing their reaction with the knowledge that these countries are hesitant to accept a unambiguously decisive course towards Moscow. Norway and Denmark were together with Poland supporters of including the security aspect of the raw material supply route to the NATO strategic concept at the summit in Warsaw.
Moscow’s operation is perhaps more assertive thanks to the set of consents needed to build a gas pipeline on German territory. Theoretically, it can move. The commencement of the construction of the German section may make it difficult to get Nord Stream 2 under the gas directive, which the European Commission wants to amend. This is potentially the only way to block a project. However, several conditions have to be met to achieve this goal.
If the revised gas directive does not include a loophole that would not allow Nord Stream 2, which BiznesAlert.pl wrote about, which Germany will probably try, then the next element of the dispute will be the definition of projects to be applied. It is about new projects and the European Council will come to a conclusion as to how to determine it. The dredged Nord Stream 2 will be more difficult to consider as a “new” project, although it is not impossible, because for example, prof. Jerzy Buzek proposed that the directive should apply to all projects started after November 2017.
The gate, which BiznesAlert.pl wrote bout, is the unspecified rules and deadline for granting derogations. The European Council’s lawyers call for this hole to be fixed and for clear criteria to be set and the date for the release to be granted. These at the current stage relate to investments made before the amendment come into force. It is not known whether Nord Stream 2 will be built before the adoption of directives. If not, theoretically, it will not be able to count on derogations, but the European Council will continue to fight for it, they could also include this project, which will be one of the main concerns of the Ministry of Energy. Regarding the criteria, it is likely that an exempt investment would have to strengthen energy security or support market development. These are not met by Nord Stream 2. In turn, the period of the 5-year derogation would not satisfy Gazprom, which calculated the project for 50 years. The company would have to revise the investment management model before getting a refund.
The very opinion of European Council lawyers favorable to the regulation of Nord Stream 2 is a positive signal from Poland’s point of view. The body, which has previously issued favorable opinions for the project, has now admitted that it is the basis for its subordination to EU regulations.
Last chance to block
If the Directive covered Nord Stream 2 and did not give it the right to grant it a derogation, i.e. exemption from provisions imposing antitrust law, the European Commission would ask the Member States for a mandate to negotiate with Russia the conditions for its implementation. This would involve the necessity of long-term negotiations of changes in the Russian law, i.e. probably with the delay of the project. If the Russians do not want to talk, the European Commission will have the right to block the project. If the compromise negotiated by the Commission is not satisfactory, it will not be ratified by the European Parliament. Here is the long road to the potential blockade of Nord Stream 2, which is vaguely looming on the horizon.
Another field of action comes with the growing activity of the Russian fleet at Nord Stream 2. Confirmation of Scandinavian fears justifies the reaction of NATO. The Swedes have already consulted the potential impact of the project on their security with NATO’s NATO Energy Security Center of Excellence. Theoretically, Nord Stream 2 could be used as a pretext for hybrid activities involving unmarked military forces, for the location of listening equipment and other activities analyzed by strategists from the center in Vilnius. The problem is that although the military have no doubts about the nature of Nord Stream 2 and articulate it clearly without dictaphones, the decision is made by politicians who have doubts.
In turn, the threat of US sanctions may increase the cost of the project through more expensive loans, but even if the restrictions came into force without consulting Europe, which the Americans have not yet decided, would not necessarily be effective, as we wrote in BiznesAlert.pl. Perhaps the operation of the Russian fleet in the Baltic Sea is a new reaction of the United States.
It’s time for NATO’s response
The fact that Nord Stream 2 corrupts Europe means that even if it can be recognized as impertinent military exercises on the route of the disputed gas pipeline, it will not cause a reaction in the West. Such a test result currently carried out by Russia will clearly be in the favor of the regime of Vladimir Putin, elected president once again in the national ritual of fake elections.
Poland must continue to strive for the favorable shape of the gas directive, which will at least delay Nord Stream 2 and is desirable from the point of view of the cohesion of European law throughout the territory of the European Union. The problem of Russian exercises near Nord Stream 2 should meet with the North Atlantic Alliance’s response.