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The Nord Stream 2 pipeline was physically damaged, but I think that before that it had been irrevocably destroyed by Russia’s decision to attack Ukraine – said Thomas Bagger, German ambassador to Poland in an interview with BiznesAlert.pl.
BiznesAlert.pl: What are your first impressions of Poland?
Thomas Bagger: Energy policy is one of our key areas of interest in Poland. The top issue on the agenda are the quickly changing relations due to the Russian aggression on Ukraine. We all need to adapt fast to the new situation. Our countries are both undergoing a transformation of the energy sector. We do not fully agree on this, but there is also great potential for cooperation. However, it will not be used on its own. We need commitment from both sides. Our cooperation is also important from a crisis management point of view, we must eliminate potential conflicts and make the most of the potential of our relations for mutual benefit.
From the perspective of a diplomat, how does the real dialogue between Poland and Germany look like when it comes to officially communicated relations, which are often not the best?
We don’t just look at press releases. Of course, this is part of our work, but our relationship is like a pyramid. At the top there are strong winds, and sometimes storms, but at the bottom there is peace. Our debates are intense, but the fact that our strong economic ties are deepening means that these storms at the summit do not affect everyday relations at the lower level: cultural exchange, cooperation between cities, and other areas.
We have a long history of the so-called eastern policy in Germany and Poland. Poles may fear that despite Russia’s invasion of Ukraine and many positive developments in Berlin, Germany may want to return to the status quo. Are their fears justified?
Relations with Russia are at the heart of relations between Poland and Germany, because they affect trust or lack thereof. It’s nothing new. We have centuries of history written into our identity. However, the current crisis has led to changes called by Chancellor Olaf Scholz “Zeitenwende”, or a “turning point”, which means we are starting to see eye to eye. We would like it to be understood in Poland that Russia’s attack on Ukraine was a shock to the Germans, the political establishment and public opinion. Since the illegal annexation of Crimea and the war in Donbas have we never considered relations with Russia to be simple. We knew that they were difficult, but there was a belief that an intensive economic partnership would stabilize Russia’s behavior, restrain it. That’s where we got it wrong. We overestimated the economic rationality behind Vladimir Putin’s actions. This was a mistake by Germany, which must now be corrected. The deep gas interdependence seen in the example of Nord Stream 2 was an obvious mistake, because it increased the costs of changing the energy sector and diversifying supplies to Germany. However, we believe that Russia starting the war means it has entered a path of self-destruction. Putin has destroyed the Russian business model. Germany imported about 55 percent of gas, 50 percent of coal and 35 percent of oil from Russia. Now these Russian fossil fuels are not imported at all and there is no return to the past. In the past, these economic ties stabilized political relations, but this trust has been destroyed and it will not be easy to rebuild it. This does not mean that Russia will disappear. There will be some relations with it beyond those related to the war, but in a completely different formula.
Unknown perpetrators sabotaged the Nord Stream 2 pipeline. Does this mean that it should not be rebuilt?
Yes. The Nord Stream 2 pipeline was physically damaged, but I think that before that it had been irrevocably destroyed by Russia’s decision to attack Ukraine. This move undermined everything Germany was hoping for in return for maintaining economic relations with Russia.
Chancellor Olaf Scholz believes that it is necessary to maintain contact with Russia. Is he misunderstood when some in Poland believe that the Chancellor is demanding a return to the status quo?
There is no return to the status quo ante. There is no return to the German – Russian relations before the Russian aggression in Ukraine in the energy sector or in other economic areas. Almost all German companies have left the country and there is no prospect of their return in the foreseeable future. The Chancellor’s position that he will continue to talk with Russia, which he spoke about when commenting on his telephone conversations with Vladimir Putin, is something different than the announcement of a return to cooperation. This is not our choice, but a necessary consequence of Russia’s actions in Ukraine.
For Poles, the derusification of the Schwedt refinery is an important signal of changes in Germany. Should this be done? What is the agreement between Poland and Germany on this issue?
The refinery is one of Germany’s energy facilities that has Russians as shareholders. These include not only the Schwedt refinery, but also, for example, gas storage facilities in Rehden. These assets have been placed under trust management, so Rosneft Deutschland cannot participate in business decisions and manage the plant. However, this legal solution is temporary and can be extended. The German government placed Rosneft’s stake under such management, and therefore under the control of the Ministry of Economy and Climate Protection until the spring. Then there will be a decision on whether to extend this formula or to change the shareholder in a more formal way. No decision has yet been taken on this matter. However, in the talks between Berlin and Warsaw, it is clear that the issue of the lack of Russian shares and the lack of Russian revenues is a precondition for cooperation on deliveries to the Schwedt refinery or for further involvement of Poland in this project.
Is Germany prepared to impose an oil embargo on Russia?
This is another topic that we can discuss together. I think that both sides have important interests in relation to the supply of products to western Poland and east Germany, especially the refineries in Schwedt and Leuna. We have intensive discussions on how to make these two interests converge and help each other to ensure security of supply.
Do we have a deal on this? Poland and Germany were supposed to abandon oil supplies from Russia by the end of 2022, but this did not happen in our country.
There is a memorandum of cooperation between ministers Anna Moskwa and Robert Habeck, and talks on ensuring security of supply are underway. The security of supply is crucial. We have always said that Russia must bear the costs and consequences for its aggression against Ukraine, but also that we cannot harm ourselves more than Russian suppliers. This is a matter for a discussion, but I believe that we will find a common solution.
The energy transition is underway, but we are more experienced after the Russian attack in Ukraine. What are the implications for Energiewende in view of this event?
Energiewende’s roots go back to the anti-nuclear movement in the 1970s. Our society, has a different approach to nuclear energy than the Poles. This is the effect of socialization in other conditions. So, when it comes to the war and energy crisis we make our decisions on the basis of how we look at energy. I understand that in Poland, a very important aspect of the energy transition is the pursuit of security of supply and energy independence. Therefore, the decision to build two large nuclear power plants and the potential development of small nuclear reactors in the future is important for Poland. In Germany have a different perspective. Due to the crisis we decided to extend the lifespan of nuclear power plants for a few months, until April this year. We have also extended the operation of some coal-fired power plants until 2024, which had been transferred to the reserve. We want to have a supply of energy at a critical moment, when it is not known whether the diversification of gas sources will occur quickly enough. But in the long run, we will continue to focus on developing renewable energy even faster than before Russia’s attack on Ukraine. So we have a similar approach to the development of RES, and there is a lot of potential here. At the same time, our approach to nuclear power is different. This is also due to a different approach of the public opinion, which I spoke about. The whole debate about the energy transition in Poland is about security, and in Germany it is about the climate catastrophe. We have a broad social consensus that we should not go back to the atom. Gas was supposed to be a transitional fuel, so we need to develop renewables faster. Poland and Germany both want to phase out coal, Berlin wants to do it quicker, but when it comes to this matter we are part of the European-wide effort to decarbonize.
Will we be able to respect each other’s approach to energy? Should Poland be afraid of Germany’s reaction to its nuclear program?
We should not only respect our approach to energy, but also try to understand where it comes from. From the Polish point of view, it is difficult to accept that Germany is against returning to atomic energy. I hear a lot about how Germany was allegedly naive or had bad intentions when it comes to its gas dealings with Russia in the past twenty years. However, looking at Germany’s energy policy and the decision to withdraw from the atom, then to move away from coal, you can see that a transitional solution was needed and it had to be gas. It is not necessary to agree with this decision, but it is easier to understand where it all came from. Similarly, Poland’s attachment to coal stems from its history of economic policy and resource availability. Poland should not expect applause from Germany because of its nuclear program. It should not come as a surprise to Poland that the mandatory environmental impact assessment and consultations have been criticized, and instead Warsaw should look at this as an opportunity to ensure greater transparency of the project, to provide information on actual plans and to address legitimate concerns. This does not pose a threat to the Polish choice. Neither do the opposition of the German public opinion or the lands. However, Poland could look at these concerns as something that, in the spirit of good neighbourliness, should be taken into account. I will add one more point. When German companies began to invest in Poland after the fall of the Iron Curtain, entry into the European Union, an important driver of their involvement was a well-educated and cheaper labor force. Now investors want a zero carbon footprint. Poland, in the interest of its own economic development, will need supplies of green energy in order to attract such investors. But the decision will be Warsaw’s.
What are the prospects for the hydrogen economy in Poland and Germany?
A large part of Germany’s effort to diversify its gas supply is the rapid expansion of LNG import infrastructure, i.e. floating storage and regasification units (FSRU), the first two of which have already reached Germany. All of this infrastructure is being built with the hope that it will be used to import hydrogen in the future. The efforts to secure the future of the Schwedt refinery include a major transformation package that will also allow it to be used in the hydrogen economy. Even though we are at a very early stage in the development of the hydrogen industry, a large part of our efforts to diversify supplies are also directed towards the use of hydrogen on a mass scale. When it comes to the demand for hydrogen in Germany, we are only able to cover about a fifth of the demand generated by domestic production. So we’re going to have to import a lot of hydrogen. We have started import discussions with potential suppliers. Some of them currently deliver fossil fuels, but perhaps in the future they will become suppliers of green hydrogen. Poland has potential in the field of research and development of the hydrogen economy. One of the areas where we should do more in bilateral relations is the development of hydrogen in the energy industry, but not only. We want to develop cooperation using hydrogen in relations with cities and private companies. Some of them are very advanced and want to cooperate with Germany. Together we can do a lot in this area.
What is the scope for cooperation on the European arena?
We sit at the same table in Brussels. This is the beauty and at the same time the “nightmare” of European integration. This is a complicated process of seeking compromises, especially since there are already 27 countries, and not six as in the beginning. On the other hand, no one can impose their own ideas. We have to reconcile 27 different trajectories to chart a common course. The big picture at the Russian attack on Ukraine is that Europe is experiencing a significant spike in energy costs. This is a challenge from the point of view of our European industry in comparison with our partners-competitors in the USA and Asia. This is especially important for the economies of Poland and Germany, which are so closely linked and in which industry plays an important role. In the case of industry, energy costs represent a very large part of the overall cost of production. The question of how to move away from coal and how to deal with the social consequences is being asked in Poland, but also in the mining regions of eastern Germany. At the same time, although the long negotiation process on climate policy is over, Poland needs a little more time. In Poland, the consensus on supporting Ukraine is stronger in the society, among other things, because of geographical proximity and history. Germany, on the other hand, has a much stronger consensus on the climate crisis than Poland, where citizens are much more divided on the issue. In Brussels we may have a different approach to these issues, as we are dealing with electorates that have varying opinions. However, it is worth looking at the example of France, which has been developing nuclear energy for decades and has a different approach than Germany, and yet we are trying to reach a consensus on the energy transition and investments to support them across Europe.
Is there room to use the Weimar Triangle?
In the fundamental sense this space exists. The war in Ukraine changed the political constellations in Europe. I stressed during talks in Berlin that Poland was playing a new, central role in mediating assistance to Ukraine. In the future, it will also play a greater role in the European Union. Poland is currently experiencing a “strategic moment” not only because of its geographical location, but also because Brussels and Berlin realized that it has not been listened to carefully enough. However, this is not enough on its own. To take advantage of this “strategic moment”, Poland should present constructive ideas on the future of Europe, on issues related to energy, but also with regard to Ukraine: How to bring it closer to the European Union, and how to connect it with the European energy and transport infrastructure. Our task will be to create space for Poland to be heard and to play its part. This is not about pointing fingers, but about more productive ways of working together. Therefore there is more room to exploit the Weimar Triangle, which brings together the three most important players in the European Union. Not because we are the same, but because our differences are only the starting point for further work, not the end of it. However, it is not enough for Poland to say that it was right, because this will not replace proposals for solving problems in the future.
One of the reasons for our rapprochement is a common sense of danger. Are we facing an existential threat to the West?
That’s a very good question. I’ve been thinking about this for years. I grew up in west Germany when it was a NATO front country like Poland is today. West Germany had an army of 500,000 men, military spending of 3.5% of GDP, and 300,000 U.S. troops. At that time, we felt an existential threat from the Soviet Union. After the peaceful reunification of Germany in 1989, as Helmut Kohl said, for the first time in history, we were surrounded only by friends. Unfortunately, in the 1990s and later, we lost all sense of danger. Hence came a reduction in military spending, a focus on exports and globalization, and a political hope for change through trade (“Wandel durch Handel”). However, in recent years, as a result of subsequent events, such as the war in Georgia in 2008, Putin’s return to the Kremlin in 2012, the war in the Donbas, the annexation of Crimea in 2014, we slowly began to realize that this happy time in history is not given once and for all. It is a pity that the shock of Russia’s invasion of Ukraine was needed to bring about a “Zeitenwende”, that is, a fundamental change in policy towards Russia, Ukraine, energy and defense. This is not only a political change, but also a change in the mentality of the Germans. The polls show growing support for NATO, for allied guarantees, for providing protection to allies. I believe that existential questions are returning to the debate in Germany, and with them existential threats. In Poland they never disappeared. They have yet to return to Germany. This is why all these talks about suport for Ukraine take more time in Germany. However, this does not mean a different path. Our paths are similar and we have the same goals. Russia cannot win this war. Ukraine must win. Germany is involved in this.
Could it be that the approach of Poles to the energy transition is changing similarly?
The impression that we have understood how the world is changing carries the risk of believing that we are right. I know that after 1989 it was sometimes a German fault. However, it is known that history does not develop linearly and sometimes has different twists and turns. Poland is right to say that its sceptical attitude towards Russia was right, and Germany may have been too naive or too slow to react. However, being convinced of one’s own right does not mean having an idea for the future. On Ukraine and Russia, we want to bring our position closer to Poland, and even if this is seen as too slow, it is a large-scale and, in fact, quite rapid process. Germany, along with Poland, is one of the largest suppliers of all kinds of assistance to Ukraine in the European Union. This makes us natural partners in this area, as well as on Ukraine’s road to Europe. Although our societies have different approaches to the energy issue, it would be good advice for the Germans not to challenge Poland for it taking longer to transition, but instead seek room for cooperation. There is great potential in this area, even if we do not completely agree on everything.
Interview by Wojciech Jakóbik
