The Kremlin is trying to imply its opponents are guilty of its own vices. It has again accused the U.S. of waging a hybrid war and pursuing a hostile policy against Nord Stream 2, because it is losing on all fronts and will not have many reasons to celebrate this Christmas. So it is acting out to ruin other people’s Christmas just like the fairytale Grinch – writes Wojciech Jakóbik, editor in chief at BiznesAlert.pl.

Putin’s same old propaganda

The Kremlin’s same old propaganda made headlines claiming that the U.S. was using sanctions against Nord Stream 2 as political leverage, because the fuel from the contentious pipe would be cheaper than LNG deliveries from America. “This benefits Europe’s economy, and especially Germany’s,” Putin argued during his annual press conference on which Mariusz Marszałkowski wrote a detailed report. “The liquefied gas from the United States is 20 percent more expensive than our pipe gas,” Putin said. However, it depends which Russian pipe gas he had in mind. The gas delivered to Poland on the basis of the Yamal contract may be even four times as expensive (400 percent) as LNG on the spot market. That is after simplifying the price of the Yamal gas and assuming it would cost USD 400, and buying LNG on the spot market for USD 100, which is very possible. Putin knows that the public opinion does not pay attention to details when it comes to the discussion on gas prices and security of supply, so he stays on the same old message that LNG from the US is not economically sound, so Americans are forcing it on Europe.

However, it is Gazprom that uses force to achieve the Kremlin’s political goals, even at the expense of the company’s own interest. An example of this was when Gazprom stopped delivering gas to Ukraine after Russia illegally annexed Crimea and attacked the eastern part of the country. This resulted in the removal of Gazprom from the Ukrainian market, even though up until 2015 the country had been the second biggest importer of Russian gas in Europe, right after Germany. Now Russians need to pay more to book new capacity in Ukrainian gas pipelines, which they still need, because their project to replace gas transmission via Ukraine with Nord Stream 2 failed completely and strategically, as American sanctions halted it for a year. Russia’s Gazprom doesn’t want to be predictable, to make it impossible for Ukraine to plan expenses, so it does not book additional capacity during the cheaper, annual auctions, and instead pays more and buys capacity during monthly auctions. This goes against the company’s interests, but is in line with the Kremlin, which wants to continue destabilizing Ukraine despite the failure of Nord Stream 2.

The Nord Stream 2 strategic goal failed

Even if Russia manages to do the impossible and finish Nord Stream 2 despite the US sanctions, which may be extended even in 2020, its strategic goal was not achieved. Russian propaganda stories on how finishing this contentious gas pipeline will be the best answer to “America’s hybrid war”, won’t hide this truth. By the way, it is Russia who is waging a hybrid war against America (e.g. Russian hackers attacking American institutions in December 2020), and even against its own citizens, which is evidenced by the attempted murder of Alexey Navalny, who collected evidence of the crime himself by exposing his would-be killers in a sting operation, during which he duped one of the people who developed Novichok into revealing the details of the FSB operation over the phone.

Russians are losing on all fronts, including Nord Stream 2. At the end of 2019 Russia signed a temporary agreement to transfer gas via Ukraine until 2024. In my opinion the deal was signed only because Nord Stream 2 had not been finished. Moreover, it was also possible because it ensures a minimum volume of gas would go through Ukraine, which will allow Kyiv to decrease the dependence of its budget on the transit fee in the next four years, so that once the agreement is over, the country will be ready to get by without the transit. Ukraine is under no illusion. Once Nord Stream 2 is finished there will be no gas transit via its territory.

According to ICIS, as at 18 December, the booked capacity in Ukraine for January shows that Gazprom reserved additional capacity, apart from the volume it is obliged to use as part of the temporary agreement. The deal, signed at the end of 2019, says that in 2020 Russia had to transmit at least 60 bcm of gas and then 45 bcm each year until 2024, included. Another alternative Russia has up its sleeve is the Turkish Stream gas pipeline, whose Serbian section is being filled with gas and is supposed to start regular deliveries in the New Year. The gas pipeline, which runs across Turkey to Europe will allow Russia to limit deliveries via Ukraine and the Balkans. The project is forging ahead. The Turkish Stream, whose capacity will be 15.75 bcm annually, was completed in January 2020. The section to Serbia is starting to pump gas, but the one between Serbia and Bulgaria is delayed, so at this point the Turkish Stream  will be able to block gas deliveries via Ukraine to Serbia (2.135 bcm in 2019) by redirecting them to the Turkish pipeline. It remains to be seen how the American sanctions will impact the entire project.

The Russian propaganda will also not change the fact that the latest, hostile actions, such as the cyber-attacks on the U.S. right before Christmas, and the new facts on the attempted poisoning of Navalny, may lead to more sanctions being imposed on the Kremlin. Americans are already considering introducing new restrictions, and the case of the Russian opposition leader is causing a big stir in Germany as it undermines the positive message about the eco-friendly gas from Russia and a united front against American meddling in the continent’s inner business. The debate about Navalny in Germany may get out of control so much, that Angela Merkel’s new ruling coalition, e.g. with Christian democrats and the Greens, may want to at least introduce a moratorium on Nord Stream 2, which may not be ready before the government changes. The pipeline will certainly not be ready before the year end, but the German section may be finished. The Danish part, over which U.S. sanctions were imposed, has not been finished yet, and if the American restrictions are extended, they may make it impossible to complete the construction or use the contentious pipeline.

Spoiler alert

To use a metaphor – Vladimir Putin probably knows he was naughty and won’t receive any presents this Christmas, so he is trying to  spoil the holiday for everyone else, just like the Grinch, a green creature from Dr. Seuss’s iconic book that was brought to the screen a few times. The Grinch was lonely and did not like Christmas, so he wanted to steal other people’s presents to spoil all the fun. His plans failed, because it turned out Christmas wasn’t just about presents and the holiday was great without them anyway. Putin’s story will end similarly – whatever he does, his schemes will not succeed and he will be left with nothing but Western sanctions imposed because of the Kremlin’s aggressive policies.