North Stream 2: Towards The Full Germanization Of The E.U.

On July 21, Germany and the United States announced that they had reached an agreement on Nord Stream 2. To avoid criticism and get out of the stalemate, the agreement between Merkel and Biden established a new partnership between Berlin and Washington on climate change and energy, which aims at reducing energy dependence on Russia by accelerating the green transitions of countries in Central and Eastern Europe. The understanding matured during Merkel’s last visit to the White House, but most likely also in Geneva, during the direct talks between Biden and Putin. Of course, the U.S. president could not afford to announce the American ‘surrender’ with the visiting Chancellor at the White House.

To help support the green transition of Kyiv, Germany has committed to establish and administer a so-called “Green Fund” dedicated to the country, providing an initial donation of $175 billion, and working towards generating at least one billion euros from other sources, including the private sector. In addition, Ukraine will receive another 70 million from Berlin to abandon coal and support bilateral energy projects. Finally, Germany pledged to monitor the situation in the region and intervene, always acting through E.U. sanctions, in the event that Russia might “use energy as a weapon or launch further aggressive acts against Ukraine.” This, incidentally, represents an enormity in form even before in substance, because in a bilateral agreement with the U.S. and Berlin, it commits the entire E.U. to adopt sanctions against any Russian conduct caused by its bilateral partnership with Moscow. The E.U. has now fully become a German protectorate, full stop.

Not to be underestimated however is the fact that no “kill switch” clause has been implemented in the ruling mechanism of the new pipeline. The Germans have rejected the U.S. request to predispose the automatic suspension of the gas flow in the case of aggressive acts by the Russian side, with the excuse that it is a private initiative, in which the federal government can not interfere. Concretely, this means that no true measure has been designed to restrict exports of Russian energy. And it is legitimate to doubt that the Berlin government would really put Ukraine’s security interests first. This was understood by The Wall Street Journal, which spoke of a deal “embarrassing for its weakness”, to the point that “you can hear laughter in the Kremlin.”

However, the U.S. and Germany agreed to consider that Russian gas continues to transit through Ukraine beyond 2024. This is the part of the agreement that also includes Russia, since it cannot formally be presented as a U.S.-Germany-Russia three-way agreement. But Merkel and Putin discussed it personally on the phone. In practice, the Russian President is committed to being good for a decade. He can enjoy a strategic victory without even having to try to win. It will be enough to wait for the new structure to take its course and produce the desired geopolitical effects.

The weakness of the agreement is in fact that Russian gas will no longer need to pass through Ukraine, but Kyiv should be reassured by the commitment of the U.S. and Germany to ask Moscow to continue paying it the two billion annual transit rights. Expecting such courtesy from Putin might seem a bit naïve. It is clearly a halter agreement for Ukraine, whose economic and geopolitical interests are in fact being sacrificed, but it is also a wake-up call for Poland and the Baltic States. And in Kyiv, but also in Warsaw, they did not take it well at all. Kyiv, for its part, has called for formal talks with Brussels and Berlin to discuss its concerns, invoking a clause in its agreement with the E.U. on political association and economic integration. In addition, Ukrainian Foreign Minister Dmytro Kuleba signed a joint statement with his Polish counterpart, saying that efforts to assuage the concerns of the two countries “can not be considered sufficient.” The Ukrainian-Polish statement says that the decision of U.S. President Joe Biden to stop opposing the pipeline “created a political, military and energy threat to Ukraine and Central Europe while increasing Russia’s potential to destabilize the security situation in Europe, thereby perpetuating the divisions that have characterized  NATO and the European Union so far.”

Luca Giulini