Nord Stream 2 Completed: The Game is Over

Nord Stream 2 is likened to an "energy gamble" with two main players, Russia and Germany, in which Germany's political will plays a particularly important role in helping this project overcome numerous controversies, opposition, and even threats of sanctions from the US and the West.

The Nord Stream 2 project is completing its final kilometers. Photo: Russia Energy

Germany's choice

In a Kremlin statement announcing the progress of Nord Stream 2, Germany was mentioned with great respect: “The Russian President appreciates the German side’s steadfastness in completing this project – a project aimed at strengthening Germany’s energy security.” But even without Russia’s praise, public opinion could clearly see Germany’s particularly important role in the Nord Stream 2 project. This includes the significant efforts of Chancellor Angela Merkel until her final months in office, when she visited Washington and received President Joe Biden’s approval to complete the gas pipeline project.

Much has been said about Russia's "mystical allure" to the German elite – also known as the Russlandversteher. Angela Merkel is no exception, despite disagreements over Ukraine and Russian influence in Eastern Europe. However, Merkel is particularly confident in the role of Russian gas in Germany's energy security, which is why Germany made a clear and consistent choice from the outset with the Nord Stream 2 project.

Like Nord Stream 1 (completed in 2011), the Nord Stream 2 project will supply natural gas via 1,200km of pipeline under the Baltic Sea, starting in St. Petersburg and landing ashore in the North Sea off the coast of Germany. The total annual capacity will be approximately 110 billion cubic meters.³Nord Stream 2 allows Russia to bypass the route through Ukraine. Dismissing concerns that the project would increase both Germany and Europe's dependence on Russian gas, and diminish Europe's deterrence of Russia on regional issues such as Crimea, Germany argues that gas through Nord Stream 1 or 2 makes no difference.

But clearly, Germany's choice was based on calculations about finding a cheap, reliable energy source, and in this respect, Nord Stream 2 is superior to the pipeline system through Ukraine. Many people liken comparing Nord Stream 2 to the pipeline system through Ukraine to comparing fiber optic cable to copper cable! After five decades of use, the pipeline through Ukraine has leaked to the point that experts estimate it will cost 6 billion Euros to repair. In addition, the Russian gas supplier Gazprom can transport gas to Germany at a lower cost and with less complexity, eliminating the 3 billion USD/year transit cost for Ukraine.

Chancellor Angela Merkel fiercely defended the Nord Stream 2 project. Photo: Reuters

Germany's choice is very practical given the development of its domestic energy sector. Next year, Germany will close its last nuclear reactor, and plans to end coal-fired power generation by 2038. Although the share of renewable energy in Germany's electricity mix is ​​gradually increasing, it has not yet reached 50%. This means Germany will have a significant energy gap, and natural gas is part of the strategy to fill this gap. Currently, natural gas is also the energy source for heating approximately 45% of households in Germany.

Opponents of the Nord Stream 2 project have argued that Germany could receive gas via the current eastern route through Ukraine, or through Belarus and Poland, or liquefied natural gas from the US via Turkey and other European countries. But in the assessment of German leaders, none of those options promised the simplicity and reliability of Nord Stream 2.

Ukraine's uncertain future

In the economic and political game of "Nord Stream 2," the biggest loser is Ukraine, and that loss is evident in both economic and political aspects. As a modern, high-capacity gas pipeline system running directly from Russia to Germany, Nord Stream 2 will weaken Ukraine's role as a regional gas hub. The reduction in the volume of gas transiting through Ukraine by Russia is expected to cost Ukraine up to $3 billion per year in revenue.

Moreover, Ukraine has also lost a crucial political weapon for self-defense against Russia's actions on its eastern flank. Therefore, before the completion of Nord Stream 2, Ukrainian President Zelensky declared it a "dangerous political weapon," threatening Ukraine and Europe. Last weekend, during German Chancellor Angela Merkel's visit to Ukraine before Merkel's trip to Russia, President Zelensky requested that Merkel pressure Russia to extend the gas transit contract with Ukraine for another 10 years after it expires in 2024.

To reassure Ukraine, Germany pledged to impose sanctions on Russia if it used energy as a weapon to carry out future acts of aggression against Ukraine. However, as President Zelensky feared, this commitment was rather vague. Furthermore, the proposal for Russia to extend the gas transit contract with Ukraine after it expires in 2024 remains open.

German Chancellor Angela Merkel reassured Ukrainian President Zelenskyy during his visit last weekend. Photo: France 24

Although the two leaders, Angela Merkel and Vladimir Putin, had a very serious discussion on this issue, Vladimir Putin used a delaying tactic by stating that Russia needed to assess the scale of European fuel demand before signing a transit contract, because Russia could not sign a supply contract with consumers in European countries without one.

According to analysts, although Ukraine is considered by the US and the West as an important factor on the eastern flank in the response to Russia, it does not yet have enough weight for the "big players" to accept the geopolitical trade-offs. One detail that is often mentioned is that when US President Joe Biden and Russian President Vladimir Putin confirmed they would discuss the Ukraine issue at their Geneva summit in June, the US President refused an offer to meet with the Ukrainian President before the meeting.

The Nord Stream 2 project is said to be 95% complete.

On the Russian side, President Putin also showed no interest in meeting with Zelensky. Therefore, although Prime Minister Angela Merkel pledged to do everything possible to ensure Ukraine's security until the very last moment before leaving office, Ukraine remains very concerned about its uncertain future after Nord Stream 2 becomes operational, depriving the country of a crucial economic and political weapon.

But whatever Ukraine's concerns may be, the Nord Stream 2 deal has now been decided, and it's not an exaggeration to say it's a major victory for Russia. Even the US, after years of opposition and sanctions, has finally had to admit that there's no way to stop this project. All parties – whether they like it or not – are forced to bet on Russia's commitment to operating Nord Stream 2 as an economic project, not as an economic and political weapon against Europe and against Ukraine itself.