Europe is the new Caspia

05.08.2021

 Last week Kyiv officially called Brussels and Berlin for urgent consultations, referring to Articles 274 and 337 of EU-Ukraine Association Agreement of 2014. 

This historical agreement led to the Revolution of Dignity in Ukraine, when then President Viktor Yanukovych refused to sign it. Shortly after this, Moscow, fearing that the agreement would help to create a transparent Ukrainian economy, integrated with Western Europe, invaded Ukraine.

Today, again, the document is getting symbolic in the same context. In the context of Russian economic policy towards the West. The reason for calling for consultations is the recent US-Germany agreement, concerning the Nord Stream 2 project. The articles used by Ukraine’s foreign minister Dmytro Kuleba concern the issue of energy infrastructure.

The deal, reached between Washington and Berlin on 21 June, basically approves the construction of Nord Stream 2. A gas pipeline bypassing Central Eastern Europe and delivering Russian gas to Germany.

When Germany is Europe

The idea of using gas as a mean to tight Russia with Europe was floating within Russian decision-making circles already before the fall of USSR. The pipeline Yamal-Europe was born out of these plans. Obviously, it was planned and constructed in a particular international situation. Back then, decision-makers in Moscow couldn’t envisage problems with Belarus and Ukraine, and - probably - didn’t have enough technical possibilities to go underwater. Hence, a pipeline going through these former republics. 

Times changed. Moscow realized that the Yamal pipeline may prove problematic. It would allow Ukraine and Belarus to have some leverage towards them. In the end - the pipeline was going through their territories. Minsk and Kyiv proved Moscow right, both capitals were trying to benefit from the pipeline. But Moscow also used gas deliveries as a political leverage towards them.

Slowly a new concept appeared. Berlin - possibly with Moscow suggestion - formulated a new strategy in which Germany is a central hub for gas distribution in Europe. Particularly Russian gas. The idea of building a gas pipeline through the Baltic Sea, that would bypass Central-Eastern Europe is a crucial element of this strategy. 

This concept is beneficial for both Berlin and Moscow. Given the dominating strategy in Europe focusing on clear energy, Germany would become a major controller of delivery of clean fuel to all EU countries. Its central position ensures the control of deliveries to both east and west Europe.

We shouldn’t forget about direct benefits for German establishment. A group of German businessmen, particularly from the banking sector with alleged ties to former DDR secret police Stasi, are employed in the project. Former chancellor Gerhard Schroeder is probably the best know example of Russia’s seductive power. A vocal supporter of the idea of EU’s rapprochement with Russia and Nord Stream project, he was awarded the position of th chairman of the board of Nord Stream AG and later of the Russian state-owned oil company Rosneft.

Russia’s gains are similarly two-fold. Of course, this is an economical gain. Gazprom forces on its partners long term contracts with a secret and elaborated price formula, that ensures a good income for the Russian budget.

At the same time - Moscow deals here with Germany. It is frequent to point out that Vladimir Putin served as an intelligence officer in DDR, hence his instinct to choose Berlin as a primary partner.

But let’s not forget, that after the Versal Treaty Berlin and Moscow worked long and hard to undermine the treaty. While they both were very far away ideologically (and, well, Moscow tried to ignite a revolution in Berlin), in the end they understood, that they are the only allies against all odds. Make no mistakes, there wouldn’t be any parachute units in Russia if it weren’t for German training.

And well, as a Pole I need to mention this. This cooperation led to Ribbentrop-Molotov pact, dividing Central Eastern Europe among the two countries. There were loads of issues that resulted from this pact, but I want to draw your attention to two of them.

Sonderaktion Krakau was an extermination of all intellectuals Germans could find in their occupation zone. Katyn, was a place, where all officers, that could ever lead any resistance, were killed. In this way both countries eliminated the intellectual elements of the country.

Washington wants a piece of a pie

American’s administrations never really cared about Nord Stream. Of course, there were different sanctions imposed by the US, but they never were effective. They were always enough to show that Washington is against Russia’s energy expansion in Europe, but never enough to stop it. And this policy was stable trough all presidents. Donald Trump’s administration was different. But only on the surface. Trump kept talking about delivering direct sanctions, but never signed a document that would result in proper blockade of the project. He left the paperwork for the next president, who has never signed it.

Why, one might ask. This is quite clear - Berlin was always a crucial Washington partner in the continental Europe. All relations with the continent - be it the EU, France, or Poland - were always a function of the relationship with this state. So, if the Nord Stream project was important to Germany, US was not interfering. And when Trump was trying to revisit relations with Berlin, Nord Stream became his target.

But Russian gas exports to Europe are no longer only Germany’s problem. In 2017 the U.S. became a net natural gas exporter for the first time in almost 60 years, mostly thanks to the development of LNG. While Asia is the biggest importer of US LNG, EU is becoming important for this engagement. In 2019 36% of US LNG was delivered to EU countries. According to Eurostat US delivered 12.5 bcm or 3% of total gas imports. However, US was and important LNG deliverer - it delivered 16% of EU’s LNG delivery.

For a long time in the energy sphere between Russia and the US oil was a thing. The main battleground for oil (but not only) was the wider Caspian Sea region, where Moscow and Washington engaged in different deals with countries of the region, to ensure the control over oil transit routes from this area. One might see Baku-Tbilisi-Ceyhan oil pipeline as a symbol of US relative success in this competition.

Time passed. And now Europe is a new competition ground in energy security between US and Russia. 

Already during Barack Obama’s administration there were rumors, that Joe Biden (or rather, his son) was trying to reach deal with Kyiv on importing gas to Ukraine. This would be logical. Ukraine has important gas reservoirs and is located near to the EU countries, that could buy American gas. 

This deal never came into life. 

But what if we look at the current agreement between US and Germany in the context of energy relations.

Biden understood that Russian presence in gas exports to Europe cannot be stopped at this stage. So maybe a market sharing deal could be in order. US and Russia are competing in the gas market, but both are different in subsector approaches. Gazprom delivers gas trough pipelines, based on long term agreements with a price formula. US is important player on LNG market. There gas is delivered mostly by ships and prices are closer to market ones - based on spot negotiations.

So, Washington, Berlin and Moscow could have a market-sharing deal. Germany is a main distributor of gas in Europe, and both Russia and US deliver gas - the former by pipelines, the latter, by ships. 

This is not Europe

When you really think of this, Germans are right, when they claim that the issue of the delivery of gas into Europe is an economic issue. Russia, US and Germany want to benefit from the growing world gas market in Europe. Nord Stream and US attempts to broaden its presence in the European gas market are actions driven by greed.

What they refuse to admit is that these economic actions have security and political consequences.

Moscow for a long time has been advancing a narrative that calls for a “new system of international relation”. This is not a new instrument, Russia constantly, throughout its history was aiming at being a part of a small group of countries, that would decide the fate of the European continent. A part of this approach is presenting certain parts of Europe as “belonging to Russian sphere of influence”. 

The direct expression of this tactic was the concept of “near abroad”, popular in the 90. and at the beginning of 2000. This formulation was used to described former USSR republic, an area of - how Kremlin claimed - exclusive Russian influence. To be fair - all former colonial powers or aspiring powers would address their former colonies in the same way. Just to mention England, which representations in former colonies are not called Embassies but High Commissions or US Monroe Doctrine, that warned against non-us “interference” in the Western Hemisphere. 

However, at certain stage Moscow had to accept the reality. Former USSR republic became independent states with their own policies and approaches (in general, there are - of course - deviations from the rule). Therefore the “near abroad” formulation is not so often present in the official narrative.

It was replaced with more delicate approach. In its dialogue with the West Kremlin weakened its “this is our territory” approach. Instead, it focused on the need for a new structure of the relations in Europe. This is represented by repeated calls to “review the Westphalian order”. Russian diplomats and intellectuals claim that his means a new structure, in which all states are treated as equals.

What they refuse to add is that the Westphalian order, an international structure that we have now, is based on international law and the notion of sovereignty of states. So, concepts that at least to some extent, helped to mitigate the appetite of various powers to change borders. 

To explain this. Abandoning the results of the Peace of Westphalia would mean that we all agree to Russian’s invasion on Ukraine. Since there are no rules that would protect the borders or whole states - everyone is entitled to invade whomever it wants.

In this narrative Moscow diplomats are telling their counterparts from counties west of Oder River “listen, Central Eastern Europe is not really Europe, this is a part of Eurasia”. And when you talk to former colonist countries like UK, France and - well - Germany, they can find a common ground.

How this is all related to Ukrainians protesting the Nord Stream project with the EU and the US?

Well, the US-German-Russia deal on the project feeds into the narrative “this is not Europe”.

While Berlin and Washington think that we are talking only about economics, Moscow thinks about intellectual concepts, that would create future international structures. Agreement between Washington and Berlin plays into the concept, that Moscow is interested in. It just bluntly states - Germany is the center of Europe. The rest of it on the East is expendable.

Nothing changes, all changes

It is unlikely, that Kyiv would force Berlin or Washington into drastically change of their positions. Both capitals are known to disregard opinions of “lesser countries”. Germany stood for the Nord Stream project regardless of who was ruling the country - SPD or CDU/CSU.

To be fair, Ukraine calling for respecting of the Association Agreement - that’s not really an honest approach. Ukrainian governments failed to deliver reforms it promised to its citizens, when signing the document. This includes reforms in the energy sector.

But looking in the longer perspective - this deal may lead into the change of the situation in Europe. Russia will understand this as approval of their approach towards Central Eastern Europe.

Today and tomorrow - nothing will change. In 10 years - we may be looking at a different world.