The European Union caught between its energy and diplomatic strategies

Tuesday 24 April 2018

After the nerve gas attack in Salisbury, England in March 2018 and the accusation by the United Kingdom of Russia being behind the attack, EU countries and others around the world decided to expel over thirty Russian diplomats from their respective soil[1], including Germany, as a sign of unity and support towards the UK. However, on the 28th of March 2018, Germany approved the ‘Nordstream 2’ gas pipeline project, increasing the transit capacity of the current ‘Nordstream 1’ pipeline, linking Russia and Germany directly through the Baltic Sea. The said project has been at the center of a heated debate since 2009, and Germany’s ‘double game’ is kick starting new contradictions within the EU.

 

The European Union’s ‘Blue Gold’[2] trade with Russia started in the 1970s, characterised by large volumes and a strong interdependence relation. The UE is Russia’s first exportation market with a 30% market share[3], Europe’s main supplier in that field. However, the EU’s dependence over Russian gas varies a lot among the Member States: it can reach close to 100% dependency for some Eastern European countries (such all three Baltic countries[4]), mostly due to their proximity to the Russian market, as well as the exchange mechanisms created by the ex-USSR and the Council for Mutual Economic Assistance (COMECON) during the Cold War. It is inexistent in Spain (that imports its gas from Algeria) and other countries, most of them furthest from Russia. Russian gas exportation goes through three main supply roads: the first, the most abundant, goes through Ukraine (the Brotherhood pipeline), the second goes through Belarus (the Northern Lights pipeline), and the third, NordStream 1, which goes under the Baltic Sea, straight to Germany.

 

Ukraine is the highway of Russian gas, with 80% of the total EU gas consumption transiting through the country[5]. This situation has frequently become a source of conflict between the different actors; the exporting country, the importing country, and the transit country. Because of their interdependence relationship, the EU and Russia must work to keep a functioning partnership, despite many conflicts and misunderstandings. Ukraine has regularly expressed its opposition to the construction of the Nordstream 2 pipeline, as it would greatly decrease its income from transit duties. Ukrainian President Petro Poroshenko went as far as accusing supporters of the project to be Russia’s accomplices[6]. Lithuania has also expressed its opposition to the project, claiming it would make the country more vulnerable to Russia’s geopolitical pressure, hoping that the pipeline will not be built[7]. Meanwhile, Finland has approved just last week the construction of the new pipeline through its economic zone[8].

 

Many elements separate the European and Russian energy systems, and complications have escalated since the ascension of climate change in the international political agenda. The EU has been wanting to open up gas industries to competition since several years, as it is necessary for the good functioning of the internal market[9]. However, this policy has progressively distanced the EU from the institutional and state-controlled gas market in Russia, and therefore complicated relationships in that regard. These EU initiatives are part of the climate change policies overhaul that began in the 1990s, and even though it is likely to function for the electricity market, gas is a different matter. Indeed, only the United Kingdom and the Netherlands are gas suppliers within the EU, but their reserves are naturally slowly depleting. Norway also provides a significant portion of EU gas needs but it is not part of the EU. The European Union is in a difficult position because it needs to combine energy efficiency and consumption reduction with the growing energy demand, without having any significant gas extraction within its borders. For Philippe Esper and Claude Mandil, co-authors of ‘Europe and Energy, Economy and Security’, “Europe’s priority is not energy independence, but the search and guaranty for a functioning interdependence”.[10]

 

With its new climate policies, the EU has opted for a liberalisation of the energy market, and the creation of the single energy market, through the 1998/30/EC and 2003/55/EC directives and the 3rd energy package[11]. The gas market requires a more thoughtful and precise framework, to counter-act and compensate potential conflicts. That’s the reason why some might think that Germany’s approval of the pipeline is not in line with the EU’s general energy strategy, as it would further increase its already high dependence on Russian gas. Nevertheless, Germany stated that the diplomatic incident with Russia and the pipeline have to be “strictly separated”[12]. With Finland’s ‘green light’, the construction project now only needs Sweden’s and Denmark’s approval to go ahead[13], as the Baltic countries continue to show their opposition.

 

The fact that Germany approved the construction of the pipeline while the investigation on the nerve gas attack in England is still ongoing shows that the stakes are much higher than they appear. Even if we acknowledge the fact that Germany treats both issues separately, the importance of this decision cannot be ignored. Profit proves that some items on the political agenda are of higher importance than others, regardless of recent developments. However, should political tensions arise, we might see the project put to a stop once again. In fact, a weeks ago, on the 10th of April, German Chancellor Angela Merkel stated that there would be “no Nordstream 2 without clarity about the Ukrainian transit role”[14]. Still, the EU has to deal with its energy supply problem[15] and this larger pipeline might have to be built to secure the EU’s much needed energy stability.



[1]https://www.aljazeera.com/news/2018/03/expels-60-russians-closes-consulate-skripal-poisoning-180326130541717.html

[2] gas

[3] Clingendael International Energy Program. Russian gas imports to Europe and security of supply.

[4] https://www.economist.com/news/briefing/21600111-reducing-europes-dependence-russian-gas-possiblebut-it-will-take-time-money-and-sustained

[5] http://news.bbc.co.uk/2/hi/europe/8179461.stm

[6]https://www.unian.info/politics/10063637-poroshenko-calls-supporters-of-nord-stream-2-russia-s-accomplices.html

[7] http://www.baltic-course.com/eng/energy/?doc=138994

[8]https://www.reuters.com/article/us-gazprom-nordstream/gazprom-gets-finnish-approval-to-build-nord-stream-2-gas-pipeline-idUSKCN1HC1KB

[9] http://ec.europa.eu/competition/general/liberalisation_en.html

[10] https://www.cairn.info/resume.php?ID_ARTICLE=COMM_138_0321

[11] https://ec.europa.eu/energy/en/topics/markets-and-consumers/market-legislation

[12] http://tass.com/economy/996209

[13]https://www.reuters.com/article/us-russia-germany-nordstream/germany-fully-approves-russia-built-nord-stream-2-gas-pipeline-idUSKBN1H31IF

[14] https://www.euractiv.com/section/europe-s-east/news/merkel-no-nord-stream-2-without-guarantee-for-ukraines-gas-transit-role/

[15] https://ec.europa.eu/energy/en/topics/energy-strategy-and-energy-union/energy-security-strategy

What's new on Twitter?

Commissioner @KarmenuVella considers that developing EU #aquaculture is the solution to future food challenges… https://t.co/xw4eVei42T
The @EUCouncil adopts the #EU #CircularEconomy package which sets legally binding #waste #recycling targets includ… https://t.co/ChmoFuKwaG
Un rapport voté par la Commission de la pêche demande à la Commission européenne d'évaluer le rôle de la pêche de l… https://t.co/P8lhar070Z
Follow us

Meeting room for rent

Book now

Modern meeting room for 18 people. Catering can be provided.

Keep in touch,
sign up to our Newsletter

* Indicates require