{"id":5451,"date":"2021-02-21T07:02:31","date_gmt":"2021-02-21T07:02:31","guid":{"rendered":"https:\/\/euromenaenergy.com\/?p=5451"},"modified":"2021-02-21T07:02:31","modified_gmt":"2021-02-21T07:02:31","slug":"germanys-empty-pipeline-logic","status":"publish","type":"post","link":"https:\/\/emimer.com\/?p=5451","title":{"rendered":"Germany\u2019s Empty Pipeline Logic"},"content":{"rendered":"<div class=\"article__abs u-mt-se\" dir=\"ltr\">\n<p>Although the Nord Stream 2 gas pipeline is only 100 miles from completion, the transformation of world energy markets since construction began implies that the project no longer makes economic sense. So why is German Chancellor Angela Merkel determined to see it through to the end?<\/p>\n<\/div>\n<div class=\"article__body article__body--commentary english\" dir=\"ltr\" data-page-area=\"article-body\">\n<p data-line-id=\"905b1be58ad64d65b73d944999b0dcee\">HAMBURG \u2013 Nord Stream 2, the almost-finished pipeline running directly from Russia to Germany, is not really about securing cheap natural gas. It is about personal gain and these two countries\u2019 national interest.<\/p>\n<p data-line-id=\"13bda11128964c98a2c271fa4a6afe65\">The pipeline across the Baltic has pitted the United States and the European Union against Germany, and a swelling chorus of domestic critics against Chancellor\u00a0Angela Merkel. If it were just a matter of gas molecules, the project might never have seen the light of day. So, why did it?<button class=\"comment__caller comment__caller--no-comment\" aria-expanded=\"false\" aria-label=\"Paragraph comment\" aria-controls=\"login_register\" aria-haspopup=\"true\"><\/button><\/p>\n<p data-line-id=\"6d6f9a9f5df542ec8270d65977be884d\">Go back to 2005, when Gerhard Schr\u00f6der and Russian President Vladimir Putin sealed the deal just before Schr\u00f6der stepped down as chancellor. Shortly after handing power over to Merkel, the Russian energy giant Gazprom, essentially a Kremlin affiliate, named Schr\u00f6der chairman of Nord Stream AG\u2019s shareholders committee. In 2016, Schr\u00f6der rose to the top of Nord Stream 2, with Gazprom the only shareholder.<button class=\"comment__caller comment__caller--no-comment\" aria-expanded=\"false\" aria-label=\"Paragraph comment\" aria-controls=\"login_register\" aria-haspopup=\"true\"><\/button><\/p>\n<p data-line-id=\"d24261577b7d4f63bc6ae4099bce1a33\">Ever since, Schr\u00f6der has been Putin\u2019s tireless point man. Sch\u00f6der never tires of repeating that he did it for the good of Germany, because it locked in energy security at decent prices.<button class=\"comment__caller comment__caller--no-comment\" aria-expanded=\"false\" aria-label=\"Paragraph comment\" aria-controls=\"login_register\" aria-haspopup=\"true\"><\/button><\/p>\n<p data-line-id=\"52f6dfa6917d438b8ecbefbe438b8329\">In fact, Germany and Western Europe do not need Nord Stream 2. The oil price has\u00a0more than halved\u00a0since its 2008 peak. And with ever more new gas fields coming onstream, especially in the Mediterranean, not to mention North America, the price of gas has dropped by\u00a0almost four-fifths\u00a0over this period. Nor is the gas glut likely to be temporary, given ever more renewables surging into the market.<button class=\"comment__caller comment__caller--no-comment\" aria-expanded=\"false\" aria-label=\"Paragraph comment\" aria-controls=\"login_register\" aria-haspopup=\"true\"><\/button><\/p>\n<p data-line-id=\"bc763b8c7d7d46aeadee4debc931c49e\">There are already 13 pipelines running from Russia to Europe, delivering some\u00a0250 billion cubic meters (m<sup>3<\/sup>) of gas. Nord Stream 2 will raise dependence on Russia, but much more is at stake, because the pipeline circumvents Ukraine and Poland. For Putin, Ukraine, a former Soviet republic, rightfully belongs to the\u00a0<em>rodina,<\/em>\u00a0the Motherland, and he has already grabbed two pieces: Crimea and the Donbas. Likewise, he believes that Poland, a former satrapy, should be part of Russia\u2019s sphere of influence.<\/p>\n<p data-line-id=\"9f12d2da4bf3418284ab08a0b371545f\">Nord Stream 2 enables Putin to weaken both countries by depriving them of transit fees and breaking Ukraine\u2019s grip on the tap. In 2020, Ukraine earned $3 billion in fees from transporting some\u00a050 billion m<sup>3<\/sup>\u00a0of gas. Nord Stream 2 could pump about the same amount of gas \u2013 a neat coincidence. Schr\u00f6der\u2019s Gazprom gambit would enable Putin to apply the screws to Ukraine (and Poland), at a time when the government in Kyiv is desperately trying to resist Russian pressure on Ukraine\u2019s already-weak economy.<button class=\"comment__caller comment__caller--no-comment\" aria-expanded=\"false\" aria-label=\"Paragraph comment\" aria-controls=\"login_register\" aria-haspopup=\"true\"><\/button><\/p>\n<p data-line-id=\"76a05578c13a4d3894d8732d1bd85b68\">Schr\u00f6der was not really thinking of Germany or Europe when he got his friend Putin to top up his modest chancellor\u2019s pension of \u20ac93,000 ($113,000) per year. The real puzzle is Merkel. When former US President Donald Trump\u00a0told\u00a0her, \u201cYou\u2019ve got to stop buying gas from Putin,\u201d she did not budge. An unnamed German official vowed: \u201cWe will do anything it takes to complete this pipeline.\u201d<button class=\"comment__caller comment__caller--no-comment\" aria-expanded=\"false\" aria-label=\"Paragraph comment\" aria-controls=\"login_register\" aria-haspopup=\"true\"><\/button><\/p>\n<p data-line-id=\"6e03847a75284535b58c1f5dbcda6a14\">Presumably, energy supplies are not uppermost in Merkel\u2019s mind. This is not about the \u201clow politics\u201d of gas and cash, but the \u201chigh politics\u201d of states seeking power and position. Regardless of how often Germans and Russians have been at each other\u2019s throats, the enduring reflex goes back to Bismarck, who famously told the country in the middle: \u201cNever cut the link to St. Petersburg.\u201d In other words, keep the peace with the giant on Germany\u2019s eastern flank.<button class=\"comment__caller comment__caller--no-comment\" aria-expanded=\"false\" aria-label=\"Paragraph comment\" aria-controls=\"login_register\" aria-haspopup=\"true\"><\/button><\/p>\n<p data-line-id=\"099f5a0346e44f91b3133a3e784691ed\">Though now sheltered by NATO, the Federal Republic has been honoring Bismarck by practicing propitiation, or at least benevolent neutrality. With her fine sense for power, Merkel is not swooning over Russian gas, but sticking to a classic rule of German diplomacy.<button class=\"comment__caller comment__caller--no-comment\" aria-expanded=\"false\" aria-label=\"Paragraph comment\" aria-controls=\"login_register\" aria-haspopup=\"true\"><\/button><\/p>\n<p data-line-id=\"ca013a8a69ae429b87cca4fc5e7471d5\">Even during the Cold War, West Germany defied three American presidents \u2013 Nixon, Carter, and Reagan \u2013 by bartering steel pipes for Soviet energy. But what might have made economic sense during the global oil shocks of the 1970s now reflects only Bismarck\u2019s admonition: Don\u2019t rile the Russians.<\/p>\n<p data-line-id=\"4fd004ac4f484511b5c63e8dee017b9e\">Today, however, Merkel is acting on a new stage, and not only because of oversupply and dwindling demand as the industrial world shifts to solar, wind, and higher efficiency. Suddenly, Merkel is \u201chome alone.\u201d It is not just the US, Britain, and nervous East Europeans who want to reduce Nord Stream 2 to scrap. Even the French are turning against the deal.<button class=\"comment__caller comment__caller--no-comment\" aria-expanded=\"false\" aria-label=\"Paragraph comment\" aria-controls=\"login_register\" aria-haspopup=\"true\"><\/button><\/p>\n<p data-line-id=\"d622e976f8494ae59a1f1b05cf42751e\">Reliant on nuclear power, France doesn\u2019t need Russian gas. It worries more about Germany\u2019s \u201cspecial relationship\u201d and Russia\u2019s lengthening shadow over Europe. Just this month, Russian foreign minister Sergey Lavrov\u00a0threatened to rupture relations with the EU if it imposed new sanctions.<\/p>\n<p data-line-id=\"bfd15e5120ba46ff92a687896c14bc04\">In addition, Merkel faces unprecedented headwinds on her own turf. Even prominent fellow Christian Democrats and the pacifist-minded Greens have turned against Putin. So have parts of the liberal media, which usually zeroes in on imperial America.<button class=\"comment__caller comment__caller--no-comment\" aria-expanded=\"false\" aria-label=\"Paragraph comment\" aria-controls=\"login_register\" aria-haspopup=\"true\"><\/button><\/p>\n<p data-line-id=\"aec8c1139e294f698870bc88d03b1d50\">Why? Two words:\u00a0Alexei Navalny. Facing his most dangerous rival yet, Putin has overplayed his hand. The Kremlin\u2019s attempted murder of Navalny, and now the longish prison sentence meted out to him, has rattled Germany\u2019s political class. In democracies, moral revulsion beats Merkel-style realpolitik.<\/p>\n<div data-newsletter-subscribe-form=\"true\" data-classes=\"newsletter--branding newsletter--ps newsletter--compact newsletter--label newsletter--admin\" data-newsletter=\"prosyn-weekly-newsletter\" data-label=\"Sign up for our weekly newsletter, PS on Sunday\" data-link-name=\"newsletter-weekly\">\n<form class=\"newsletter input-element u-mtb-s form user-input-form\" aria-hidden=\"false\">\n<div class=\"newsletter-editor newsletter--branding newsletter--ps newsletter--compact newsletter--label newsletter--admin\">Merkel has maneuvered Germany into isolation. But the smart bet is that Nord Stream 2 will be completed. With only 100 miles left to go, it defies the imagination to believe that a \u20ac10 billion project would be buried beneath the Baltic sands. In the end, the Germans will not affront the Russians, and US President Joe Biden will go easier on Germany than Trump did.<\/div>\n<\/form>\n<\/div>\n<p data-line-id=\"f9d2a3b1572e4060b02dc1eb066cccb1\">The wheeling and dealing has already begun. Germany is dangling some juicy carrots before Biden, promising to raise subsidies for the construction of German liquefied natural gas terminals that will take in American LNG. Germany also vows to work hard on new rules that would ensure the continued transit of gas through Ukraine. Poland will get funds for LNG terminals. There is talk that Germany would shut off Nord Stream 2 if Russia violated international law and human rights. Please, President Biden, just lift the sanctions.<button class=\"comment__caller comment__caller--no-comment\" aria-expanded=\"false\" aria-label=\"Paragraph comment\" aria-controls=\"login_register\" aria-haspopup=\"true\"><\/button><\/p>\n<p data-line-id=\"30006d33be374500825bcac8ee2d4b22\">A deal\u00a0<em>will\u00a0<\/em>be struck. But who will \u201cnegotiate\u201d with the energy market? The court of supply and demand may issue this definitive verdict: no need for another pipeline. If so, Nord Stream 2 may just rot away underneath the Baltic \u2013 a monument to greed and folly.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Although the Nord Stream 2 gas pipeline is only 100 miles from completion, the transformation of world energy markets since construction began implies that the project no longer makes economic sense. So&#8230;<\/p>\n","protected":false},"author":1,"featured_media":5459,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[46,48,57,68,76,77,82,86,87,90,96,99,103,107,109,111,113,137,139,146,148,160,174,183,184,201,202,209,222,230,232,233,244,246,249,256,262,263,267,277,279,280,285,288],"class_list":["post-5451","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-oil-gas","tag-aramco","tag-athens","tag-baroudi","tag-carbon","tag-climate","tag-climate-change","tag-co2","tag-cyprus","tag-decarbonising","tag-democracy","tag-doha","tag-eastmed","tag-egypt","tag-embargo","tag-emissions","tag-energy","tag-energy-peace","tag-gas","tag-gazprom","tag-greece","tag-greenenergy","tag-international-maritime-disputes","tag-lebanon","tag-maritime-boundaries-east-mediterranean","tag-maritime-disputes","tag-offshore","tag-oil","tag-opec","tag-pollution","tag-poverty-alleviation","tag-putin","tag-qatar","tag-rosneft","tag-roudi","tag-russia","tag-saudi","tag-solar","tag-solar-power","tag-straddling-hydrocarbons-reserves","tag-total","tag-trump","tag-turkey","tag-unclos","tag-usa"],"_links":{"self":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts\/5451","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=5451"}],"version-history":[{"count":0,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts\/5451\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/media\/5459"}],"wp:attachment":[{"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=5451"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=5451"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=5451"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}