Political Pipe Dreams

When international business and international politics collide, the results can lead to uneasy alliances and geopolitical anxiety.

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Gas and oil pipelines have long been a source of political contention and accusations of cronyism, hypocrisy, and pandering to dictators are pretty much de rigeur when any pipeline gets underway.

Suspicions over US involvement in Afghanistan, for example, were only compounded in 2009 when the then Secretary of State Hillary Clinton gave her backing to the Chevron TAPI (Turkmenistan–Afghanistan–Pakistan–India) project after Unocal secured guarantees from the Taliban, a group that the US was at war with, that the pipeline would be protected. Mrs Clinton also met with President Gurbanguly Berdymukhammedov of Turkmenistan, a state so secretive, corrupt, and repressive that it makes neighbouring Iran look like Iceland, to shore up support from the gas rich former Soviet nation.

In many respects this is realpolitik. All politicians have to work with the hand they were dealt when they got the job. But grander concepts are at play here too. TAPI was hailed as an attempt to stabilise Afghanistan economically, as well as making sure Iran was cut out of the process.

Nord Stream 2

Today, we see a similar set of geopolitical realities at play with the Nord Stream 2 gas pipeline between Ust-Luga in Russia to Greifswald in Germany. The €10-billion project, majority owned by Russian state-controlled energy firm Gazprom, covers 1,225 km, has a capacity of 55 billion cubic metres of gas per year and is set to be fully operational by late 2019.

Outgoing German Chancellor Gerhard Schröder initially signed Germany up to the Nord Stream project agreement in 2005, shortly before leaving office and having already lost the election that brought Angela Merkel to power. It’s little wonder that eyebrows were raised when not long after stepping down as Chancellor, Herr Schröder accepted Gazprom’s nomination as head of Nord Stream’s shareholders’ committee, leading to popular tabloid Bild to dub him “Gazprom Gerhard” and describe him as “definitively belonging to Putin”. His appearance at Putin’s presidential inauguration in 2018, in a prominent position standing next to Prime Minister Dmitry Medvedev, did little to shake that perception.

For his part, Herr Schröder has long been an advocate of greater strategic cooperation between Europe and Russia, though his critics say it’s less about easing tensions and more about lining his own pockets, especially as the former Chancellor’s business interests in Nord Stream do not stop with Gazprom. Herr Schröder is also Deputy Chairman of the Supervisory Board at Herrenknecht AG, a tunnel boring company that happens to have worked on the Lubmin trenchless shore crossing, an integral German part of Nord Stream 2.

The larger geopolitical implications of the pipeline reach far and wide and it’s an issue that is dividing the European Union, worrying the Ukraine, and drawing heavy criticism from Washington DC.

President Donald Trump has described Nord Stream 2 as a “horrible thing”, saying that it will make Germany a “captive of Russia”. The Trump-appointed US Ambassador to Germany, Richard Grenell, not known for his popularity in his assigned country, has repeatedly criticised the project claiming that it would undermine security in the region and that Berlin was breaking standing sanctions against Moscow. Mr Grenell even sent threatening letters to several German companies working on the pipeline, warning them of “a significant risk of sanctions” if they did not pull out.

Then there’s the Ukraine issue. The country stands to see a 2% decline in its economy from lost gas transit fees as a consequence of Nord Stream 2. Kiev fears that such an economic hit could further instability in the war-weary country, leaving the eastern regions ripe for the picking if Russia chooses to repeat its actions in the Crimea in Donetsk, Donbass or Luhansk.

The EU has made several attempts to allay the fears of the bloc’s eastern countries, saying that Nord Stream 2 is about increasing capacity for the rapidly increasing demand and not about diverting from Ukraine or Poland. Germany is already the world’s largest importer of natural gas and that shows no sign of abating, so demand must be met somehow. The argument is that it’s a mutually beneficial arrangement. The European Union needs gas and Russia needs the European cash, making it a codependent relationship, not leaving Europe in Putin’s pocket.

Russian President Vladimir Putin has repeatedly claimed that the Nord Stream project is totally free from politics and is a purely commercial venture. However, with the political value of natural gas rising fast, and several countries scrambling for a piece of the action, it’s clear that that cannot be the case, regardless of what the intentions may have been.

Local answers to global questions

Out of all the murky business dealings, political threats and security concerns, the best kind of stability that both the EU and Russia can hope for with Nord Stream 2 is a new version of the Mutually Assured Destruction doctrine. This time, however, instead of nuclear annihilation, the worst outcome would be Mutually Assured Destruction of Economies, MADE rather than MAD. While this can provide a shaky form of cooperation, there must be another way.

Perhaps an answer lies further to the south. The Spanish Balearic Islands recently signed into law their plan to switch to 100% renewable energy sources by the middle of this century. An ambitious plan it may be, but an inspiring one that has seen 26 other EU islands follow suit.

In an increasingly globalised world, with complex geopolitical entanglements, it could be that we need to look for the answers locally, as the Balearics government have done. Not only would harnessing the abundance of local, natural energy; solar power in the south, wind and tide in the north, benefit the environment, it creates local jobs and most importantly, reduces the need to import energy. When essential services such as energy so much as risk being used as political pawns by larger powers, ultimately everybody suffers.

Renewables have repeatedly won the moral argument and are fast catching up with the economic one. Perhaps a more concerted move towards renewable, sustainable energy supplies can even relieve us all of some the confusion, and mitigate some of the dangers of the increasingly intertwined geopolitical situation we find ourselves in.

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