Get Ready For a Merkel-Biden Bust-Up Over Russian Gas
(Bloomberg Opinion) -- The new transatlantic honeymoon isn’t over yet. German Chancellor Angela Merkel, like most European leaders, is still basking in the afterglow of Joe Biden’s inauguration as the 46th president of the U.S. After Number 45, of course, she’d have warm feelings for anybody.
And yet, it’s just a matter of time — days or weeks — before they’ll need to have an awkward talk. The topic will be Russia. The U.S. and Germany have long been at odds about an almost finished pipeline that would carry Russian gas under the Baltic Sea directly to Germany. It’s called Nord Stream 2 because it would double the capacity of an existing pipeline in the same waters.
Combined with another link running through the Black Sea, called TurkStream, this new system is meant to give Vladimir Putin, Russia’s president, the option of circumventing almost all of the eastern European countries through which Russian gas currently flows westward.
The official position of the Merkel government hasn’t changed: Nord Stream 2, she avers, is a purely commercial project in which politicians shouldn’t meddle. Moreover, the cheap Russian gas will be necessary as a stopgap while Germany transitions from coal and nuclear energy to renewable sources.
The U.S. position hasn’t changed either. There’s a bipartisan consensus that Nord Stream 2 is a geopolitical project, and a disastrous one at that. It would leave eastern Europe, including its NATO members, economically and energetically vulnerable and make Germany potentially dependent on the Western alliance’s most obvious adversary.
This American view is shared by, well, almost everybody — from Ukraine to Latvia, Lithuania, Estonia and Poland. The latter is so irate, it’s even trying to disrupt the project by slapping a huge fine on Gazprom PJSC, the Russian parent company of Nord Stream 2 AG. Even France, usually Germany’s closest partner, is against the pipeline, as is the European Parliament.
This opposition has become even more passionate since the poisoning, and now jailing, of Russian opposition leader Alexey Navalny, and the mass arrests of people protesting for his cause throughout Russia. In the past, Western sanctions have left Putin notably unimpressed. Stopping a strategic pipeline, many Europeans are guessing, might get his attention.
In this context, Germany’s insensitive stubbornness is disturbing. Support for the pipeline comes disproportionately from two parties: the center-left Social Democrats and the extremist Left Party, which descends from East Germany’s communist party. Both have traditions of anti-Americanism and Russophilia.
They love pretending that the U.S. stance is purely, and hence cynically, about helping exports of American liquefied natural gas (LNG), which is more expensive than the piped sort. In reality U.S. business interests — which were admittedly a big factor for Biden’s predecessor, Donald Trump — are a minor consideration in Washington, and none at all for Germany’s other allies.
Tensions between the U.S. and Germany, nominally the closest of allies, thus keep escalating. For over a year, Washington has been threatening to punish companies involved in building the pipeline, causing most of them to pull out and in effect halting the project. Last month, the U.S. imposed the first sanctions, on a firm that owns a pipe-laying ship.
To resist this “economic imperialism,” as some Germans are calling it, the state of Mecklenburg-West Pomerania, where Nord Stream 2 makes landfall, has set up a highly suspect defensive structure. The region happens to include Merkel’s constituency. But the driving force behind the initiative is the state’s premier, Manuela Schwesig, a pro-Russian Social Democrat born and raised in East Germany.
This structure is a public foundation with the nominal (and rather ironic) mission of protecting the climate and environment. But Mecklenburg ponied up only €200,000 ($240,520) in funds for it, whereas €20 million is coming from the pipeline project, and therefore Gazprom. The foundation’s bylaws also allow Nord Stream 2 to propose the managing director and to select two board members.
So the foundation is really meant to circumvent American pressure. Using the legal shields German law gives such entities, it could buy and store the materials and machines needed to finish the pipeline to maintain construction despite U.S. sanctions.
The good news is that this is becoming a scandal even in Germany. Environmental lobbies are suing the foundation in several courts, calling it a “farce” and “greenwashing.”
Even more encouragingly, the third of Germany’s left-of-center parties, the Greens, has found its moral and geostrategic compass. Its leaders, Annalena Baerbock and Robert Habeck, are demanding a stop to Nord Stream 2. Among Merkel’s own Christian Democrats and the smaller Free Democrats, there are also stirrings against it.
But one mystery remains: Why does Merkel herself cling to the pipeline? She’s anything but naïve about Putin’s methods. And if Navalny is alive today, it’s largely thanks to her decision to fly him to Germany for treatment after his poisoning in Russia.
My assumption has been that she’s sticking to Nord Stream 2 to keep the brittle peace in her coalition with the Social Democrats. But she also knows that this partnership will last only until the federal election in September. At that point she will retire and a new government takes over. In the most likely scenario, the Christian Democrats will stay in power, but this time in partnership with the Greens.
Perhaps the current situation, which is in effect a stalemate but also a suspension, suits her. It helps keep Putin in check, as he must fret about the $11.4 billion that the project has literally sunk under the Baltic sea. It also allows her to keep talking to Biden about other areas of cooperation, from decarbonization to defense, before deciding on the pipeline.
And at some opportune moment, she knows, a new conservative-Green government could then announce the obvious: that this pipeline should never have been built, and will never contain anything but air.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Andreas Kluth is a columnist for Bloomberg Opinion. He was previously editor in chief of Handelsblatt Global and a writer for the Economist. He's the author of "Hannibal and Me."
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