Nord Stream 2: commercial venture or political tool?

Mar 14 2018

U.S. and European experts weighed the political and business implications of Nord Stream 2 at an Atlantic Council event in Washington on Monday, March 12.

Europe’s demand for gas is rising while production is declining, complicated by the decommissioning of nuclear plants and environmentally damaging coal plants. This has resulted in a need for new energy sources and Russia should not be ruled out, said panelist Brenda Shaffer, a senior fellow at the Atlantic Council.

In Germany, there is strong support for Nord Stream 2 as a business proposition, said Claudia Müller, a member of German Bundestag. Nonetheless, Ms. Müller noted that there have been some 62 meetings concerning the pipeline between the German Chancellor and other high-level politicians.

As such, many experts see Nord Stream 2 not merely as a commercial project, but as a political tool that threatens energy security in Europe, particularly in Ukraine and Eastern Europe.

With the rapid growth of renewable energy and LNG exports, Europe today has a variety of energy options. There is more competition in the energy market, said Agnia Grigas, a senior fellow at the Atlantic Council, and Europe should take advantage of this, whereas Nord Stream 2 would “lock in the European markets.” “I don’t think this is a very commercial project,” Grigas said.

Sandra Oudkirk of the US Department of State agreed, saying “buying into a massive expensive undersea project buys into future dependence on gas.”

Bypassing Ukraine

A divisive factor of Nord Stream 2 is that it proposes to bypass Ukraine, which some say would give Russia a free hand.

“This is a very dangerous free hand to give to Moscow right now,” said Ms. Grigas. “I don’t think this is exactly the time to reward the Kremlin and Gazprom.”

But opposition to Nord Stream 2 is not about punishing Russia, said Douglas Hengel, a senior fellow at the German Marshall Fund, as much as it is about European energy security. “We have to look at what Russia is trying to do here. It is part of an overall plan, I think, to try to weaken the energy union, to weaken the European Union, to weaken the West,” said Hengel.

Yet Ms. Shaffer argued that bypassing Ukraine would in fact be beneficial to its independence, due to Russia’s deep involvement in Ukraine’s energy industry and the latter’s reliance on gas transfer rents.

In this regard, the U.S. policy objective of strengthening Ukraine by blocking Nord Stream 2 is counter-productive, Shaffer said.

Nor would it change Russia’s wider foreign policy, she added. “Does anyone take the view that if Nord Stream 2 isn’t built, Russia suddenly comes out of Crimea, changes policies in Donbass, changes policies in Syria?” asked Shaffer.

While U.S. opposition to Nord Stream 2 might not change Russian foreign policy, said Ms. Oudkirk, it is linked to “Ukraine’s path towards the West and a European future.”

Panelists agreed, however, that the U.S. should not widen its Russia sanctions to Nord Stream 2 unilaterally.

Ms. Müller warned that more U.S. pressure and restrictions on Germany could shift public opinion in Russia’s favor.


Exporting corruption

Another criticism of Nord Stream 2 is that it could spread a culture of corruption. It could have a negative impact on political and business life in Germany, said Ms. Grigas.

“We know when Russia exports its natural gas, it also exports political influence and it also exports corruption,” Grigas said.

Moreover, it is an initiative that strives to “to enrich the Putin circle,” said Anders Aslund, a senior fellow at the Atlantic Council. Just as Gazprom has enriched Putin’s close friends – such as Gennady Timchenko, the Rotenberg brothers, and Yury Kovalchuk, as discussed in a 2008 report by Boris Nemtsov and Vladimir Milov – so, too, will Nord Stream 2 further benefit some of these individuals, Aslund said.

Free Russia Foundation head of research, Ilya Zaslavskiy, also present at the event, said there is already evidence of exporting corruption, as in the case of the Rotenberg brothers, who were beneficiaries of Nord Stream 1, as well as a money-laundering scandal around the Nordic Yards shipbuilding plant, as discussed in Free Russia Foundation’s report.

In his comments and questions to the panels, Zaslavskiy emphasized that independent research shows that Nord Stream 2 is not only about by-passing Ukraine but a whole of Central and Eastern Europe, breaking existing EU directives on Slovakia’s Eurostream and leaving an open question on who will pay for additional transit infrastructure from Germany to Central Europe. More importantly, Nord Stream 2 takes one of the major incentives for Putin not to wage a war of annihilation against Ukraine and creates a dangerous over-dependence on Russian gas via this single vulnerable undersea route that under worst scenarios would carry 70% of all Gazprom deliveries to the EU. In 2014-2015 Putin arbitrarily reduced supplies into Nord Stream 1 in order to prevent reverse gas flows to Ukraine and this is an indication on how political expediency will also drive Nord Stream 2 future operation.

The first panel at the Atlantic Council event included:

Mr. Douglas Hengel, Senior Fellow, The German Marshall Fund of the United States; Professorial Lecturer, Energy, Resources and Environment Program, School of Advanced International Studies, Johns Hopkins University

Ms. Sandra Oudkirk, Deputy Assistant Secretary for Energy Diplomacy, Bureau of Energy Resources, US Department of State

Dr. Brenda Shaffer, Senior Fellow, Global Energy Center, Atlantic Council

Dr. Agnia Grigas, Senior Fellow, Eurasia Center, Atlantic Council

Moderated by: Ambassador Richard Morningstar, Founding Director and Chairman, Global Energy Center, Atlantic Council

The second panel included:

Ms. Aliona Osmolovska, Head of Corporate Communications, Naftogaz of Ukraine

Dr. Friedbert Pflüger, Director, European Centre for Energy and Resource Security (EUCERS), King’s College London; Senior Fellow, Global Energy Center, Atlantic Council
Ms. Claudia Müller, Member, Mecklenburg-Vorpommern, German Bundestag

Dr. Anders Åslund, Senior Fellow, Eurasia Center, Atlantic Council

Moderated by: Ambassador John Herbst, Director, Eurasia Center, Atlantic Council

By Valeria Jegisman

Europe’s demand for gas is rising while production is declining, complicated by the decommissioning of nuclear plants and environmentally damaging coal plants. This has resulted in a need for new energy sources and Russia should not be ruled out, said panelist Brenda Shaffer, a senior fellow at the Atlantic Council.

In Germany, there is strong support for Nord Stream 2 as a business proposition, said Claudia Müller, a member of German Bundestag. Nonetheless, Ms. Müller noted that there have been some 62 meetings concerning the pipeline between the German Chancellor and other high-level politicians.

As such, many experts see Nord Stream 2 not merely as a commercial project, but as a political tool that threatens energy security in Europe, particularly in Ukraine and Eastern Europe.

With the rapid growth of renewable energy and LNG exports, Europe today has a variety of energy options. There is more competition in the energy market, said Agnia Grigas, a senior fellow at the Atlantic Council, and Europe should take advantage of this, whereas Nord Stream 2 would “lock in the European markets.” “I don’t think this is a very commercial project,” Grigas said.

Sandra Oudkirk of the US Department of State agreed, saying “buying into a massive expensive undersea project buys into future dependence on gas.”

Bypassing Ukraine

A divisive factor of Nord Stream 2 is that it proposes to bypass Ukraine, which some say would give Russia a free hand.

“This is a very dangerous free hand to give to Moscow right now,” said Ms. Grigas. “I don’t think this is exactly the time to reward the Kremlin and Gazprom.”

But opposition to Nord Stream 2 is not about punishing Russia, said Douglas Hengel, a senior fellow at the German Marshall Fund, as much as it is about European energy security. “We have to look at what Russia is trying to do here. It is part of an overall plan, I think, to try to weaken the energy union, to weaken the European Union, to weaken the West,” said Hengel.

Yet Ms. Shaffer argued that bypassing Ukraine would in fact be beneficial to its independence, due to Russia’s deep involvement in Ukraine’s energy industry and the latter’s reliance on gas transfer rents.

In this regard, the U.S. policy objective of strengthening Ukraine by blocking Nord Stream 2 is counter-productive, Shaffer said.

Nor would it change Russia’s wider foreign policy, she added. “Does anyone take the view that if Nord Stream 2 isn’t built, Russia suddenly comes out of Crimea, changes policies in Donbass, changes policies in Syria?” asked Shaffer.

While U.S. opposition to Nord Stream 2 might not change Russian foreign policy, said Ms. Oudkirk, it is linked to “Ukraine’s path towards the West and a European future.”

Panelists agreed, however, that the U.S. should not widen its Russia sanctions to Nord Stream 2 unilaterally.

Ms. Müller warned that more U.S. pressure and restrictions on Germany could shift public opinion in Russia’s favor.


Exporting corruption

Another criticism of Nord Stream 2 is that it could spread a culture of corruption. It could have a negative impact on political and business life in Germany, said Ms. Grigas.

“We know when Russia exports its natural gas, it also exports political influence and it also exports corruption,” Grigas said.

Moreover, it is an initiative that strives to “to enrich the Putin circle,” said Anders Aslund, a senior fellow at the Atlantic Council. Just as Gazprom has enriched Putin’s close friends – such as Gennady Timchenko, the Rotenberg brothers, and Yury Kovalchuk, as discussed in a 2008 report by Boris Nemtsov and Vladimir Milov – so, too, will Nord Stream 2 further benefit some of these individuals, Aslund said.

Free Russia Foundation head of research, Ilya Zaslavskiy, also present at the event, said there is already evidence of exporting corruption, as in the case of the Rotenberg brothers, who were beneficiaries of Nord Stream 1, as well as a money-laundering scandal around the Nordic Yards shipbuilding plant, as discussed in Free Russia Foundation’s report.

In his comments and questions to the panels, Zaslavskiy emphasized that independent research shows that Nord Stream 2 is not only about by-passing Ukraine but a whole of Central and Eastern Europe, breaking existing EU directives on Slovakia’s Eurostream and leaving an open question on who will pay for additional transit infrastructure from Germany to Central Europe. More importantly, Nord Stream 2 takes one of the major incentives for Putin not to wage a war of annihilation against Ukraine and creates a dangerous over-dependence on Russian gas via this single vulnerable undersea route that under worst scenarios would carry 70% of all Gazprom deliveries to the EU. In 2014-2015 Putin arbitrarily reduced supplies into Nord Stream 1 in order to prevent reverse gas flows to Ukraine and this is an indication on how political expediency will also drive Nord Stream 2 future operation.

The first panel at the Atlantic Council event included:

Mr. Douglas Hengel, Senior Fellow, The German Marshall Fund of the United States; Professorial Lecturer, Energy, Resources and Environment Program, School of Advanced International Studies, Johns Hopkins University

Ms. Sandra Oudkirk, Deputy Assistant Secretary for Energy Diplomacy, Bureau of Energy Resources, US Department of State

Dr. Brenda Shaffer, Senior Fellow, Global Energy Center, Atlantic Council

Dr. Agnia Grigas, Senior Fellow, Eurasia Center, Atlantic Council

Moderated by: Ambassador Richard Morningstar, Founding Director and Chairman, Global Energy Center, Atlantic Council

The second panel included:

Ms. Aliona Osmolovska, Head of Corporate Communications, Naftogaz of Ukraine

Dr. Friedbert Pflüger, Director, European Centre for Energy and Resource Security (EUCERS), King’s College London; Senior Fellow, Global Energy Center, Atlantic Council
Ms. Claudia Müller, Member, Mecklenburg-Vorpommern, German Bundestag

Dr. Anders Åslund, Senior Fellow, Eurasia Center, Atlantic Council

Moderated by: Ambassador John Herbst, Director, Eurasia Center, Atlantic Council

By Valeria Jegisman

Free Russia Foundation Calls for Urgent and Concrete Steps to Stop Putin’s Global Assassination Campaigns

Feb 11 2021

Vladimir Kara-Murza, a prominent Russian pro-democracy advocate, was closely tracked by an FSB assassination squad when he suffered perplexing and near-fatal medical emergencies that sent him into coma in 2015 and 2017, establishes a new investigation by the Bellingcat group

Documents uncovered by Bellingcat show that this is the same assassination squad implicated in the August 2020 assassination attempt on Alexey Navalny and whose member has inadvertently confirmed the operation in a phone call with Navalny.   

Bellingcat has also established the FSB unit’s involvement in the murder of three Russian activists, all of whom died under unusual but similar circumstances. 

Taken together, these independent nongovernment investigations establish the fact of systemic, large-scale extrajudicial assassinations carried out by Putin’s government against its critics inside and outside of Russia, including with chemical weapons banned by the Chemical Weapons Convention. 

Free Russia Foundation calls on the international community to formally investigate and prosecute Putin’s government for these crimes. 

Free Russia Foundation calls on the Biden Administration to direct the FBI to release investigation materials surrounding the assassination attempts against Vladimir Kara-Murza that have been denied to him thus far. 

Free Russia Foundation calls on the international community to articulate measures to compel Russia to free Alexey Navalny from his illegal incarceration where his life remains in dire danger. 

Free Russia Foundation condemns in strongest terms today’s court sentence announced to Alexey Navalny

Feb 02 2021

Continued detention of Navalny is illegal and he must be freed immediately. Suppression of peaceful protests and mass arrests of Russian citizens must stop, and the Kremlin must release all those illegally detained and imprisoned on political motives. Free Russia Foundation calls on the international community, the US and European leadership, to move beyond expressions of concern and articulate a set of meaningful instruments to compel the Kremlin to stop its atrocities.

Free Russia Foundation demands Navalny’s immediate release

Jan 17 2021

On January 17, 2021, Putin’s agents arrested Alexey Navalny as he returned to Russia from Germany where he was treated for a near-deadly poisoning perpetrated by state-directed assassins.

Navalny’s illegal arrest constitutes kidnapping. He is kept incommunicado from his lawyer and family at an unknown location and his life is in danger.

Free Russia Foundation demands his immediate release and an international investigation of crimes committed against him by Putin’s government.

The European Court of Human Rights Recognizes Complaints on Violations in “Ukraine v. Russia” as Admissible

Jan 14 2021

On January 14, 2021, the European Court of Human Rights published its decision on the case “Ukraine v. Russia”. The Grand Chamber of the Court has recognized complaints No. 20958/14 and No. 38334/18 as partially admissible for consideration on the merits. The decision will be followed by a judgment at a later date.

The case concerns the consideration of a violation of the European Convention on Human Rights related to Russia’s systematic administrative practices in Crimea. 

The admissibility of the case is based on the fact that, since 2014, the Russian Federation has exercised effective control over the territory of Crimea, and, accordingly, is fully responsible for compliance with the norms of the European Convention on Human Rights in Crimea. The Court now needs to determine the specific circumstances of the case and establish the facts regarding violations of Articles of the Convention during two periods: from February 27, 2014 to March 18, 2014 (the period of the Russian invasion); and from March 18, 2014 onward (the period during which the Russian Federation has exercised effective control over Crimea).

The Court has established that prima facie it has sufficient evidence of systematic administrative practice concerning the following circumstances:

  • forced rendition and the lack of an effective investigation into such a practice under Article 2; 
  • cruel treatment and unlawful detention under Articles 3 and 5; 
  • extending application of Russian law into Crimea with the result that, as of  February 27, 2014, the courts in Crimea could not be considered to have been “established by law” as defined by Article 6; 
  • automatic imposition of Russian citizenship and unreasonable searches of private dwellings under Article 8; 
  • harassment and intimidation of religious leaders not conforming to the Russian Orthodox faith, arbitrary raids of places of worship and confiscation of religious property under Article 9;
  • suppression of non-Russian media under Article 10; 
  • prohibition of public gatherings and manifestations of support, as well as intimidation and arbitrary detention of organizers of demonstrations under Article 11; 
  • expropriation without compensation of property from civilians and private enterprises under Article 1 of Protocol No. 1;
  • suppression of the Ukrainian language in schools and harassment of Ukrainian-speaking children under Article 2 of Protocol No. 1; 6 
  • restricting freedom of movement between Crimea and mainland Ukraine, resulting from the de facto transformation (by Russia) of the administrative delimitation into a border (between Russia and Ukraine) under Article 2 of Protocol No. 4; and, 
  • discriminating against Crimean Tatars under Article 14, taken in conjunction with Articles 8, 9, 10 and 11 of the Convention and with Article 2 of Protocol No. 4 to the Convention.

Cases between states are the rarest category considered by the ECHR. Almost all cases considered in Strasbourg concern individuals or organizations and involve illegal actions or inaction of the states’ parties to the Convention. However, Art. 33 of this Convention provides that “any High Contracting Party may refer to the Court the question of any alleged violation of the provisions of the Convention and its Protocols by another High Contracting Party.” In the entire history of the ECHR since 1953, there have been only 27 such cases. Two of them are joint cases against Russia, both of which concern the Russian Federation’s aggression on the territory of its neighboring states, Georgia and Ukraine.

New Year’s Blessings to All

Dec 30 2020

While 2020 gave us unprecedented challenges, it created transformative changes in the way we work and communicate. The hours of Zoom calls seemingly brought us all closer together as we got a glimpse into each other’s makeshift home offices along with interruption by kids and the family pets. Remote work also made us appreciate human interactions, in-person events and trips much more!

As 2020 comes to an end, we want to especially thank our supporters who continued to believe in our mission and the value of our hard work, and we hope the coming year brings all of us progress and growth for democracy throughout the world. We’d also like to thank our partners and staff in the U.S. and abroad, and we know how hard everyone has worked under difficult world changes to achieve so many of our objectives this year.

We send our best wishes to all who have stayed in the fight for democratic reforms and for the values of basic human rights. We look forward to a new year with the hope of many positive changes to come.

– Natalia Arno and the Free Russia Foundation team.