Time for a moratorium on Nord Stream 2. Poland may reveal how the Kremlin uses Gazprom

An interim solution to the Nord Stream 2 dispute is to impose a moratorium on its construction at least until the end of talks between the US, Germany and other interested parties. Poland could contribute to the negotiations by offering its knowledge on how Gazprom abused its position with regard to the Yamal contract – writes Wojciech Jakóbik, editor in chief at BiznesAlert.pl.

The West is in a dispute, the NS2 construction is picking up

The conflict over Nord Stream 2 is about US sanctions, which made difficult, but did not stop the construction of the contentious gas pipeline from Russia to Germany, which, according to Russia, has been completed at 98 percent. Reportedly the first string is to be ready by the end of June, and the entire pipe by September 2021. However, these declarations should be taken with a grain of salt, because in the past the completion date has been postponed many times. Originally it was supposed to have been ready to deliver gas at the end of 2019, but right before that deadline the US sanctions had been introduced. However, the restrictions were not sufficient to halt the construction forever. The works resumed after Joe Biden’s administration took over the reins in Washington. The Russians are using the Fortuna barge, which will be reportedly accompanied by the Akademik Cherskiy, which has been allegedly technically adapted to meet the requirements to receive a permit to construct the pipe in Danish waters. Biden inherited the duty to widen sanctions by adding new entities suggested by the across-the-aisle group of US senators. However, so far the US administration has not extended the list, and instead promised it would reveal it as late as on the 16th of May, which – if Russians are to be believed – will be after the first line of the NS2 will have been done and dusted. This is fuelling suspicions about an agreement with Germany, a revelation presented by some media as a done deal. However, the American rhetoric is that the administration is opposed to such a bargain. The new Deputy Secretary of State Wendy Sherman ensured Washington would “do anything” to prevent the completion of the Nord Stream 2 pipeline, but the Department’s spokesman Ned Price admitted that the sanctions were not the only tool available. However, these declarations have not been yet followed by any deeds. The Republican Senator Ted Cruz increased the pressure on the administration by blocking the confirmation of William Burnes as head of the CIA.

In the meantime numerous articles have been published in the American and German media on the possible solutions that could break the deadlock. One of the more popular propositions is to increase the volume of gas and the duration of the transmission contract between Ukraine’s Naftogaz and Russia’s Gazprom, which will expire at the end of 2024 to a volume of 65 bcm in 2020 and 40 bcm in 2024. Some supporters of this solution believe the redress for Nord Stream 2 should include a “switch off” mechanism, which would allow Germany to stop deliveries via the contentious pipe in case of issues with transmission via Ukraine, guarantees Germany would invest in the natural gas and hydrogen sectors by the Dnieper, as well as other less specific conditions difficult to properly verify after the completion of the contentious pipeline. The most specific proposal is the amendment to the transmission agreement with Ukraine, and it is clear that under enough pressure from the West, Russia is actually willing to be flexible. The contract should protect against abuses from Gazprom, which may be also kept in check thanks to the EU gas directive, which is to encompass NS2.

A moratorium would ease the pressure of time in the dispute

However, first it is worth taking a step back and starting a discussion on Nord Stream 2 with clearing the atmosphere. Negotiating under the pressure of time exerted by Russians who are speeding up the construction, does not contribute to a constructive debate. This is why any talks about the contentious gas pipeline should start with a moratorium on the construction of Nord Stream 2, a solution probably unwanted by the German government, but demanded by the critics of the project, including some members of the ruling party in Berlin, e.g. Norbert Roettgen from CDU and the party’s potential future coalition member – the Green Party. Then, Ukraine, as well as other countries that are opposing Nord Stream 2, such as Poland and Lithuania, should be allowed to join the table.

Warsaw could offer constructive contribution to the negotiations, e.g. by sharing its knowledge on how Gazprom abuses its position when it comes to transmission contracts, which Poles learned about during the years-long dispute over the Yamal contract with Russians. This input could help to draft a contract for Ukraine that would not let Gazprom start a political game controlled by the Kremlin. Perhaps the European Commission should also join the talks as the appropriate representative of the interests of the entire European Union, not just some of its member states. Interestingly, Poles could support the Commission in this regard, as it has formally confirmed the Yamal contract included irregularities that could be abused, but it also refused to act as it did not have any impact on an intergovernmental agreement. The lesson of the Yamal contract shows that the scope of any agreement about Nord Stream 2 needs to go beyond an intergovernmental deal, to ensure the Commission has direct impact and is able to act as the natural arbitrator in case of disputes resulting from the contract.

After the moratorium is introduced, the talks will take place without the pressure exerted by the builders of Nord Stream 2, and after Berlin shows some good will, which will make it easier to make an agreement with the critics of the project. Perhaps the moratorium, which was so popular in the fall of 2020 when Donald Trump’s administration was considering further actions against NS2, is disappearing from the public debate for a reason. It is an alternative to extending the US sanctions, which could impact German companies. It’s Germany’s way to not lose face and get out of the deadlock caused by NS2. This is also a way to quickly stop the construction and avoid a scenario where the West is thinking what to do, but Putin is not waiting and finishes the pipe and yet again forces the parties to accept the policy of fait accompli, or, in other words, uses NS2 for political purposes, which is exactly what the project’s critics have been warning about.

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