Putin’s Corrupt Pipeline Is on Life Support

By Ryan Tully

Tuesday, February 16, 2021

 

With the detention and sentencing of Alexei Navalny and the arrest of thousands of peaceful Russian protesters, the divisive Nord Stream 2 (NS2) pipeline has once again returned to the forefront of political discourse in Europe and the United States.

 

The new Biden team has struck the right rhetorical note, arguing that NS2 is “a bad deal for Europe” and promising that the U.S. will not “roll over” for Russia. Since Navalny’s arrest and sentencing, key European figures have stepped up their rhetoric as well. Tom Tugendhat, who chairs the Foreign Affairs Committee in the U.K.’s House of Commons, has on multiple occasions advocated for NS2 to be killed. By an overwhelming 581–50 margin, the European Parliament passed a resolution calling on the EU to “immediately” halt work on NS2. Even the French, who up until recently backed Germany in support of the project, have changed their tune. When asked earlier this month if France was in favor of abandoning the project, Secretary of State for European Affairs Clément Beaune confirmed that it was.

 

At this point, the international leaders who support NS2 could very likely be counted on one hand. Among them are German chancellor Angela Merkel; Merkel’s likely successor, Armin Laschet, the leader of Merkel’s Christian Democratic Union (CDU); Russian president Vladimir Putin; and the ex-Stasi intelligence officer who is now the pipeline project’s CEO, Matthias Warnig. On February 5, Laschet insisted that Germany would not abandon NS2 in the wake of Navalny’s sentencing and the mass detention of protesters in Russia. “Feel-good moralizing and domestic slogans are not foreign policy,” he said with an obvious note of disdain.

 

Yet foreign policy can and should be moral. And even setting the moral aspect of the NS2 debate aside, there are substantive foreign-policy reasons that the pipeline should be killed. To date, all of the sanctions and penalties put in place to punish Russia for its malicious activities over the last decade — the election meddling, the poisoning of Sergei Skripal, the invasion of Crimea, the propping up of dictators around the world — haven’t changed Putin’s calculus. But thwarting NS2 might.

 

The late Senator John McCain once compared Putin’s Russia to a mob-run gas station with nuclear weapons. He wasn’t wrong. Putin literally installed his friend Warnig, the ex-Stasi intelligence officer, as the CEO charged with completing NS2. And Russia is so dependent on energy production and sales to prop up its relatively small GDP that killing the pipeline might very well make him think twice before breaking yet another international norm. It would be a blow to his wallet, and a very public blow to his image both domestically and internationally.

 

Yet another reason to kill NS2 is that over his nearly two decades in power, Putin has established a pattern of disrupting Russian energy supplies to Europe to achieve his desired political ends. In 2006 Gazprom shut off natural-gas supplies to Ukraine for three days after Kyiv rebuffed Kremlin demands to substantially raise the price of gas imports, a move designed to knee-cap Western-friendly Ukrainian political parties ahead of that spring’s elections. Later that same year, a string of explosions in southern Russia interrupted gas supplies to Georgia, sending a powerful message to that country’s new president, Mikheil Saakashvili, just as he’d begun to implement pro-Western policies. In 2010, Gazprom decreased gas flows to Belarus over its refusal to join a customs union with Russia and Kazakhstan. In 2014, as retaliation for backfilling reduced Russian supply to Ukraine, Moscow reduced gas flows to Austria, Poland, Romania, and Slovakia. And most recently, in July 2020, Russia zeroed-out crude-oil exports to Belarus for three days, to extort President Alexander Lukashenko into increasing economic integration with the Kremlin.

 

Such energy-based extortion is Putin’s strongest, most reliable geopolitical tool, and NS2 would give him countless more opportunities to wield it. On those grounds alone, the project should be killed, and there are two ways in which it could be.

 

The easier path forward would be for the Germans to pull the plug, unilaterally ending the pipeline. If it were done in a coherent fashion, and timed to coincide with statements of support from across Europe, this would send a powerful message that Putin’s way of doing business will no longer be tolerated in Europe.

 

The other path forward would be for the United States to kill the pipeline. Contrary to statements from the Kremlin, the bipartisan enactment of sanctions via the 2019 Protecting Europe’s Energy Security Act (PEESA) in December 2019 and the 2021 PEESA Clarification Act (PEESCA) has left NS2 on life support. The sanctions have forced the NS2 consortium into delay after delay, which has in turn likely resulted in hundreds of millions of dollars in cost overruns. They’ve also led company after company to abandon the project, leaving the consortium with an ever-shrinking pool of firms from which to obtain critical services and technical expertise. Moscow and Berlin have responded by claiming that completion of the pipeline is inevitable and can be accomplished in the near term, in a desperate bid to save the project. But that simply isn’t the case. Left to do their work, the PEESA/PEESCA sanctions will kill NS2 sooner rather than later.

 

As the Biden administration gets up to speed, its foreign-policy hands will soon realize that the PEESA/PEESCA sanctions are mandatory, and designating companies for sanctionable activity is statutorily required. In short, unless the administration refuses to give the sanctions teeth by enforcing the law — a course of action that senators from both parties have publicly warned against — NS2 is going to die. It’s just a matter of who gets the credit.