Gazprom, Eastern Europe and the Energy Security Crisis

Overview

There are two main political aspects to the current crisis Eastern European states face when discussing the Nord Stream Pipeline. The pipeline is an agreement made between former German Chancellor, Gerhard Schröder and Russian president, Vladimir Putin. The main concern of sponsoring company Gazprom were the transportation costs between Russia and the transit countries such as the Ukraine, Poland, and Slovakia. Therefore, the pipeline passes through the Baltic Sea, to bypass these states and in turn reduces the costs Gazprom faces. This system of offshore natural gas pipelines is operated by Nord Stream AG, in which Russian state company Gazprom is the majority shareholder; Gazprom has the authority to appoint and approve personnel appointments (Clean Energy Wire, 2020). 

In 2011, Nord Stream 1 was finished, becoming the longest subsea pipeline in the world. It was inaugurated by Western state officials, Germany’s Merkel, France’s Fillon, the Netherlands’ leader Rutte and Medvedev of Russia.  In 2018, work began on Nord Stream 2 but construction was halted due to US sanctions. The reasoning behind the United States’ involvement in European politics has been critiqued by both those against and in favour of the pipeline. Eastern European states such as Poland have asked for American involvement to prevent and delay the construction of the pipeline, meanwhile, European supporters of the pipeline blame the US’ interest in selling their own natural gas. These two possible scenarios continue to  puzzle European leaders as to why the United States is interfering in European politics. 

The first concern of this security crisis is the European Union’s energy security commitment (Evans, 2014); and secondly, the potential use of the new gas pipeline as both an economic bargaining tool and as a political soft power tool used by the Russian government to influence EU politics. If Europe wishes to fulfil their 2030 energy security commitments and reduce the influence of external energy exporters, it must invest in renewables and fund research into new forms of energy such as nuclear fusion.

Europe’s Energy Security

European leaders in support of the pipeline argue that it will increase and protect Europe’s energy security. But it leaves the critics with the question: who will the European Union rely on for their energy security after the pipeline is built, especially since the main shareholder, Gazprom, is Russian owned? Meanwhile, those against the pipeline have brought up the question: what does this mean for the EU’s energy policies and commitment? In 2018, the EU produced 42% of its own energy while 55% was imported (IEA, 2020). If Europe wishes to become self-sufficient on its own energy production then perhaps relying so heavily on imports is not the best solution. Increased imports could and would make the member states too dependent on the importing state. Eurostat found that 29.8% of crude oil, natural gas and solid fossil fuels importations come from Russia, making it the largest supplier for the EU (Eurostat, 2020). 

The idea that Russia could threaten Europe’s energy security is not improbable. This fear stems in part from the Russo-Ukrainian gas dispute of January 2009 (Stern et al., 2009). Both sides failed to agree on a price for Russian gas and on a tariff for the transit into Europe. In consequence, 16 EU member states were left with reduced or no shipments of energy supplies resulting in some Balkan countries entering humanitarian emergencies due to populations being unable to heat their homes. A 10-year agreement was reached on the 20th of January, 13 days after supplies stopped flowing into Europe.

The EU’s energy policies and commitments were primarily to reduce their use of coal in their energy production and consumption by increasing other sources of energy (European Commission, 2020). This includes natural gas, renewable energy such as wind and solar and finally nuclear energy. The construction of the pipeline has caused concern for those states neighbouring the Baltic Sea; those with territorial waters around the pipeline; and the states who have ratified the Espoo Convention, Environmental Impact Assessment in a Transboundary Context (EIA) (Nord Stream, 2009). These concerns include the physical damage to the seabed, dumped barrels or materials during its construction, cultural and scientific heritage, and threats to natural reserves and marine life. The International Maritime Organisation has declared the Baltic Sea as a particularly sensitive sea area. Despite these efforts from concerned EU member states and environmental organisations, the NS1 pipeline was finished. 

Poland’s Office of Competition and Consumer Protection (UOKiK) filed a lawsuit against Gazprom in August of 2020 detailing that the NS2 pipeline was being continued despite not having the approval of the Polish government. Paweł Jabłoński, Poland’s deputy foreign minister, said “independent of the fine, we treat the whole Nord Stream project as a purely political investment…a danger to the energy security of all of Europe” (Hernandez & Larger, 2020). The Estonian government shares the same sentiments as they see the natural gas pipelines as a way for Russia to exert its control over Eastern and Central European states. They are also affected economically by the pipeline because the company will no longer pay for transit costs.

Power Politics and Gazprom’s Influence on the European Population

Aside from the energy security crisis and the economic disruption to former transit countries, there are political power aspects that have left mostly Eastern European states uneasy about Russia’s power over the region. This sentiment is shared by officials in the United States, who have also expressed their disapproval of the pipeline because of its potential to increase Russia’s influence.

However, attempts to increase Russian influence in Europe have also extended beyond the boundaries of international political relations, and have begun to be aimed at populations. For example, Gazprom has been an official partner of the UEFA since the start of the 2012/2013 season. Therefore, their logo has been seen by large numbers of European and international citizens. One can easily recognise their signature light blue colour on the television screen and the logo printed on their newly sponsored teams in Russia and Germany. For the 2018 European Champions League final, 380 million viewers were reported (Statista, 2018), many of whom will have witnessed and likely recognised the logo of this Russian state-sponsored energy giant. This can be considered a subtle way of influencing the public’s opinion of the company by making their brand recognisable and digestible due to its close association with a much loved sport.

Nevertheless, Russia still operates some forms of traditional power politics, and the presence of the Baltic Fleet of the Russian Navy, supposedly situated to ensure the ecological safety of the pipeline, has raised questions over the true purpose or need for their placement near many of Russia’s Baltic neighbours. There are other concerns over espionage and military intelligence voiced by Sweden, who would have the Russian navy present in their territorial waters (Hurt, 2020). In light of recent civil unrest in Belarus, the Russian army has increased military activity in the waters, causing a reaction from Sweden, Finland and the United States on behalf of NATO. In this regard, Russia has the potential to destabilise European politics through this geopolitical project in which they hold an economic and political bargaining tool. Furthermore, President Putin and his administration have a history of supporting EU separatist groups and the pipeline will likely increase their access and influence in Europe (Salvo & Soula, 2017). Clearly, therefore, European security officials have a right to be concerned, and the addition of US President-elect Biden only adds to the security uncertainty.

Solutions

Due to the ongoing ecological, economic and political concerns, the United States government has enforced sanctions on Russia to pressure officials into abandoning the project (Wingrove, 2019). In 2017, 9 EU member states sent a letter to the European Commission detailing their opposition to the Nord Stream 2 pipeline and requesting that the project be audited. These include the Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Poland, Romania, and Slovakia. Despite this, the international community has also critiqued this as a political power move by the US, suggesting that the United States is simply wanting to sell their natural gas to Europe rather than support the region’s autonomy.

However, if Europe wishes to protect their energy security, why are they moving forward with a company sponsored by a foreign company in which the Russian government holds the majority of shares? Germany has left those East of its borders in a security crisis because of its support for a project that reduces the transit costs thereby disturbing the economic flow of transportation costs into the host countries and euro economic zone (Kilisek, 2015). This support also allows Russia to further pressure and antagonise these various former Soviet states. The added access the Russian government has to the Baltic Sea leaves those countries bordering the waters under the threat of espionage by the Russian navy. Therefore, the European Union should invest in more renewable and nuclear energy sources within its borders to secure alternatives to foreign imports and ensure that energy will not be used as a bargaining tool in potential future conflicts.

Finally, alternative sources of energy should also be identified. Eastern European countries such as Poland have already begun to import their natural gas from other suppliers to avoid renewing a new agreement in 2022 with Russian suppliers. Meanwhile in Western Europe, in 2018 France reported its use of nuclear energy at 42% (World Nuclear Association, 2020). In Northern Europe, Scandinavian countries, Sweden, Finland and Denmark are above a 35% use of renewable energy such as wind and solar power to fulfil their EU energy requirements and commitments (IEA, 2020). If the EU wants to increase and ensure their energy security and reduce their dependence on foreign suppliers, it must increase the development and implementation of these other forms of energy production. The funding of scientific research is important to continue to ensure European and global energy security. This is why 35 countries including all European Union member states have come together to fund and develop the first fusion tokamak, ITER, a magnetic fusion device (ITER, 2020). It is located in Southern France and it is hoped that it will provide a large-scale and carbon free source of energy. Although it is also a nuclear reaction like fission, it is different. Fusion is two nuclei coming together to release energy whereas fission is the splitting of unstable nuclei into two (Eurofusion). This is important because this new form of power is even safer than traditional nuclear power generation, and so more likely to be adopted by countries and populations alike.

If the EU wishes to fulfil its 2030 climate and energy framework, it must reduce its importation of outside energy sources. The Nord Stream pipeline might ensure a source of energy, but at what cost? The Eastern European states feel threatened firstly by the increasing influence of Russia on the European Union, and secondly on the decreasing EU energy security more broadly. If the NS2 project is completed, other European nations that are situated further from Russia and the pipeline could soon share these same concerns with their Eastern European neighbours.

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