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Party Poopers: Baltic States Trying to Sabotage North Stream II Pipeline

The Baltic Brats - in consultation with Maidan loonies - are kicking and screaming that Europe is trying to achieve energy security with Russia. They sure make great 'Europeans' - trying to destroy Europe's economy in pursuit of their historical-psychological hang-ups

This post first appeared on Russia Insider

Originally appeared in German at German-Russian Economic News. Translated by David Norris

A push that is hardly in the interest of German energy security: After collective consultation involving the presidents of Ukraine, Estonia, Latvia and Lithuania, the Estonian Prime Minister, Taavi Roivas announced today the intention to act against the extension of the Baltic Pipline North using every possible means. In doing this they are appealing to the so-called Third Energy Packet of the European Union that came into force in 2009.

In the summer of 2015 the companies Gazprom, Eon, Shell, BASF, OMV and ENGIE (an amalgamation of Gaz de France and Suez) had agreed a doubling of the capacity of the North Stream pipeline from the then 55 billion cubic metres. Planned are a third and fourth line alongside the already existing pipes of which the first would become operational in 2019.

The relevant company agreement was signed on 4th September. The objective is the establishment of the New European Pipeline AG in which Gazprom would participate with 51%, Eon, Shell, BASF and OMV each with 10% and ENGIE with 9%. 

The underlying consumption prognosis is valid only against the background of an exit from the use of fossil fuels in the course of the 21st century. Although natural gas is not CO2-neutral, it contains considerably less carbon dioxide per energy unit. In order to meet expected European climate goals, energy suppliers are reckoning with an accelerated exit from the use of carbon producing energy generation. In any case, in Germany no one believes in a renaissance of atomic power - and the expansion of renewable energy sources has come up against natural and financial barriers - so that there remains just one way out, the step by step transfer to energy production using gas fired power stations.

Experts are expecting a rise in the demand for gas in the EU in the next 20 years to about 100-150 billion cubic metres yearly. At the same time, already today the flow rates from the North Sea and the Atlantic Shelf are shrinking.

The Third Energy Packet of the European Union actually aims to liberalise the energy market and strengthen the rights of consumers. At least since the conflict over the Black Sea Pipeline South Stream, the regulation despite the confrontation will involve the further integration of the European and Russian and European energy market. Expressed simply is the legal background  - that Gazprom rightly wants to benefit financially from the distribution of gas in western Europe. For this very reason the company secured shared ownership of the pipes on European territory. The Third Energy Packet is demanding, however, the separation of pipeline operators and gas providers.

The Ukrainian participation in the recent initiative can be explained by the openly admitted aim of the Russians to reduce the amounts of gas flowing through Ukraine. In Moscow since the first gas deliveries to western Europe in the 1970s it has been seen as a point d'honneur to see all contracts punctually and completely fulfilled, but they are now increasingly disturbed by the unpredictability of the situation in Kiev.

The Ukraine, on the other hand, sees the economic and political disadvantages brought about  by the reduction of transit volumes. Prime Minister Arsenij Jazenjuk has already several times referred to the Baltic Sea project as "anti-Ukrainian". In view of the threatened loss of up to 2 billion US dollars per year in transit payments he even spoke of an "anti-European" project - because the money lacking  must then be made up to the new Ukrainian government by the western suppliers.

As far as the money is concerned, Slovakia joined in the chorus of criticism. As a transit country she too receives considerable sums from the deal. Premier Robert Fico accused the companies involved after the signing of the North Stream agreement in September of having "betrayed Slovakia as a member of the EU". He added that they made the Slovakians "look like idiots."

Also in Poland critical voices were clearly heard. The national conservative Predident, Andrzej Duda suggested, North Stream II "threatens the security of the Ukraine, Slovakia, Poland and other countries". Poland would do everthing possible to hinder the project.

Observers speculate further as to why the Balts are jumping on this train, to whom neither economic nor political disadvantages accrue from the North Stream. A possible explanation is the fear that the extension of the pipeline could weaken the entire pro-western coalition of the Baltic lands, Poland and the Ukraine.

Unclear at this point is the roll of the USA. It is known that the political and military co-operation with eastern middle European border states since the Ukrainian crisis has been intensively supported and encouraged. The suggestion is that the USA was also a determined participant in attempting to spoil the Black Sea project South Stream for Russia. Also in this instance the Third Energy Packet was the actual legal-political lever used. US American influence is the reason that the alternative development of the Black Sea route from Russia into Turkey (Turk Stream) has still not got off the ground.

In the case of the Baltic pipeline something else comes into consideration: In  Poland as well as in the Baltic clear doubts are nursed with respect to German loyalty. The essential question is whether the German people will see the interests of the east middle European States in an emergency to be more important than German-Russian neighbourliness. Consequently, in the Baltic it was attentively noted that in the Spring of 2015 the majority of Germans spoke out against recognising any military confrontation between the Baltic lands and Russia automatically as war in terms of paragraph 5 of the NATO Treaty.

The Russian on-line newspaper cited the chief of the East European Gas Analysis with the words, the opponents of the German-Russian pipeline would wait with their loudest criticism until such time as the internal German discussion around the construction of the necessary connecting pipeline from the Mecklenburg coast to inland Germany begins.

The chance of North Stream II failing as a result of opposition to any extension of the infrastructure - together with the supporters of an Atlantic inspired politics of disconnecting from Russia -, should not be underestimated. As an argument as to why Europe should entertain such a distancing from Russia, the supporters of the Atlantic TTIP point to the apparent infinite amounts of American fracking gas.

One thing is certain, that the extension of the west-east pipeline network has fallen victim for a long time to the victory of this group. At the same time, significant amounts of money are being ploughed into the building of liquid gas facilities on the American east coast and the acquisition of LNG tankers.

With the assumed failure of the Black Sea project and the political bar from the Baltic to the Ukraine, the Baltic alone remains as the only transit zone for a extensive integration and extension of the European energy market that includes Russia. This integration remains decisively in the economic interests of Germany, Holland, France and Austria. Over against this remain against Russia the coalition of east middle European countries that are supported largely by the Anglo-Saxon world, particularly the USA. The outcome of the discussion surrounding North Stream II will probably determine the future fate of the European energy infrastructure.

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