Russia – Ukraine Issue Highlights  – Nord Stream 2 gas pipeline 

Russia has constructed Nord Stream 2, a gas pipeline that will transport Russian natural gas directly to Germany. However, supplies to Europe via Nord Stream 2 have yet to begin because the pipeline is awaiting approval from European authorities. Several European countries and the United States continue to oppose the pipeline, claiming that it will give Russia more influence. But major European businesses have invested heavily in Nord Stream 2. The U.S. has threatened to halt the pipeline opening that will link Russian gas with Western Europe if Russia invades Ukraine.

Recently, President Vladimir Putin ordered Russian armed forces to cross the border into separatist-held areas in eastern Ukraine, declaring them independent. As a result, Germany has put the Nord Stream 2 gas pipeline on hold. Russia has criticized this decision. 

What is the Nord Stream 2 pipeline? 

The undersea Nord Stream 2 pipeline directly links Russian gas to Europe via Germany and is complete but not yet operating. It runs parallel to an earlier Nord Stream pipeline and would double its capacity. It means Russia state-controlled oil producer Gazprom can send gas to Europe’s pipeline system without using existing pipelines running through Ukraine and Poland. 

Why is Nord Stream 2 pipeline important for Russia?

While Europe needs Russian gas, Gazprom relies on the European market for sales to support Russian government budgets. 

It will also help to meet Europe’s growing demand for low-cost natural gas, as well as supplement existing pipelines through Belarus and Ukraine. Europe imports the majority of its gas, with Russia accounting for roughly 40%. Nord Stream 2 would provide an alternative to Ukraine’s aging system, reduce costs by eliminating transit fees paid to Ukraine and Poland, and avoid episodes such as the brief gas cutoffs in 2006 and 2009 due to price and payment disputes between Russia and Ukraine.

Despite strong pressure from the US and some European countries, Germany has thus far attempted to keep Nord Stream 2 out of global politics. For years, the United States has argued that constructing another pipeline bringing natural gas from Russia to Germany, particularly one that bypasses Ukraine, increases Europe’s reliance on Russian energy supplies. US officials have also warned that Nord Stream 2 could endanger Ukraine and Poland by allowing Russia to stop pumping gas through those countries (also, Russia will no longer have to pay transit charges to Ukraine to send gas via the country). They believe that it allows Russia to use gas as a geopolitical weapon.

Energy is a major political issue in Central and Eastern Europe, where Russian gas supplies are critical for power generation and home heating. Recently, natural gas prices set new records in Europe as its demand is increasing “quite rapidly.”

Way Forward

Reviving the Minsk peace process is a practical solution to the situation.

Minsk I: In September 2014, Ukraine and Russian-backed separatists reached a 12-point cease-fire agreement in Belarus’ capital. Its provisions included prisoner exchanges, humanitarian aid deliveries, and heavy weapons withdrawal. The agreement quickly fell apart, with both parties violating it.

Minsk II: In 2015, the ‘Minsk II’ peace agreement was signed under the mediation of France and Germany, averting an open conflict. It was intended to put an end to the fighting in the rebel regions and hand over control of the border to Ukrainian national troops.

While the Minsk agreement is far from ideal, it may serve as a starting point for a diplomatic solution to the current crisis, and reviving it may be the “only path on which peace can be built,” as French President Emmanuel Macron has stated.

For Ukraine, it could help it gain possession over its borders and end the threat of a Russian invasion for the time being, while for Russia, it could be a way to ensure that Ukraine never becomes a part of NATO.