Trump is right about Germany and Nord Stream 2

At a recent NATO breakfast meeting in Brussels, Trump again laid bare his hostile view toward the alliance.  He exclaimed to NATO secretary general Jens Stoltenberg that allies aren't paying enough toward defense and singled out German chancellor Angela Merkel for pursuing the Nord Stream 2 gas pipeline deal with Russia.

In response to Trump's criticism of Nord Stream 2, Stoltenberg contended that even during the Cold War, there was trade between Russia and European countries beyond the Iron Curtain.

Trump countered that trade and energy are different, which is true.  Trade partners are more replaceable than energy-suppliers, especially countries like Russia, which has the infrastructure to meet large demand and influence prices.

Russia vigorously defends its position as Europe's largest natural gas-supplier.  Securing this dominant and lucrative position is partly why Russia's armed forces have intervened in Georgia, Ukraine, and Syria in the last ten years.  

But Russia also uses its resources as political leverage against countries dependent on them.  The Kremlin has periodically cut off gas to Ukraine over pricing disputes, causing severe panic in Europe.  Forty percent of Russian gas to Europe flows through Ukraine before it is delivered to other markets in the E.U. 

The E.U. has led efforts to negotiate an end to numerous pricing disputes between Ukraine and Russia, in order to allow natural gas to flow to the rest of the continent.  The Kremlin will soon be able to punish Ukraine by withholding gas, without threatening its more profitable markets in the broader E.U. – specifically Germany, its largest buyer.

Four years ago, the EU and NATO imposed economic sanctions on Russia for seizing Crimea from Ukraine, and the E.U. pledged to step up efforts to reduce their dependency on Russian natural gas. Russia provided 50-75% of Germany's natural gas in 2017, and Nord Stream 2 will only increase these numbers.

Ukraine is not a member of the E.U. or NATO, and without Germany leading E.U. attempts to mediate Russian-Ukrainian affairs, Ukraine's position will weaken dramatically.  But eastern E.U. countries reliant on Ukrainian pipelines also argue that Nord Stream 2 will allow Russia to isolate all of Eastern Europe, without affecting richer E.U. members farther west.



Also under scrutiny is the questionable role of Germany's former chancellor in the history of pipeline project.  In his breakfast lecture, Trump temporarily shifted his criticism from Merkel to former German chancellor Gerhard Schroeder.

Schroeder is a close friend of Putin and was a strong supporter of the original Nord Stream project.  Days before he ceded his position to Merkel after losing the 2005 election, he signed off on the Nord Stream deal.  Within weeks, he had become chairman of Nord Stream's consortium shareholder committee.

Schroeder jumped around as a board member of several Russian-linked corporate associations until landing positions as chairman of Rosneft and the Nord Stream 2 project.  Rosneft is Russia's largest oil company and is currently operating under Western sanctions.   

A former German chancellor is now directly implementing a Russian-backed pipeline deal while also at the helm of a sanctioned Russian company.  The current German chancellor is downplaying the significance of the project, despite applying those sanctions just four years ago.

This has completely undermined the image of institutional cohesion against Russia that the E.U. has attempted to project since 2014.  Germany is often seen as the leader of the E.U., and Schroeder's involvement in Nord Stream has shown that the institution's most vital member is forging its own path.

Barack Obama opposed the Nord Stream 2 project, while E.U. president Donald Tusk has also criticized its development.  Trump is similarly justified in displaying his own public disdain toward it, even if it irks a close ally.  

Nord Stream 2 will ultimately give Russia more leverage over Europe, despite E.U. pledges to diversify gas supplies.  Germany will be the main benefactor from not having to depend on Ukrainian supply routes, but the project will not reduce Russia's gas supply leverage over Germany in any way.

It will also further divide European countries and decrease the desire to act cohesively on sensitive issues.  The next time Russia cuts off gas to Ukraine, Germany may be far less affected and will therefore feel less inclined to act.

Germany has pushed for tougher action against Russia in the last few years while seeking constant reassurance from the U.S.  Yet it continues to deepen its economic and geopolitical relationship with Russia through a multi-billion-dollar pipeline deal.

If Nord Stream 2 goes ahead, it will drastically decrease Europe's ability to coordinate against Russia's grand strategy to divide the continent.  Germany's leaders cannot continue to brush this aside as much as they would like.