Zelensky Demands Compensation From Germany as Ukraine to Lose Billions From Nord Stream 2

Wednesday, July 14, 2021

Paul Antonopoulos, independent geopolitical analyst

Ahead of Monday’s meeting between German Chancellor Angela Merkel and Ukrainian President Vladimir Zelensky, it was revealed that he would ask his German counterpart to either stop the construction of the Nord Stream 2 gas pipeline from Russia to Germany or pay compensation to Ukraine if it loses its status as a major transit country. This is an audacious request considering Ukraine is a leading country in attempting to pressure and contain Russia, but simultaneously does not want to lose its status as a key transit country between its eastern neighbor and Central Europe.

Although the Nord Stream 2 company expects the construction of the first branch of the gas pipeline to be completed by the end of August, and considering that 98% of the work has been completed already, Ukraine’s elite still believe there is a possibility of stopping it. The Deputy Chief of Staff of the President of Ukraine even believes that the news of the pipeline being almost finished is just “speculation” and is convinced that Nord Stream 2 can be stopped at any stage.

German media do not rule out the possibility that Berlin could offer Ukraine billions to repair the failed gas network in the country in order to smooth out disagreements with Washington over Nord Stream 2. As compensation, one of the options mentioned is support for the production and export of Ukrainian hydrogen fuel.

Investing in the Ukrainian gas system also poses many issues, especially since alternative pipelines run through Greece, Turkey and Bulgaria to reach European markets. The countries further west in Europe, like France and Spain, do not particularly need pipelines. France has nuclear energy and it is easier for Spain and Portugal to be supplied with liquefied natural gas. For these factors, especially with more pipelines reaching the Balkans, there is no real need for the overhaul of the Ukrainian gas system.

Certain quantities of gas will continue to go through Ukraine because of the agreement between Moscow and Kiev on the transit of Russian gas to Europe until 2024. The possibility to extend the agreement after 2024 is not ruled out, but will certainly be weaponized by Moscow if Kiev continues to maintain hostile policies. Because gas consumption has increased, Ukraine may be used as a reserve source if gas suddenly runs out somewhere.

Overhauling the Ukrainian gas system would have been four times cheaper than building two new branches of Nord Stream 2. However, as Kiev maintains a hostile policy against Moscow, Russia was forced to find alternate routes to deliver their gas to Europe. It is this contradiction that frustrates Kiev as it is their own behavior that has reduced their status as an important transit country. They now demand compensation from Germany despite their own policies putting them in the position of irrelevancy in the gas game. Germany now has almost all the benefits from a gas pipeline and can now sell gas to most of Europe.

Ukraine will not be the only country to suffer from the Nord Stream 2 project. Poland, Latvia and Lithuania, who all maintain hostile anti-Russian policies, claim that the pipeline is a political project. Moscow maintains that the pipeline is an exclusively economic and commercial project. However, there is an undeniable political aspect to the pipeline as the most ardent anti-Russian countries in the European Union and NATO, the aforementioned Baltic States and Poland, will see Russia further integrated into European energy structures.

More importantly for the average European citizen, energy consumers will get cheaper gas through the Nord Stream 2 gas pipeline than that from pipelines that go through the territory of other countries. This is because there is no need to pay for transit and there is less risk coming from individual countries, as was the case in 2009 when Europe froze because of Kiev’s blackmail attempt against Moscow.

Essentially, there is nothing that can stop the completion of the Nord Stream 2 gas pipeline, especially as it is only a matter of days until gas starts flowing through it. Zelensky can complain to Merkel and Germany as much as he wants, but the reality is that the Nord Stream 2 project will be completed and Ukraine will be bypassed as the main transit country for Russian gas to reach European markets, and they only have themselves to blame for losing out on desperately needed billions of dollars in transit fees.

Source: InfoBrics