Debating Nordstream

by Joshua Foust on 10/29/2007 · 11 comments

While we try to keep our content as tightly focused on Central Asia as we can, the state of the world today sometimes requires us to extend our gaze farther afield. Since it is difficult to discuss Central Asia’s energy markets and politics without also discussing Russia, and doubly difficult to discuss Russia’s local interests without considering its larger ambitions, both within Europe and in a global sense, sometimes a discussion must be much more global in outlook, while maintaining a definite interest for our geographic specialty.

Steve LeVine, whom I consider a kindred spirit in his obvious frustration at the U.S.’s strategic nonchalance in the face of a Russia with clearly expansionist ambitions on the energy—and especially natural gas—markets (see here, here, here, here, and here, for starters), points to an interview Foreign Policy conducted with Zbigniew Brzezinski, President Jimmy Carter’s National Security Advisor and the single American most responsible for the mijahideen and, eventually, al-Qaeda (he says it was worth it).

FP: Will Russia’s influence on the European Union continue to grow? There have been many dire warnings about EU member states’ reliance on Russian energy. Do you believe this is a threat, and can Europe wean itself off Russian energy?

ZB: It’s a potential long-range threat. It is not yet a threat. If Europe and the United States jointly do not do what is needed to obtain great diversification of access to energy, Europe could become politically vulnerable. This is why it’s important to the West to see access to the Caspian Sea energy resources and beyond the Caspian to Central Asia. This is why the West should promote such projects at the Nabucco pipeline through southeastern Europe to central Europe.

Nabucco only gets you so far, however. At the moment, gas must traverse Russia pipelines to reach it. LeVine’s solution—one he shares with a number of people, including this author, is the trans-Caspian pipeline, which has been more or less stillborn for a while now. That’s not to say it’s dead, but these things take a lot of time.

Russia, meanwhile, is pushing through Nordstream.

NEGP

Notice how that pipeline goes along the seabed of the Baltic. Such a thing is hellishly expensive to build, especially for 1200 km. Building it overland, through Lithuania and Poland, would be much cheaper.

Cost, however, is only one consideration when it comes to big, national oil projects. The BTC pipeline, for example, was not the cheapest solution to avoid clogging the Bosporus and breaking Russia’s monopoly on Central Asian energy exports—running a pipe through Iran was. Similarly, a trans-Caspian pipeline is not the cheapest solution to making an end-run around Russia: going through Iran is. Of course, doing anything to acknowledge the potential of a positive role for Iran is more or less verboten in American politics these days, even if using their shiny new port on the Gulf of Oman might offer some good commercial leverage with Pakistan.

Russia is simply, and naturally, uninterested in doing the most economical thing to get its gas to Northern Europe. They want to sell to Germany at a discount, and gouge the rest of the former Eastern Bloc into economic submission—much as they have tried with Belarus, Ukraine, Moldova, and Georgia. This is not a moral consideration, at least primarily. It is just smart, and damnably clever, geopolitics.

Seen in that context, the leadership of Nordstream is a fascinating beast: within a month of his resignation as Chancellor of Germany, Gerhard Schroeder was installed as a high-ranking employee of Gazprom, the state-owned Russian gas company building Nordstream. It is the only time I am aware of a head of state has become the million-Euro-a-year employee of another state’s government-owned corporation. It is a stunning arrangement: the equivalent of George W. Bush going work for Halliburton on February 10, 2008, right after securing them a massive new contract in Iraq. It was a move so shocking the Washington Post at the time wondered if this employment bargain was the result of Schroeder’s dogged refusal to condemn Vladimir Putin’s constant erosion of Russia’s civil liberties—the conflicts of interest were that severe.

But the intrigue of Nordstream’s executive leadership is almost beside the point; what matters is that this pipeline will be a geopolitical disaster for the EU, as it would essentially lock them into being dependent on Russian energy beneficence for the foreseeable future. Perhaps emboldened by their recent “soft” success over the fallout of the Statue Riots (which mistakenly turned them into the poster child for how advanced countries can be victimized by next-generation “fifth wave” warfare), Estonia has begun resisting the Nordstream, especially now that Russia has announced its intentions to secure the pipeline’s construction through Russian naval forces. But there are difficulties in opposing the pipeline’s construction, especially at sea: in 1995, both Estonia and Finland voluntarily receded (pdf) their sea borders by 3 miles to create a 6 mile wide international sea lane in the northern Baltic, and this is where Russia will construct the first stage of Nordstream. Either or both can revoke its side of the treaty on 12 month’s notice, but such a move is unlikely given the way Russia has positioned itself.

What matters for Central Asia is that this dagger at Europe’s throat (as LeVine vividly draws it) will be built on the back of cheap Central Asian gas. Despite its nearly 50% price hike last June, Turkmeni gas still largely subsidizes Russia’s pipe network, as it is so much cheaper than many of their Siberian fields and makes for handy (and profitable) export to wayward vassals like Ukraine. Similarly, Nursultan Nazarbayev has displayed a curious apathy at his increasingly Russia-monopolized gas stocks, in particular the Kashagan field everyone seems to be salivating over.

Where all of this will head is unclear. Europe remains crippled by its lack of a coherent, EU-level energy policy—the resultant bilateral deals Gazprom has shrewdly negotiated will keep piling up into a tangled mess no one will be able to solve without a drastic step like (I am speculating) nationalization. But even then, the dependency Gazprom will have built up will create enormous headaches. Similarly, Russia, through Gazprom, is playing for keeps. The United States is not, and so long as that mismatch in national priorities persists the Kremlin will continue to outmaneuver the White House as it corners global energy markets.

Update: Ben at neweurasia.net weighs in with a lot of good thoughts, and a plea for temperance.


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This post was written by...

– author of 1849 posts on Registan.net.

Joshua Foust is a Fellow at the American Security Project and the author of Afghanistan Journal: Selections from Registan.net. His research focuses primarily on Central and South Asia. Joshua is a correspondent for The Atlantic and a columnist for PBS Need to Know. Joshua appears regularly on the BBC World News, Aljazeera, and international public radio. Joshua's writing has appeared in the Columbia Journalism Review, Foreign Policy’s AfPak Channel, the New York Times, Reuters, and the Christian Science Monitor. Follow him on twitter: @joshuafoust

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{ 11 comments }

highway61 October 30, 2007 at 11:27 am

Thanks for the post. I wonder, however, whether it’s valid to say that Gazprom wants to give a discount to Germany. Isn’t Germany paying more for Russian gas than any other entity? As far as I could tell, Belarus only this year has gone from ~$47 per 1000 cubic meters to $100. This is still a far cry from what Germany pays.

oldtimer October 30, 2007 at 12:01 pm

How much will Germany be paying? We can see whether it’s a discount since what others are paying is well known.

Mr. Shroeder is in a good company at NordStream and, by extension, at Gazprom. There are several German officials with past ties to Stasi. There is a Die Welt article on that: http://pbtt.wordpress.com/germany/die-welt-gazprom%E2%80%99s-german-daughter-is-operated-by-former-stasi-spy/

Tanvir October 30, 2007 at 12:52 pm

Estonia has been reluctant to allow Russians to build the pipe line anywhere near Estonia. I don’t blame the Estonians, considering the history they’ve had with the Russians. It wasn’t until the Singing Revolution that Estonia gained their independence from Russia. I just saw a website about the revolution, http://singingrevolution.com. It’s a story of courage and power of people when they “sing” as one.

D October 30, 2007 at 6:23 pm

“While we try to keep our content as tightly focused on Central Asia as we can,” — you’re surely taking the p***?
Sorry, but I don’t care much for news of your social outings, glass flinging escapades or latest posturing against other blogs. Or for the RELENTLESS focus on Pakistan and Afghanistan.
How could this great blog failed to have menioned the murder of Alisher Saipov? Where’s the indepth coverage of Uzbek and Kyrgyz elections?
Honestly, this Nordstream post was the most interesting in ages, and almost pertinent to readers who come here for CENTRAL ASIAN and by extension FSU news’n'views.

Joshua Foust October 30, 2007 at 9:35 pm

D, I’m afraid I must have missed the time Afghanistan was considered not a part of Central Asia, or where the opinions and unrest there had no impact upon the rest of Central Asia.

Similarly, I have found some stories on Alisher Saipov, but I’m afraid Nathan is far more versed in the internal politics of the former Soviet ‘stans, and I don’t have much to add beyond pointing out that it happened. Last I checked, we prefer analysis here, not simply acting like a news aggregator (though the news room does ably serve this purpose).

I’m afraid there is nothing to say about Uzbekistan’s sham elections we haven’t already said. run a search or read through the “Uzbekistan” tags. Nathan and I post on what we consider interesting. Frankly, there is a lot more interesting things (to me, at least) going on in Afghanistan at the moment than there is in Kazakhstan. Which is, if you think about it, good news for Kazakhstan, as it means there is no active disaster going on.

You can look at this, too, as a division of labor: Nathan and I, both living in large American cities, cannot hope to cover the intimate details of Central Asia with near as much precision as the good people over at neweurasia.net (to name one example). So for the newsy stuff, we tend to let them take the lead, while we focus on analysis.

I appreciate your frustration at our lack of comprehensive coverage, and I actually share it. Were I not, like Nathan, consumed with a day job that limits what I can post, I would dearly love to be far more wide-ranging in covering regional news, rather than simply trying to analyze what happens there from a mostly American perspective. If anyone would care to fund this blog sufficiently, I would gladly take on such role (this is a serious request). Until that time, I’m afraid we’re left with me covering what I happy to run across in the news of the moment that catches my eye, and with Nathan posting what he can when he can. And with our other contributors not posting at all, which is a shame.

Steve LeVine October 31, 2007 at 7:37 am

Josh, someone ought to fund you. You and Nathan are doing an outstanding job. I actually side with the coverage of Pakistan and Afghanistan, seeing them and Central Asia and the Caucasus as an effective strategic unit. And Nordstream pulls us into Europe. It’s a broad topic.

Steve LeVine, author
The Oil and the Glory

oldtimer October 31, 2007 at 10:30 am

Josh: I actually agree with D’s criticisms. Having said that, I can’t stress enough the fact that you and Nathan are providing a discussion platform while nobody else has done it. In that I agree with Steve that you two are doing an outstanding job.

Ian October 31, 2007 at 11:49 am

I confess I’d like to see more post-Soviet Central Asia-related stuff on Registan, but that’s a compliment to you guys for the job you’ve done. I enjoy reading your writing. The newsroom is nice, but sometimes all it takes is pulling a story from there and highlighting it in a light post.

For those who criticize anonymously, go start your own blog. If you don’t want to foot the financial costs, I know neweurasia is constantly looking for more writers.

Ben October 31, 2007 at 12:46 pm

Contact neweurasia if you’re from Central Asia and don’t want to foot the financial costs. We don’t pay Westerners to write on our site (that goes for me as well).

And D, I agree with Ian, it’s not really fair to criticise Josh for posting on what he has time for and what he is interested in. It’s a blog, not a special-interest publication. And if you don’t want to read stuff on Afghanistan and Pakistan, just don’t.

Nathan October 31, 2007 at 1:53 pm

Many thanks Steve.

I should also mention a couple other things that crimp my ability to blog as much as I’d like to. First, I really shouldn’t blog from work. Not that I can’t, but I shouldn’t. Second, my day job feels like a more formal version of writing for Registan.net a lot of the time. During the two hours of free time I have per day, it would feel too much like working to be blogging. (Not that I’m complaining about work at all. I love it, and I owe the position to blogging.)

Ian, you’re right about it being simple as highlighting a story. I shied away from that for a while, so I kind of need to relearn blogging to get back into that style of post.

The good thing about this discussion is that I’ve already gotten two offers from new contributors. But, I want to extend that offer out to even more. I especially encourage students to write. I can attest to how helpful blogging can be to getting a job in one’s field.

Craig Murray November 2, 2007 at 9:48 am

Josh,

Very good article. You may be interested in the second part of this long article here, which shares your analysis and concern:

http://www.craigmurray.org.uk/archives/2007/06/russian_journal.html

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