ARGUMENT: ENERGY SECURITYPermanent Rupture: The European-Russia Energy Relationship Has Ended with Nord Stream

Published 3 October 2022

Last Monday’s blasts that tore through the Nord Stream 1 and Nord Stream 2 pipelines have already blown up whatever was left of five decades of German energy policy. For Germany, abandoning the Nord Stream pipelines signified a fundamental transformation of Germany’s energy security strategy, and its approach to relations with Russia. “The Nord Stream pipeline was the last gasp of Ostpolitik and this week’s damage is likely fatal.” Emily Holland writes.

Last Monday’s blasts that tore through the Nord Stream 1 and Nord Stream 2 pipelines have already blown up whatever was left of five decades of German energy policy.

Emily Holland writes in War on the Rocks that on 6 September, Swedish seismologists reported several underwater explosions off the coast of Denmark. Minutes later, pipeline monitors in Germany reported a 94 percent drop in pressure in the Nord Stream 2 pipeline. Currently, there are three separate major leaks in the controversial Gazprom pipelines that once directly shipped Russian natural gas to German consumers.

“While the circumstances of the explosions are still unclear, Danish and Polish leaders have stated that the likely cause is sabotage, while a Ukrainian official deemed the explosion a “terrorist attack planned by Russia,” Holland writes, adding:

In the context of Russia’s continued war in Ukraine, these explosions signal a critical juncture in Euro-Russian relations and global energy flows. Indeed, they mark the definitive end of the gas bridge that has linked the fates of Europe and Russia since the 1960s. The violent demise of Nord Stream forces Brussels and Moscow in opposite directions: Europe will now accelerate its clean energy transition and seek closer energy ties with the United States, while Moscow is now China’s gas station. This is not ideal for either side. In the coming years both European competitiveness and Russia’s role on the global stage will diminish.

Holland notes that although the Soviets first began selling energy products to Western Europe in the late 1950s, today’s energy dependency dates back to German Chancellor Willy Brandt’s Ostpolitik.

Starting in 1969, Brandt sought to normalize relations between East and West by creating new economic and political links, particularly in the realm of energy. One the policy’s first achievements was a landmark gas deal between the Soviet Union and West Germany in February 1970. The flourishing gas relationship lasted through the collapse of the Soviet Union, German reunification, the chaotic first decade of post-Soviet independence, and more.

In 2011, the Nord Stream pipeline was launched in a splashy ceremony attended by then Russian President Dmitry Medvedev, German Chancellor Angela Merkel, French Prime Minister Francois Fillon, Dutch Prime Minister Mark Rutte, and E.U. Energy Commissioner Gunther Oettinger. In 2015, over a year after Russia’s annexation of Crimea, a consortium of Western European firms signed an agreement with Gazprom on the construction of Nord Stream 2, which would double the capacity of Russian gas exports to Germany.

For Germany, abandoning the Nord Stream pipelines signified a fundamental transformation of Germany’s energy security strategy, and its approach to relations with Russia. Germany’s major energy utility companies, including Uniper and RWE, were powerful lobbyists for cheap and plentiful Russian energy, and have historic ties with Germany’s Christian Democratic Union. The strength of Germany’s industrial base was also built on a grand bargain with Russia: Relatively cheap and plentiful Russian energy kept German exports competitive on global markets. Moreover, affordable Russian gas allowed the Christian Democratic Union to work out a deal with the Green Party to wind down nuclear energy and expand renewables. 

Holland concludes:

Over the longer term, Europe will have to reckon with a major industrial transformation. Energy prices will remain elevated for the foreseeable future, making production unprofitable in energy intensive industries. This week, 15 E.U. member states wrote to E.U. energy commissioner Kadri Simson demanding an E.U. ceiling on gas prices to help protect industries that are collapsing under the weight of soaring hikes. A deep recession in Europe is inevitable: Deutsche Bank is predicting that Euro-area gross domestic product will fall by three percent in the next year. European governments are doing their best to shield their citizens and businesses from the impact of the energy crisis by nationalizing utilities, rolling out aid packages such as €100 checks to poor households, and capping energy price increases for households and small businesses. But these interventions are costly, and do not address the inevitable longer term societal adjustments. For decades, the competitiveness of European industry hinged on affordable Russian energy, but this arrangement has now ended. The loss of European competitiveness will disproportionately affect poorer Europeans, who are already voting the radical right back into office

The Nord Stream pipeline was the last gasp of Ostpolitik and this week’s damage is likely fatal. Even in the midst of an energy crisis that is arguably more severe than that of 1973, it is almost inconceivable that European capitals will go back to pre-war energy arrangements. Even if European unity against Russian aggression does not hold in the coming years, the days of Russian energy dominance in Europe are over. States will accelerate clean energy transition, nuclear energy is poised for a renaissance, and Russia’s place on the European continent will be forever diminished.