NATO v. Nord Stream 2
After a five month delay, Russia is ready to complete the Nord Stream 2 pipeline.
The Nord Stream 2 pipeline, built to increase the flow of Russian gas into Europe’s biggest economy, was thwarted five months ago after U.S. President Donald Trump imposed sanctions that forced workers to retreat. Now, after a three-month voyage circumnavigating the globe, the Akademik Cherskiy, the Russian pipe-laying vessel that’s a prime candidate to finish the project, has anchored off the German port where the remaining pipeline sections are waiting to be installed...
Satellite images captured by Planet Labs inc. on May 10 show that sections of pipeline have been moved to a jetty equipped with a crane for loading. Ship-tracking data shows that a dredging vessel operated by a Nord Stream 2 contractor, as well as a Russian pipe-laying-crane ship are also in the vicinity and that the Akademik Cherskiy had moved as of Wednesday next to the jetty loaded with pipes.
In order to complete the final 100-mile stretch of Nord Stream 2, Russia effectively needs to use its own vessels due to U.S. sanctions.
The U.S. still thinks that it can stop Gazprom from finishing the pipeline, but that's insane.
Tens of billions of dollars, along with Putin’s reputation as a savvy geopolitical chess master, have been invested in the pipeline project. However, Moscow is now running out of viable options. The only move left is to proceed in defiance of sanctions that will adversely affect many in the higher echelons of the Russian establishment.
This is checkmate.
Yes, this is checkmate...for Putin.
After investing billions of dollars, Gazprom would go bust if they don't finish this pipeline. So do you really think that more U.S. sanctions will give them even a moment's pause?
Sanctions are pointless now.
The question here is, why was this pipeline such a big deal?
To give you an idea, consider the recently completed Turkstream pipeline.
The Turkstream pipeline network isn't even fully integrated yet, and it's already having an impact. Who it's impacting is the key.
Although Ukraine has not been importing any Russian gas for its domestic needs since November 2015, it has signed a five-year transit contract with Gazprom for a minimum 65bcm in 2020 and 40bcm/year from 2021.
However, transit volumes have fallen 47% year on year in the first four months of 2020, amounting to 15.5bcm. The steep drop has been linked to European oversupply and low demand, but also to the lack of transit to the Balkan region after Russian exports to Turkey, Bulgaria and Greece were diverted to the new TurkStream pipeline from January 2020.
“Our transmission system can transit 110bcm of gas [annually] but this year we expect only 50-55bcm of transit,” Makogon added, pointing out that volumes would drop even lower if Russia commissions Nord Stream 2, a 55bcm/year subsea pipeline designed to link Russia directly to Germany via the Baltic Sea.
Ukraine stands to lose $3 Billion a year in transit fees from Russia once Nord Stream 2 is completed this year. This will devastate Ukraine's budget and economy.
Before you feel any sympathy for Ukraine, consider the situation that Ukraine put Russia in.
Ukraine’s NATO membership ambitions were written into the Ukrainian Constitution in February 2019 via an amendment that also confirmed the goal of eventually joining the European Union.
NATO integration has remained official Ukrainian policy following the April 2019 election of President Zelenskyy. In early 2020, the country was said to be on track to secure NATO Enhanced Opportunity Partner status later in the year if the pace of reforms was maintained.
NATO's mission continues to be "destroy Russia". So you can see why Russia would feel the need to, at the very least, not help fund an enemy nation.
Plus the potential consequences of Ukraine entering NATO are terrible.
There are ongoing concerns that membership would allow Ukraine to immediately invoke Article 5 of the NATO treaty, the stipulation that an armed attack against one member state is an attack against them all.
Fortunately, the new Ukraine government of President Zelensky doesn't appear nearly so eager for a military confrontation with Russia. Plus public support for joining NATO is dropping.
If I was to make a prediction, I would say that NATO was about to experience a political setback.