New European Commission, old problems? The last game of Nord Stream 2

The geopolitical game over Nord Stream 2, a gas pipeline directly connecting Russia with Germany and imposing a strategic mark on Central and Eastern Europe is entering its final stage. Therefore, the choice staff of the new European Commission and the competences of the Polish Commissioner are critical.

At the end of May, the European Union passed regulations governing gas pipelines importing gas into the EU. The current battle for Nord Stream 2 thus moves to the level of legal implementation, often much less visible and therefore underestimated. Under the new regulations, the European Commission gives final approval as to the principles of operation of gas pipelines such as Nord Stream 2. Therefore, the supervision of the newly staffed Commission over the appropriate application of the provisions by Germany will be crucial.

The now-beginning final stage of the game of Nord Stream 2 within the EU will, as before, be tough. The dispute over the law and its interpretations will be lined with the interests of individual players. One cannot rule out that the United States will at some point enter the game by introducing sanctions against companies involved in the gas pipeline. Nevertheless, the threat of Washington using such an instrument has been on the horizon for 2 years.

The stake at the current stage is time. Its passing increases the costs of launching the gas pipeline, both political and economic ones. The later it takes place, the higher the bill for its supporters.

Nord Stream 2 is already delayed by at least a few months, which means a significant defeat for Russia. As a result of the delay, Moscow will not achieve its goal to move the gas flow from the Dnieper to the Baltic Sea before the contract for gas transit through Ukraine expires on 1st January 2020, and thus cut off Ukraine in a way that is painless for the European Union. If it was possible at all, the complete blocking of the construction of Nord Stream 2 had ruled out in 2016-2017.

Struggle for the „(P)ole position”

It so happened that the new reshuffle in Brussels coincides with the last stage of the dispute over Nord Stream 2. The new European elections mean the beginning of a new institutional cycle in the European Union. The European Parliament and the European Commission soon start working in a new arrangement. There will also be a new President of the European Council. We are hearing news about staffing key positions in the EU and regrouping various political families in the European Parliament. These issues rightly attract attention, as they set the game of interests in the EU for the next 5 years.

The struggle for positions is like a „pole position” fight in Formula One racing. The stake of the forerun is the starting position for the proper struggle later. It is vital who will be nominated as the Polish Commissioner and who will receive that area of operations (portfolio).

The competences and political experience of the Polish Commissioner, regardless of the area of activity assigned to them, can play a crucial role. After all, it’s not like only the Commissioner for Energy determines energy issues. First of all, other Commissioners can have an informal impact. Second, many decisions are ultimately resolved by voting at the College of Commissioners. The commissioners make political decisions acting within the framework of the law (or at its borders – this is often up for interpretation). What these will be, largely depends on the Commission’s composition.

The game of Nord Stream 2 so far

Nord Stream 2 is an example of intricate orchestration of interests. The owner is Gazprom, a very wealthy state company, supported by Russia’s political assets. Its lobbying and communication activities are very effective. The gas pipeline project also directly involves very influential companies from the major member states: Germany, France, Austria, the Netherlands and Great Britain (the latter, however, is not a supporter of the gas pipeline). In particular, Germany and Austria provide strong political support to the project.

Such aggregation of interests translates into the way the EU institutions operate. The influence of the Nord Stream 2 supporters is visible both on the intergovernmental level (in the European Council and the EU Council) and the Community level (in the European Commission; The European Parliament remained quite immune).

In the case of the European Council (gathering prime ministers and head of states), reaching a consensus is very strongly influenced by the most influential players, Germany and France. The situation in the EU Council is similar, as it decides through voting with the so-called double majority. It is how a state’s power has been formally written into the legislative process since the Treaty of Lisbon. Countries involved in Nord Stream 2 have such an institutional position that they are relatively short of reaching the number of votes required to block solutions they find unfavourable.

Finally, the European Commission. Here, the effect is neither direct nor formal, which makes it hard to see. Without going into the political details of the formation of interest groups and lobbying, one can limit oneself to stating that the staff in managerial positions plays an important role. While it would be quite time-consuming to calculate the number of positions related to countries supporting Nord Stream 2 (which would be a considerable number indeed!), this is very simple in Poland’s case. Of approx. 100 management positions only 3 are held by its citizens.

Berlin – driving quietly will get you further

The attitude of the German government regarding Nord Stream 2 is not without reason. Chancellor Angela Merkel’s avoiding the nub of the problem by calling it „a business project” or her long silence should deceive no-one. Accepting that the joint German-Russian strategic undertakings are only the result of the social democrats’ influence would be a mistake. Explaining how the influence of one person, former chancellor Gerhard Schröder, who has been working for the Russian energy sector for more than a decade and is intensively lobbying in Germany for his employers, would be even less convincing.

The strong support for Nord Stream 2 is the result of such a definition of the German interest both by the government and the majority of the economic and political elite. Exactly why these circles perceive Poland so disproportionately to its role is very puzzling indeed. For instance, Warsaw is more than twice as important an economic partner for Berlin as Moscow (considering trade value), not to mention the joint membership in the EU and NATO.

The fact that Berlin defines its interests one way or another is not unusual. What is crucial, however, is that in this particular case, it is an action that strikes the European Union and NATO. Germany ignores the mutually agreed goals of the EU energy policy, bends European law to its needs, undermines the unity of the European community and ignores the security of its allies.

Such action should always be called for what it is in the EU and in the capitals of the Member States (not only in Warsaw!): as anti-European. Although it seems that these are only words, it is worth considering how important a factor in post-war German identity Europeanness is. In the case of Germany’s policy, the key could have been the shift in the public opinion’s attitude. Only a critical attitude towards Nord Stream 2 and close German-Russian cooperation could have influenced the German government following the preferences of economic circles and some of the political elite.

However, it should be remembered that despite Russia’s war with Ukraine and the occupation of Crimea, 69% of Germans are expecting greater cooperation with Russia. Although many critical voices were raised, particularly among the Greens and part of the CDU, the broader public debate on Nord Stream 2 was mostly non-existent. Undoubtedly, this state of affairs served those who supported the gas pipeline project.

Brussels – a glass-half-empty and half-full

The EU institutions were the main arena where Poland had a direct influence on shaping policy towards Nord Stream 2. Moreover, its interest was in line with the objective interest of Community institutions. After all, the gas pipeline is a threat to the Union in both political and security terms.

After all, it strengthens Russia’s influence on the EU, and it is Moscow that supports disintegration effects in the Community (e.g. Eurosceptic parties, information warfare), infuses discord among Member States and weakens the transatlantic ties, carries out military activities in its directly or indirectly immediate neighborhood (Ukraine, Middle East) and puts „gas pressure” on member states from Central and Eastern Europe.

Nord Stream 2 threatens the security, competitiveness and cohesion of the EU energy market, thus undermining the EU’s energy policy. At the market level, the law and its application are the most important. Make no mistake, however – the interpretation of the law is also a game of interests, although limited by its requirements. As a result, it is less susceptible (but not entirely!) to power politics. As part of a regulatory dispute, the European Parliament and, to some extent, the European Commission sided with the opponents of Nord Stream 2.

The Commission had a crucial role to play. However, it was divided in terms of interpretation of the basic legal instrument – the gas directive of 2009. On the one side of the dispute, there was the Directorate-General for Energy (DG ENER, together with the relevant Commissioners, M. Šefčovič, M. Cañete), which (rightly) acknowledged that the provisions of the existing Directive should cover Nord Stream 2. On the other, there was the hugely influential Legal Service of the European Commission – directly subordinate to the President of the European Commission, although theoretically autonomous – which recognized that there is no legal basis to consider that the Directive may apply to Nord Stream 2.

Knowing the somewhat one-sided and unconvincing analysis of the Commission’s Legal Services, one may wonder whether it resulted only from objective legal analysis. Perhaps this has something to do with the role of the then head of the Cabinet of the President of the Commission, an outstanding lawyer, the Bavarian Martin Selmayr?

In Brussels he earned the nickname of the „Berlaymont monster”, and descriptions of his actions suggest that he is a mix of Grigori Rasputin and Harvey Specter. His position and – importantly – his approach to the law speak volumes of the circumstances of his later promotion from the right hand of the President of the Commission to the Secretary-General of the Commission, the most powerful Commission official. The informal influence and the manner of exercising authority turned formally into the most important official position, governing the whole machine of 30,000 Commission employees.

How did that happen? By breaking the law. At the heart of the European Commission. The report by the European Ombudsman states this very clearly. During the urgent meeting of the Commissioners, Selmayr has been proposed to take the vacant position of Deputy Secretary-General of the Commission. After the approval of the election, President Juncker announced that the current Secretary-General would resign from his position. At the same time, he proposed the new vacancy is taken by the Deputy Secretary-General, who for several minutes has been Selmayr. Given the Commissioners’ utter confusion and the speechlessness, the candidacy was accepted with no objections. A few minutes later, the choice was announced at a pre-convened press conference. One should add that had Selmayr not first been appointed as a deputy, he would not meet the formal criteria to apply for the function of the Secretary-General. Neither indignation in the press (mainly French and English), nor the Ombudsman report, nor the European Parliament’s objection changed anything – Selmayr still holds the office of Secretary-General. This story not only showcases acting on the principle of fait accompli and the instrumentalization of the law but also a kind of mastery and insolence in ruthless conduct.

Selmayr’s influence is just a hypothesis. It is clear, however, that the dispute over legal interpretation in the context of Nord Stream 2 has been going on in the Commission for several months. After such a time of internal paralysis, it became clear that the Commission would not use all available legal instruments to force the pipeline promoters to comply with the applicable law and the established goals of the energy policy. In return, a compromise was reached, stating that an amendment of the gas directive was required, which was then passed very quickly by the Commission.

Thus, the dispute moved to the EU Council (gathering ministers) and another tug-of-war began between the Member States. First, the Bulgarian Presidency acted leisurely, and Germany effectively delayed the arrangements, and then the subsequent Austrian presidency essentially blocked the work. It is worth adding that at this stage, the opinion of the Legal Service, but this time of the Council, prepared on the request submitted by Germany, was crucial. Meanwhile, Gazprom was already beginning construction, although it did not yet have all the permissions and could not be sure of the pipeline’s entire route.

When Romania took over the presidency – after a year of the blockade in the Council – the work was concluded in a month. In the face of the race against time, taking the draft amendment out of the locker was undoubtedly a great achievement for the opponents of Nord Stream 2, including the Polish government.

The final form of the regulations was resolved by voting in the EU Council based on a double majority system. Until now, France has not publicly taken the floor about the amendment to the directive and has not officially supported Nord Stream 2. When the fate of the new regulations was being determined, Paris made a U-turn in line with the best traditions of Talleyrand, the French master of diplomacy from centuries before. France hinted its readiness to adopt new legislation. Although it may seem that Paris is making an unexpected turn (and there are several reasons for this) and leaves the Nord Stream 2 camp, it most likely merely raised the price for its formal support.

The result of drawing new proposals from the legislative locker was unexpectedly putting Germany in a difficult situation. However, this ended with a „compromise” agreement between… France and Germany, i.e. the players that supported the establishment of the gas pipeline from the very beginning. The regulations were then corrected at some key points under the pressure of the energy committee of the European Parliament led by J. Buzek, in which Z. Krasnodębski also worked.

This way, regulations were passed that will undoubtedly have to be applied to Nord Stream 2. It is a big success. The European Union took action, even though with more than 2 years of delay, in great pains and in a way far from ideal. Nevertheless, the regulations have been weakened so much that one cannot exclude actions that may be contradictory to them, but will still be accepted.

Washington – a gun still in the pocket

The United States plays a vital role in the dispute over Nord Stream 2 and could unilaterally determine its fate. They have already been signalling their readiness to join as a game-changer for… 2 years. Admittedly, one cannot rule out a decisive US move during the coming months, but that would rather delay the project and increase its costs than stop the construction.

The fact that the United States has not (yet) decided to use the sanctions gun does not mean that they have only limited themselves to repeated reminders that they can do so. It is quite probable that the American soft power had a significant influence in various European capitals and was a critical support for the opponents of Nord Stream 2.

In this context, one should note Denmark’s position. The Copenhagen procedure so far, which consisted of delaying the approval of the gas pipeline route, has undoubtedly led to a delay of several months. The Polish government is very active and efficient on the Danish front. The best example is the excellent move that solves the previous Danish-Polish dispute over part of the Baltic Sea. Would such actions be enough without the US support? One should remember that Berlin is Copenhagen’s major economic partner, and Washington is its most important ally, security-wise.

Last stage of the game – a role for the new Commission?

So far, the Commission’s approach with its inner turmoil does not necessarily inspire optimism regarding the future fate of Nord Stream 2. All the more that Russia should be expected to play very dirty. It seems that Moscow will want to enter into a broader agreement (simply put: a dirty deal) covering both Nord Stream 2 and gas transit through Ukraine. It probably won’t be presented in a calm atmosphere, but rather in a situation created by Moscow, involving the lack of a guarantee of gas transfer via the existing route. “Winter is coming…” will be very much valid at the turn of 2019/20, and even more 2020/21.

The new regulations (revised gas directive) hand over to the European Commission the final decision on how Nord Stream 2 should operate. Had it been done in full compliance with the applicable law, then, first of all, the bill for its launch would be much higher for investors and would not be so much at the expense of the EU energy market; and second, its negative strategic impact on Ukraine and Central-Eastern Europe might be decreased.

The implementation of the new law (and this would be done by Germany under the Commission’s supervision) may mean many pitfalls. It cannot be ruled out that Germany will interpret the new regulations in such a way that, although the gas pipeline is one whole and as such is subject to the law, they recognize that it can be sectioned and only one section of it be regulated. Furthermore, one cannot rule out that Germany would grant exemptions from the law, violating the conditions for their granting. These are just some examples. For more, see the relevant part of the analysis „What next with the EU energy policy?”.

Given these challenges, the newly formed Commission’s behaviour is going to be crucial. As a „guardian of the treaties” it should watch over the full application of EU law, not only in formal but also material terms. In other words, to avoid getting around the law. All the more so since the European Union is a community of law, a Rechtsgemeinschaft, as Walter Hallstein, the first president of the European Commission, once put it. Germany likes mentioning that, not only at universities, so we can (can we?) hope that they will also apply it.

Brussels is not a football field

The weak presence of Poland and Polish sensitivity in Brussels and some systemic shortcomings of Polish European policy (which would require a separate analysis) have been important challenges for Poland for many, many years. It should also be remembered that together with Brexit, the power of Germany and France in the decision-making process will increase, and Poland will lose an excellent ally in areas it finds relevant. Nevertheless, the example of Nord Stream 2 shows that with full mobilization of assets and a broad internal political consensus on the matter, Poland can play consistently and achieve point winnings.

Based on the case of Nord Stream 2, it may seem that the game in Brussels is often like playing against Germany at a football tournament. They always win eventually. First of all, that is a football myth, refuted in relevant research. Second, Brussels is not a football field.

The game of Nord Stream 2 has not finished yet.

Polish version is available here.