Can Germany Broker A Russia-Ukraine Deal On Nord Stream 2?

KIEV, Ukraine -- Berlin and Moscow both support building the controversial gas pipeline, but Kiev is opposed. Economy minister Peter Altmaier is commuting between capitals to find a compromise.

German Economic Affairs Minister Peter Altmaier arriving in Kiev, Ukraine.

He started out in Kiev on Monday and was back 24 hours later after a pit stop in Moscow: German Economic Affairs Minister Peter Altmaier, who has been tasked with trying to find a compromise that could break or least significantly lower Ukraine's opposition to building the Nord Stream 2 pipeline in the Baltic Sea.

The Ukrainians fear that, once it is completed, Moscow will rely exclusively on this pipeline to pump gas to Western Europe, resulting in a loss of transfer payments to Kiev that are estimated at abour $2 billion per year (€1.7 billion).

Altmaier has suggested guaranteeing that gas shipments will continue to cross Ukrainian territory in future, but this gives rise to new questions:

  • When would these shipments last until? 
  • How much gas would be transported across Ukraine? 
  • And who would give the guarantees? 
  • Russia? The European Union? 
  • Or both of them? 
It's all a matter of negotiation, and the German economy minister is currently keeping his cards close to his chest.

He is confident of the outcome, he says with a mischievous smile.

Time is ticking 

Negotiations haven't been made any easier by the fact that the US, too, is pushing into the European gas market.

Altmaier, an outspoken supporter of close trans-Atlantic ties, has always stressed values held in common with the US, "no matter who happens to be governing any of the EU states or the US."

His words could be taken as an indirect criticism of US President Donald Trump, whose administration currently threatens friend and foe alike with unilateral sanctions and increased customs duties.

The White House also doesn't think too highly of the Nord Stream 2 project, with self-interest the underlying reason.

Washington would like to export to Europe the natural gas it extracts through hydraulic fracking, pushing Gazprom out of the market.

Two so-called LNG liquid gas terminals have already been set up, one in Poland and one in the Netherlands, and more are planned.

But there is no getting past the fact that the US can't compete with Russian gas prices — another reason why the German government advocates building Nord Stream 2.

Time is ticking: Chancellor Angela Merkel is scheduled to arrive in Sochi on Friday for talks with Russian President Vladimir Putin.

The leaders will discuss the gas pipeline, as well as the situation in Syria and Iran.

Russia, the EU and China have confirmed their ongoing commitment to the Iran nuclear deal, a display of unity following the US' recent withdrawal from the pact.

Observers say Germany and Russia are also moving closer together when it comes to bilateral economic cooperation.

Current sanctions against Russia will stay in place, Altmaier told Deutsche Welle, but beyond those limitations, closer cooperation is possible.

The economy minister added that Germany wants to promote cooperation of medium-sized companies in both countries.

The German government could also imagine supporting training for Russian managers or helping Russia extract resources in a more environmentally friendly manner, he added.

"There is so much the sanctions don't cover," Altmaier said in the DW interview.

To that degree, the German economic affairs minister and Russia's prime minister, Dmitry Medvedev, agreed during Tuesday's talks in Moscow on a strategy meeting in June between the respective ministry experts.

Altmaier also brought up the issue of legal security for German companies, which is an important precondition for continued investment in the Russian market.

After all, he said, the German government aims to trigger sustained growth in Eastern Europe — noting that, of course, Germany stands to benefit in the end from more economic growth in Russia, Ukraine and other Eastern European countries.

Source: Deutsche Welle