The Northern Gas Pipeline seems more real

Boguslaw Kowalski

The governments of Sweden, Finland and Denmark consented to have the northern gas pipeline (Nord Stream) built. It is to be located on the bed of the Baltic and connect Russia and Germany. It would be cheaper to have it through Belarus and Poland. If such a version had been proposed in the 1990s we would have rejected it showing our solidarity with Ukraine, which would have been omitted. Now we are observing that we cannot count on such a gesture of support on any of our formal European ally. We are learning a bitter lesson of real politics.

Priority of politics over economy

The company Nord Stream AG has been registered in Switzerland. Gazprom Export, the Russian giant exporting gas, has 51 % shares and the German concerns E.ON-Ruhrgas and BASF-Wintershall have 20% shares each. The smallest share of 9% belongs to the Dutch firm Gasun. Recently the French concern GDF Suez expressed the desire to enter this consortium. At first, the project was an expression of strategic partnership between Germany and Russia, supported by both governments. With time it assumed more international character and looking at its shareholders it has become a project of Russia and Western Europe. The pipeline through the Baltic is to have two parallel legs, the length of each is 1,200 m, and is to connect the Russian Vyborg with the German Greiswald. The investment is to cost 8 billion euros and should transmit 55 billion cubic metres annually, i.e. one tenth of the present usage of gas in the whole European Union. The first leg should be ready towards the end of 2011 and the other in 2012. Poland opposed the construction from the very beginning and loudly said that it struck its fundamental interests. Our country will not only lose the transit fares but also it significance to supply gas to Europe. Our position in the negations with the Russians will be weakened to a considerable extent. Poland’s stand has been supported by the Baltic countries and silently by Belarus. The problem is that these countries, like Poland, have no direct instruments to co-decide about the realisation of this enterprise. Another essential argument is the costs. According to the experts if the pipeline ran through Central Europe the costs of its construction could be 50% cheaper. However, the initiators of the Northern Pipeline claim that the lack of transit fares will cause that in several years the costs of the construction will be balanced.
The political context is crucial. The construction of the gas pipeline through the Baltic strengthens the position of both partners. Russian has a clear position. It does not have to negotiate the conditions of transit and it can even impose its politics concerning gas transit on such countries as Poland, Belarus and Ukraine. The Germans will gain, too. They will not depend on the transit countries and controlling the other end of the pipeline they become the main supplier of Russian gas in Europe. The one that wants to buy it will have to talk to Berlin.

Environmental protection is not an obstacle

In this situation the Polish government had great hopes in the attitudes of the Baltic countries. The gas pipeline has to run through the waters of the economic zone of three countries: Finland, Sweden and Denmark. These hopes concern the rules of environmental protection. Some say that the construction and exploitation of the big pipeline on the seabed endangers the environment. As it is known these countries pay special attention to ecology. Denmark was the first to surrender. The government in Copenhagen gave its consent in exchange for the obligation that Nord Stream pays income tax on gas transit through this section of the pipeline that will be placed on the Danish territorial waters in the vicinity of the island of Bornholm. The Swedish and Finnish authorities waited to give their decisions. They did not hide their fears concerning the environmental protection. They examined the documents for 23 months and demanded some amendments to give their final permit to construct the pipeline at the beginning of November. Finland made Russia oblige itself to delay the introduction of the barrier duties on wood export. This was a big concern of the Finnish firms dealing with wood production. The introduction of the duty would have led to the bankruptcy of the whole industry developed in Finland. Whereas Sweden, which presides over the EU, made it shortly before the planned summit Russia – EU in Stockholm. It must have been assured that the meeting would be successful. For Poland the biggest disillusion was the stand of Sweden. After we had realised the Eastern partnership in the EU we regarded Sweden as the closest ally in the Baltic region. Warsaw counted that Sweden, referring to the protection of environment would not consent to the pipeline and would show the construction through Europe as an alternative. That would have forced Russia and Germany to negotiate with us. But this did not happen. All three countries gained something and left Poland with its problems.

Money from the EU

Apart from the permits the consortium constructing the gas pipeline has another problem. How to finance such a big project? One of the proposed solutions is to take a loan from the European Investment Bank. It is a common EU institution that to finance important infrastructural investments. Therefore, its involvement in the construction of the pipeline would be justified. However, the problem was that the capital of this bank comes from the contributions of the member states proportionally to the size of the states. And the decisions are to be taken unanimously. Thus Poland and the Baltic states could effectively block the loan. But the situation will change after 1 December 2009. On that day the Treaty of Lisbon enters into force and one of its regulations is that the majority takes the decisions concerning the EU and its institutions, including the EIB. Poland loses this modest possibility to hamper the construction of the gas pipeline.
So, among close friends the dogs have eaten the hare. The irony of the situation is that we did not help Ukraine and we actually damaged our interests.

"Niedziela" 47/2009

Editor: Tygodnik Katolicki "Niedziela", ul. 3 Maja 12, 42-200 Czestochowa, Polska
Editor-in-chief: Fr Jaroslaw Grabowski • E-mail: