- The Washington Times - Monday, June 18, 2018

It has driven a wedge between America and its allies, given Russia a chance to put a stranglehold on European energy markets and may even threaten U.S. national security, some observers suggest, by potentially doubling as a spy device.

The proposed Russia-to-Germany Nord Stream 2 has morphed into much more than just another natural gas pipeline project, and it has U.S. officials vowing economic retaliation. U.S. allies across central and southern Europe warn that the project will sideline them while drawing Moscow and Berlin closer.

The 745-mile undersea pipeline, U.S. and foreign officials say, is poised to be a weapon Russia can wield to increase European dependence on its fuel. Furthermore, officials tell The Washington Times, deep security concerns are associated with Nord Stream 2, and the Trump administration has taken steps to sanction Russian companies that provide materials for Moscow’s “underwater capabilities” used to track undersea communication cables.

The implications of Nord Stream 2 — its threats to U.S.-European relations, its oversized effect on global energy markets and its potential to boost Russian eavesdropping — have pushed the project into the spotlight as it nears completion and have grabbed the attention of top officials throughout the Trump administration.

“In essence, Nord Stream 2 provides Russia another tool for political coercion of European countries, in this case through direct control of energy resources,” Vincent Campos, a spokesman for the State Department’s Bureau of Energy Resources, said in an interview Monday. “We have seen Ukraine suffer the effects of Russia’s maligned policies, and there’s nothing to suggest that Russia will cease.”

The Kremlin denies any geopolitical ambitions from the pipeline, saying it is responding to markets while exploiting one of Russia’s biggest national assets while supplying Western Europe’s biggest economy.

“We know that some countries express their disagreement,” Kremlin spokesman Dmitry Peskov told the Tass news agency Monday. “However, this project is purely commercial, it has no political connotations, and countering its implementation would violate the principles and norms of free competition.”

Winners and losers

At the core of the argument against the Nord Stream 2, made by both American and Eastern European officials, is that the project offers Russia a great deal of leverage over its neighbors, including Ukraine, which has long been a critical transfer point for Russian gas and oil to the West. Always tense Russian-Ukrainian relations have taken a sharp downturn since Moscow’s move to annex Crimea in 2014.

Nearly half of the 193 billion cubic meters of natural gas Russia sent to Europe last year — a record amount — traveled through Ukraine via traditional pipelines. That system gives Kiev financial rewards in the form of transmission fees and guarantees that Ukraine won’t be subject to energy blackmail from Moscow.

Russia couldn’t cut off those gas supplies to Ukraine without also shutting its supply routes to major European markets such as Germany.

Europe gets about 40 percent of its natural gas from Russia.

Nord Stream 2, which would travel under the Baltic Sea and make landfall on the German coast, would dramatically change that dynamic. The pipeline would follow the existing undersea Nord Stream pipeline and is expected to at least double the amount of gas Russia can transmit through the Baltic route.

Russian-owned Gazprom is behind the $9.1 billion project, which also has financial investments from major energy players such as Royal Dutch Shell. The company says it expects the pipeline to be finished by the end of 2019.

Gazprom argues that the pipeline is solely meant to double gas shipments to energy-thirsty Europe, but some countries in the region fear Russian President Vladimir Putin is using all the leverage the pipeline gives him to pressure adversaries and reward friends.

“It’s absolutely political to circumvent the traditional route from Russia to Europe. … It’s not about increasing supply from Russia. It’s really about closing one route and opening another. It’s dangerous,” Lithuanian Defense Minister Raimundas Karoblis said in an interview last week during a visit to Washington. “Politically, it helps Putin.”

Officials from Poland, Ukraine and other European countries also have called the pipeline dangerous to the region.

American lawmakers have expressed similar concerns and say that, in a worst-case scenario, the pipeline could free the Kremlin to take a far more aggressive tack on other fronts in its confrontations with U.S. allies.

“By circumventing Ukraine, Nord Stream 2 will remove one of biggest reasons for Russia to avoid large-scale conflict in eastern Ukraine — as the Kremlin is well aware,” a bipartisan group of 39 senators wrote in a letter to Trump administration officials this year. “Transporting Russian natural gas to European markets is critical to Ukraine’s economy and provides Ukraine with important leverage in its relations with Russia. Nord Stream 2 would wholly undercut that leverage and increase Ukraine’s vulnerability to Russia.”

The Gazprom-led consortium proposing Nord Stream 2 denies those charges and even says the U.S. and its allies are wrongly demonizing the pipeline for their own purposes.

“In light of the EU’s strong diversification, it appears that it is the West that is using a simple pipeline project for political purposes,” the Nord Stream 2 group says on its website, adding that “gas production in the EU is in decline” and the void must be filled with Russian gas.

Even as Eastern European countries bemoan the project, Germany remains one of its staunchest supporters. Analysts say the pipeline would make Germany a crucial transport hub for Russian gas.

“As a transit country, Germany would not only be able to collect the transit fees … but more so than that, it would become sort of the energy center for Europe,” said Alina Polyakova, a foreign policy fellow at the Brookings Institution who tracks Nord Stream 2 extensively.

“It would attract a lot of business. German companies support this,” she said.

It’s unclear exactly what those transit fees would be, but it would likely be in the billions of dollars; Ukraine last year got about $3 billion in fees, Ms. Polyakova said.

She added that the U.S. and its European allies could likely kill the project through strong joint economic sanctions, though Germany obviously wouldn’t go along with such a plan. Although the Trump administration has said it will pursue new economic sanctions over Nord Stream 2, such a policy could hurt Germany, presenting a delicate political situation.

“It becomes much more about managing alliances for the United States,” Ms. Polyakova said.

Spy game

Beyond the geopolitical and economic issues, officials say there are a host of security concerns for the U.S. and its allies. Within the administration, officials have openly spoken about whether the Nord Stream 2 pipeline could be outfitted with listening devices.

Officials wouldn’t discuss the technical details of such fears, but there is growing concern that Moscow could use Nord Stream to intercept communications in the Baltic Sea.

“When we look at the ability of governments and companies to use infrastructure deployments as a means to convey devices and technologies that can listen and follow and monitor, that is a concern with regard to this particular undersea pipeline project in the Baltic Sea,” Sandra Oudkirk, deputy assistant secretary of state for energy development, said last month. “The new project would permit new technologies to be placed along the pipeline route, and that is a threat.”

Officials say such concerns are present anytime Russia undertakes such a massive infrastructure project, whether it’s at sea or on land. But evidence points to a specific focus within the administration on Moscow’s underwater capabilities.

Last week, the Treasury Department rolled out another round of sanctions against Russian individuals and companies in connection with the country’s ongoing cyberwarfare against the U.S. One of the companies sanctioned was Divetechnoservices, which has over the past decade “procured a variety of underwater equipment and diving systems for Russian government agencies,” the Treasury statement said.

“Today’s action also targets the Russian government’s underwater capabilities. Russia has been active in tracking undersea communication cables, which carry the bulk of the world’s telecommunications data,” the department said in its press release, which did not specifically mention Nord Stream 2.

The questions have grown serious enough that Gazprom addresses them on the Nord Stream 2 website. In a section of “facts and myths” about the project, it lists what it calls a myth: “Nord Stream 2 could be abused for marine surveillance equipment.”

“Nord Stream 2 will consist of only two strings of concrete-coated steel pipelines on the seabed. Nothing more,” the website says.

Potential undersea spying aside, U.S. officials and analysts say there are more traditional concerns. Gazprom, for example, will need land areas to serve as construction bases and hubs for repairs once the project is up and running. Such sites would likely to be in Sweden, Denmark, Germany and other European countries.

“That basically gives Russia access to territory, port areas, in the European Union and in NATO. The concern there is the Russians could use this access in nefarious ways,” Ms. Polyakova said.

Indeed, State Department officials also told The Times that there is a fear “Russia could use the need to protect pipeline construction as justification for expanding its military presence along parts of NATO’s eastern flank.”

• Ben Wolfgang can be reached at bwolfgang@washingtontimes.com.

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