NORD STREAM II: A CONTINUATION OF HISTORY OR DIVISIONAL GERMAN ECONOMICS?

JAMIE RICHARDSON

NOVEMBER 2018





In 2011 the first mention of Nordstream II appeared. Despite the project’s many flaws, Nordstream II has become indicative of the lukewarm relations between Europe’s largest economy and Europe’s largest country. From certain western perspectives Nord Stream II is a worrying project: the rise of the Russian Military Intelligence, aka the GRU, represents a genuine threat to democratic practices in many European countries. Nord Stream II negates the significance of Salisbury and The Hague hacking scandal for the sake of raw economic gain. But from a historical perspective, is the Nord Stream II project simply a continuation of a dialectic past between Russia and Germany, which reached previous its previous climax in the 20th century. Or, is this underwater pipeline a product of uncomfortable prioritisation that should be viewed in terms of German economic policy? Over the next few paragraphs I shall try and reach a decisive conclusion to this unique paradigm.

Before democracy re-entered European political culture in the late 18th and early 19th centuries, monarchism was the fundamental ruling structure. Regal rule ceded its complete power monopoly to the bourgeoisie in around the 16th сentury, representing the very earliest establishment of capitalism. However, monarchs and their extended families still occupied the upper echelons of society until midway into the 20th century. The royalty of the German-speaking empires was particularly good at a skill that still dominates 21st century professional life – networking. In Britain it was the House of Hanover that eventually came to rule the waves. However, it was Prussian royalties that were able to charm their way into the Russian regal landscape.

It is at this point, arguably, that the Russian-German dialectic began. Catherine the Great (1729-1796) was born in Pomerania, Prussia - modern day Szczecin, Poland. She became Empress of Russia after her husband Peter III was victim of a putsch. Catherine the Great encouraged German nationals to emigrate to Russia, issuing invitational decrees in 1762 and 1763. Unlike the Gastarbeiter of the 20th century, Russia expected the Germans to stay. The empress promised immigrants free travel, large tracts of land, tax benefits for 30 years, and much more. This could have earned the empress the nickname ‘Catherine the Keynesian’. The result of this was essentially a German colonisation of the Lower Volga region.

The presence of Germans in central and eastern Europe is a widely recorded phenomenon. This is most poignantly demonstrated by a semantic red thread that runs through Slavic countries: the term nemets (немец) in Russian, nimets’ (німець) in Ukrainian and Niemiec in Polish are all semantically connected to the term for dumb (unable to speak). This implies that German immigrants lived in enclaves and did little to integrate into their corresponding societies.

But it was the imperialistic nature of the German/Prussian and Russian empires of the 19th century that renders this relationship different; for, Ukraine and Poland were the victims of this imperialistic outlook. Russia and Germany were the aggressors. Both empires looked to the east to find conquest and wealth that would perhaps bring them into competition with other Western empires, notably those of Britain and France. And in the 20th century it was neo-imperialism which drew the National Socialists and Stalin towards the perceived playing ground that was central and eastern Europe. The uncomfortable truth is that Stalin, with the famines in Ukraine and purges of the 1930s, and Hitler, with the systematic extermination of Jews and Slavs in Poland and Ukraine, both expressed ideologically different, yet equally abhorrent views towards their Slavic neighbours. Such attitudes arguably culminated in 1939 with the Molotov-Ribbentrop pact, which saw Poland carved up between the two superpowers. The ensuing tragedies of the Holocaust and 45-year occupation of central and eastern Europe has remained imprinted on the collective memories of Poles and Ukrainians alike.

As the victors, after World War Two the Soviets were able to strong arm their way into the German memory as well. Even after the fall of the Soviet Union in 1991/2, the lingering presence of soviet history is felt in the sheer size and scale of the Russian embassy in Berlin. Similarly, members of Vladimir Putin’s alleged ‘inner circle’ such as Arkady, Boris and Igor Rotenberg and Viktor Wechselberg are testament to success of German immigration that began under Catherine the Great, as was assassinated liberal opposition leader Boris Nemtsov (lit. of Germans).

All of the above is indicative of the fact that Germany and Russia have extremely interwoven histories, which pervade even to this day. I argue that the infrastructural project of enormous Maßstab (German for scale, also a loan word in Russian) should be seen, at least in part, as a continuation of this historical relationship. Firstly, the economic implications of the pipeline are such that both parties involved profit greatly. On the one hand, Putin and his allies - the heads and lead shareholders of Russia’s many gas and oil companies (e.g. Gazprom, Rosneft, Lukoil) - have guaranteed income for the foreseeable future. On the other, Germany becomes the central distributor of Russian gas in Europe. Secondly, the route of the pipeline under the Baltic Sea undercuts the usual middlemen for Russian gas distribution - Belarus and Ukraine. It appears that German-Russian cooperation once again may serve to weaken and destabilise Eastern European states; this time through soft economic power rather than military might.

It would be unwise, however, to suppose that Nordstream II is purely a product of history. There exists a strong argument that Nord Stream II adheres to and expands German economic domination in Europe. German Sociologist Ulrich Beck layouts at the useful framework for this in his extended essay Das deutsche Europa. Beck argues that Germany has fully capitalized on the 2008 debt crisis at the expense of economically weaker European countries. As southern European economies faltered under the intense pressure of the 2008 crash, an event outside of Germany’s control, the German government has been able to rollout huge Rettungspakte (bailouts) to the debt-ridden economies of Greece, Portugal, Spain and Italy. Except perhaps for Greece, the risk of leaving the Euro was too great for nations not to accept the packages.

These Rettungspakete could be understood as necessary measures to guarantee the security of euro: a collapsed Euro would have an knock on effects on a global scale that would make 2008 seem like a minor slip-up - argues Beck. However, these bailouts have forced southern European governments to subscribe to a form of Sparpolitik (austerity) that serves neither the corresponding electorate, nor Europe as a whole. Germany is a main benefactor of this process: its companies are awarded lucrative privatisation contracts in Greece because the state cannot pay back the bailouts fast enough and the Euro remains stable, maintaining German export revenue. There is much more to be said on this subject, however I believe Beck sums up well Merkel’s general economic framework, especially if we are to apply it into the context of Nord Stream II: “[Germany implements] brutal neoliberalism abroad, and social-democratically orientated consensus at home.” (das detusche Europa, U. Beck, 2012, p.50).

It is precisely within this paradoxical framework that the Nord Stream II project operates. There are a few simple instances that exemplify this paradox. Firstly, it should be understood that Nord Stream II is profitable to individuals in Russia who are subservient to or active within the kleptocracy that ‘governs’ Putin’s Russia. Germany becomes an advocate of this regime, ceding its supposed democratic and western values that formed the basis of the migrant crisis rhetoric. Secondly, in a similar vein Nord Stream II undermines the integrity of the Minsk Accord II. In supporting a authoritarian regime that systematically denies Russian aggression in Ukraine and calls for the dissolution of a nation-state of 42.5 million residents, it is hard to see any sincerity in Minsk Accord II.

In May 2018 during a bilateral meeting in Sochi, Russia Ms Merkel stated that, “Germany believes Ukraine's role as a transit country should continue after the construction of Nord Stream 2... it has a strategic importance”. But it appears naive that she should expect Putin to act in the interests of a state that forms the bulk of its geopolitical propaganda. Mr Putin replied, stating “We will continue gas shipments (via Ukraine) as long as they are economically justified”. Finally, if we consider that Ukraine is to lose out on a potential $3 billion a year in transit fees as a result of Nord Stream II, one has to question the geopolitical value of Nord Stream II in European terms. Germany may have control over western Europe’s gas supply, but the economic powerhouse may be risking serious geopolitical destabilisation in Ukraine. Should further military unrest appear in Eastern Ukraine, this may lead to ideological and constitutional crises for many western states. Intervene and protect Ukraine but risk war with Russia, or allow the expansion of a kleptocracy driven by pure self-interest.

Much of what Ulrich Beck argues is that German neoliberal economics exported to faltering European economies is a primary factor in the growing division of Europe across a north vs south fault line. This division, argues Beck, renders nation-states less able to effectively tackle genuine issues that operate on a transnational level (e.g. climate change, deregulated financial markets, off-shores etc.). I argue that Nord Stream II has at its core a divisional aspect too. A primary objective of Kremlin foreign policy is destabilisation. Thus, as an economic partner to this regime, Merkel must be seen as partially responsible for the consequences of such instability. The division comes when western states decide how they deal with the Kremlin. Italy and Austria are siding with the Kremlin, whilst the Baltic states, Spain, France and to some degree the UK are ramping up anti-money laundering measures against Kremlin associates.Though Merkel spouts controlled and measured rhetoric calling for calm, her economic policy is a primary source of instability, this time between east and west. And from historical perspectives, Germany and Russia have previously used Ukraine as a geopolitical playground; today the political rhetoric is toned down into economic terms but the political reality is eerily similar.

In conclusion, there are two primary points on which to draw. Firstly, the interwoven histories of Russia and Germany do offer a useful, however, perhaps not causal explanation for Nord Stream II. It is hard to view Nord Stream II as a direct ideological attack against Ukraine or Belarus from Merkel as has previously been the case in German history. The Kremlin, however, does appear more committed to foreign aggression as a means ensuring ideological stability for its authoritarian regime, which is adherent to both its Imperial and Soviet past. Yet, secondly, the uncomfortable truth for German foreign policy analysts is the fact that German economic strength is a destabilising factor between north and south, and west and east. Though German rhetoric is neutral and expresses no divisive undertones, this may be a ploy to distract from the simmering geopolitical reality that is prevalent in Ukraine, as well as in Greece and Italy.