Piping down over Nord Stream

Russia and Germany walked over others in arranging the Baltic Sea gas pipeline venture. The Baltic States and Poland were livid. Sweden sees a security threat. Only Finland views the pipeline as no more than an environmental question.

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By Sami Sillanpää
     
      An environmental question, that's what it is. This is just an environmental issue for Finland.
      Our political leadership has repeated the view as some kind of mantra. What is significant for Finland about the gas pipeline under the Baltic Sea is merely how much of an environmental hazard it might pose.
      This is not quite how matters are seen in other countries.
     
Right from the outset, it was clear that the Baltic Sea region had never before seen such a political business venture.
      The gas pipeline was agreed on in September 2005 by the then German Chancellor Gerhard Schröder and Russian President Vladimir Putin.
      In their words, what had emerged was a "strategic partnership". The world's largest reserves of natural gas would be linked by a direct pipeline to the largest economy in the EU, Germany.
     
A company was set up for the project, named Nord Stream AG.
      The company is domiciled in Switzerland, and a majority of the shares (51%) are held by the Russian state-owned energy giant Gazprom, with smaller blocks in the hands of two German energy firms and one from The Netherlands.
      A little later, Schröder came on board as the head of the shareholders' committee of Nord Stream AG. Putin became Russia's Prime Minister in 2008, and the President's job went to Dmitri Medvedev, the former Chairman of the Gazprom Board of Directors.
     
"The pipeline is a geopolitical and economic project. For Russia, energy is a means to restore its superpower status", says Arkady Moshes of the the Finnish Institute of International Affairs. Moshes currently heads the Institute's "Russia in the Regional and Global Context" research programme.
      Oil and gas bring money and status.
      The dependence of others on Russian energy makes the country a player with whom it is best not to pick an argument.
      Russia has numerous pipeline projects under way for exporting its gas. They all have one thing in common: Russia's current energy strategy requires that it can itself control the transport routes of its oil and gas resources.
      Hence it wants as far as possible to dispose of third-party countries through which any pipeline would have to travel.
     
A gas pipeline from Russia to Germany could also be routed across land.
      It might be cheaper to implement, and it might be a better solution from the perspective of environmental considerations - the jury is still out on this one.
      But with a land pipeline, Russia would be obliged to rely on the goodwill of countries with whom it has a good deal of historical and political baggage: the Baltic States, Poland, Belarus.
      Russia does not want these potential problems. It specifically wants the pipeline to run through the Baltic, along the Gulf of Finland.
     
In their attitudes towards the planned pipeline, the countries bordering on the Baltic Sea have divided in a manner that is somehow very familiar from history: Germany and Russia are driving the steamroller. The Baltic States and Poland complain from the sidelines, unable to do anything much. Finland keeps its mouth tightly shut. Sweden puts on a virtuous face and emits high-pitched barks in Russia's direction.
      For Germany, the pipeline is of vital importance. It needs Russian gas. In 2002 Schröder's government reached a decision on a structured phasing-out of nuclear energy, so other sources of energy have to be found to make up the shortfall.
     
"Russia has been a reliable supplier of gas - even as the Soviet Union was collapsing - and its gas is relatively cheap", says energy policy researcher Alexander Rahr of the Research Institute of the German Council on Foreign Relations.
      A quarter of the natural gas used by the EU comes from Russia. At present as much as 80% of this gas is routed along pipelines passing through the unpredictable Ukraine.
      Supporters of the Baltic Sea pipeline stress the fact that the new route would benefit Europe's energy supply security.
      "The energy alliance creates a situation of mutial dependency that in turn brings stability to relations", says Rahr.
     
The Finnish government takes the same line. In other respects, politicans hereabouts have been at pains to stress that the pipeline issue is "not political". It is the environmental authorities who will make the final decision.
      "This has been a clear and matter-of-fact line", says one Finnish diplomat.
      "It was a political decision to refrain from commenting on the other aspects of the pipeline project", says one civil servant.
     
However, in the other countries around the Baltic, there has been no shortage of comments, many of them rather impassioned.
      In agreeing on the gas pipeline, Germany and Russia did not consult the other Baltic Sea countries beforehand.
      This infuriated the Baltic States and Poland. They were not best pleased that the pipeline was not routed through their territory, and that nobody even bothered to discuss the matter.
      The present Polish Foreign Minister [at the time he was Minister of Defence] Radosław Sikorski even compared the 2006 pipeline agreement with the notorious Molotov-Ribbentrop Pact of 1939, signed between Nazi Germany and the USSR, in which the signatories divided up Europe between them.
      "When Germany and Russia come to an agreement, things have usually turned out badly for us", notes Andres Kasekamp, the director of the Estonian Foreign Policy Institute.
      Finland, too, went uninformed in the early stages of the pipeline project. The political leadership in Helsinki did not, however, get up on their hind legs about it.
     
The more that Russia and the Baltic States have bickered openly over the pipeline, the more determinedly Finland has spoken of the project as simply an environmental question.
      Nevertheless, the politics of other parties to the issue have complicated the environmental impact assessment of the project.
      Finland suggested that Nord Stream would also examine a route that would traverse the Gulf of Finland slightly further south, closer to the Estonian coastline.
      There the seabed is more even, and it follws that the laying of the pipeline might cause less environmental disturbance, for example of sediments.
      Estonia torpedoed the idea in 2007. The decision was shrouded in legal and judicial details, but in actual fact it was essentially a political one, says Andres Kasekamp.
     
Finland's attitude towards the Nord Stream venture is causing frustration and annoyance in Poland and the Baltic States. There have been mutterings about Finnlandisierung ("Finlandisation") in Estonia. In the Polish press Finland is cast in the role of a traitor.
      But then again the kicking and screaming has done neither Poland nor the Baltics any good - in fact quite the opposite.
      Relations with Russia and with Germany have suffered. Russia has stopped its oil shipments through the Baltic States.
      "We are bearing the risk to the environment of the pipeline, but we are not getting any benefit out of it. This is unfair", Kasekamp says.
     
In fairness, one could say that Finland's approach has been quite logical and consistent, when one recalls that it was Finland who first floated the idea of a gas pipeline under the Baltic.
      Back in the 1990s, North Transgas (a joint venture of Neste and Gazprom) planned to transport gas from Russia to the growing market in the European Union.
      One idea was to run the pipeline via Finland to the Baltic Sea.
      Prime Minister Paavo Lipponen (SDP) lobbied strongly in favour of the project.
      "It was Finland in particular who then promoted the pipeline as a pan-European project that would benefit the economy and foster stability", says the Finnish diplomat.
      At that time - and we are talking about the era before a decision to build more nuclear power capacity - it was thought that Finland, too, would be needing to tap some of the Russian gas.
      Perhaps the Finns would also have picked up some construction contracts and would have benefited indirectly from the economic boost given to neareby regions of Russia.
     
In any event, the project withered and died, because neither Sweden nor Germany were particularly interested in natural gas at that juncture.
      Finland forgot the pipeline, until it broke surface once again as a Russo-German project.
      Now the project has no direct benefits to offer Finland.
      Finnish industry will not be using the Nord Stream gas, and the country gets no financial advantage from the use of its economic zone under the sea.
      All the same, Lipponen has continued to push the pipeline as a consultant for Nord Stream.
     
Finland's position on the Nord Stream pipeline's being simply an environmental matter is also based on the letter of the law.
      The United Nations Convention on the Law of the Sea gives others the right to lay submarine pipes and cables in the economic zone of another state. This does, however, require a permit procedure with the country whose economic zone is being used in this way.
      Hence the environmental impact assessment route has been Finland's only legal means of taking a stand on the pipeline.
     
There have been submarine pipes and cables in the Baltic Sea for years, but Nord Stream is on a whole different planet in terms of scale.
      Two pipes will be laid along the sea bed for a distance of 1,220 kilometres, and the project already carries an estimated price-tag of EUR 7.4 billion.
      The pipeline is planned to pass through the territorial waters or exclusive economic zones of five states - Russia, Finland, Sweden, Denmark, and Germany.
     
On the Russian side, for strategic reasons discussed earlier, the only viable alternative for the route of the pipeline is under the Baltic Sea. For this reason, in the assessment of differing environmental impacts the comparisons have been limited to different paths along the Gulf of Finland and further west.
      "Generally in cases like this you would have a proper study of real alternatives. It would have been correct to also examine the outcomes if the pipeline were to pass across land", says MEP Heidi Hautala (Greens).
      Finland has not wanted to link the permit for the pipeline to any other outstanding questions with Russia or Germany.
      One demand with a direct environmental component would be to set as a condition of the permit approval the fact that Russia should commit itself to the protection of the Baltic Sea. Finland has not done this, either.
      "In this respect the Finnish response has been weak and diffident", says Hautala.
     
The former government in Sweden wanted to stop the sea pipeline. The current administration is taking the project as first and foremost an environmental question.
      This has nevertheless not prevented Swedish politicians from speaking up on other knock-on effects of the pipeline.
      Even some ministers have been muttering aloud that the pipeline will give Russia a reason - or a pretext - to increase its military presence and surveillance in the Baltic Sea region.
     
In 2006, Vladimir Putin himself said that one of the most important tasks of the Russian Baltic Fleet was to protect the gas pipeline.
      Last week the former Russian Ambassador to Helsinki Yuri Deryabin stated in an article in the daily Nezavisimaya Gazeta that he regarded the pipeline project as an economic enterprise.
      At the same time, he said:
      "In the broader context, I would not rule out the fact that it is essential for Russia to restore its position of dominance in the Baltic Sea. It is quite inescapable."
      Finnish diplomats and ministry civil servants are unfazed: it is "nonsense" that Russia would send its soldiers to guard the pipeline.
      Russian warships are already permitted to operate freely in international waters. The pipeline is not going to affect Finland's geopolitical position one way or another: there is already a 1,300-kilometre land border with Russia, in case anyone has not noticed.
     
Whether Finland likes it or not, the strategic importance of the Baltic Sea region is going to grow. The Nord Stream gas pipeline is one reason for the growth.
      Even more significant is that Russia is transporting oil in tankers through the Gulf of Finland in ever increasing volumes.
      Finland's tricky environmental question will be resolved by the Western Finland Environmental Permit Authority. After receiving due reports it will either approve or deny a permit for construction.
      Finland emphasises that this is the permit authority's decision, plain and simple.
      This might not be the interpretation put on things elsewhere.
      If the pipeline gets the thumbs-down from the Environmental Permit Authority, Germany and Russia will be livid.
      At that point, the pipeline will most definitely become a political question here in Finland.
     
     
Helsingin Sanomat / First published in print 6.9.2009


Previously in HS International Edition:
  Baltic Sea gas pipeline would pass near environmentally-sensitive areas in Russia (4.9.2009)
  Putin meets Vanhanen, urges Finland to speed up pipeline process (2.9.2009)
  Licencing authority calls schedule for gas pipeline licence process “challenging” (1.9.2009)
  Environment Minister: gas pipeline project now more environmentally friendly than before (31.8.2009)

See also:
  COLUMN: A foreign policy black hole under the Baltic (25.8.2009)

Links:
  Nord Stream (Wikipedia)

SAMI SILLANPÄÄ / Helsingin Sanomat
sami.sillanpaa@hs.fi