Germany is preparing for a cold winter – its price for a lack of political foresight? Politics on Nord Stream 2 freeze Germany. Prices for natural gas, the main source of heat in Germany, are rising. Nord Stream 2 (NOST2) and political relations with Russia are being blamed for current price explosions and feared gas shortages.
Germany’s Russia policy lacks foresight
Since von der Leyen’s EU Commission presidency in 2019, the EU calls itself a “geopolitical commission.” The current five-year program addresses current geopolitical challenges, with EU members joining forces for their common security. A central institution focuses on international relations and “strategic foresight” by forecasts through analysis to ensure security and stability within the EU. (European Parliament, 2020) To what extent is “strategic foresight” used in the EU and its member states in key areas such as energy infrastructure? Answering this question will also explain how Germany anticipates political risks in international cooperation and why, without risk management, we will face greater threats in future.
Political discussions about NOST2, which began in 2015 between Germany and Russia and caused political uproar from Europe to the US, have long been avoided by the German government. Unlike its European neighbors, who recognized and emphasized political risks in energy deals with Russia early on. Countries such as Ukraine, Belarus, and several EU members have experienced gas supply stops from Russia or arbitrary gas price increases as a means of exerting political pressure.(Turksen, 2018) Political risks in energy cooperation with Russia were communicated early in NOST2 discussions, not only in European states but also to the EUC. In 2015, seven European states wrote a letter to the EUC Vice President pointing out “alarming aspects” of the NOST2 project. (Lang & Westphal, 2017) Germany’s ignorance of the political nature of NOST2 and the risks of dealing with Russia as an energy partner shows a lack of foresight.
Strategic foresight is based on risk assessments. In a geopolitical commission, managing geopolitical risks should be a top concern. Political risk management requires understanding one’s interests, analyzing potential threats to one’s system, mitigating them, and being prepared to respond to risks in the future with strategic foresight. (Rice and Zegart, 2018). Investing a small amount in risk management early can help avoid high costs later on. Anyone who has purchased insurance knows this. So what explains the gas price explosions in the German energy market and what does it mean for critical infrastructure or “principal sectors” of the EU?
Political risks for infrastructures
A new gas pipeline construction in the EU clearly affects its energy infrastructure. While economic and environmental risk concepts had to be submitted by the NOST2 promoter from the very beginning, no political checks were conducted. This not only paved the way for the Russian-financed NOST2 AG to complete its pipeline and gain political influence in Europe, but also exposes the German energy industry to geopolitical oppression by Russia. Given the importance of infrastructure projects, experts agree that political risks in the EU are neither sufficiently considered nor adequately managed (Yang-Schmidt, 2021).
As a “geopolitical commission,” the EU is called upon to create geopolitical frameworks that primarily serve the interests, security, and stability of the EU.
Based on NOST2 and Germany’s short-sighted Russian energy interests, it became clear that not only the principles of the EU Energy Union of 2015 and its Gas Directive (2010) on supplier diversity can be practically circumvented by a lack of political risk awareness, bringing gas price security and energy supply risks into the country, but as a side effect, the destabilisation of the cornerstones of European cooperation can easily be provoked by geopolitical projects that in the eyes of some were perceived only as economic ventures.
Wake-up call to manage political risks
All of this could have been prevented if Germany and the EU had had both the awareness and the tools to deal with political risks.
The fact that complaints from EU member states about NOST2 have fallen on deaf German ears has prompted members to question Germany’s commitment to the EU’s basic values. It has also exposed a regulatory gap in the EU’s ability to protect and respond to value infringements. The fact that warnings about Russia’s use of energy as a geopolitical weapon have been ignored by Germany could lead to uncontrollable Russian influence over critical European infrastructure.
The recent gas price explosions in Germany are a clear indicator of the urgent need to install an early-alert system for political risk management in the EUC to manage geopolitical threats, protect its own interests, promote EU cohesion and cooperation with “strategic foresight”.
Sources:
European Parliament, 2020. The von der Leyen Commission’s priorities for 2019-2024. [online] Available at: https://www.europarl.europa.eu/RegData/etudes/BRIE/2020/646148/EPRS_BRI(2020)646148_EN.pdf. [Accessed Sep 25, 2021].
Turksen, U., 2018. EU energy relations with Russia: solidarity and the rule of law. Oxon: Routledge.
Lang, K.-O. and Westphal, K., 2017. Nord Stream 2 – A political and economic contextualisation. [online] Available at: https://www.swp-berlin.org/en/publications/nord-stream-2-a-political-and-economic-contextualisation. [Accessed Jan 21, 2021].
Rice, C., and Zegart, A., 2018. Political risk: How businesses and organisations can anticipate global insecurity. London: Orion Publishing Group.
Yang-Schmidt, S., 2021. Political Risk Perception: Nord Stream 2 – risk or chance? [online] Available at: http://www.ceris.be/home/news/spotlight/ceris-outstanding-thesis/e377881dc91d8868c235da63d9fbcc31/.
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