Economics and geopolitics of Nord Stream-2 in the Baltic Rim

Stanislav Zhiznin,
Department of World Energy Problems, Moscow State Institute of International Relations (MGIMO-University),
Moscow, Russia

Center for Energy Diplomacy and Geopolitics,
Moscow, Russia

The Nord Stream-2 gas pipeline project (NS-2) aims to expand gas supplies from Russia to Germany and other EU countries, based on mutual economic interests and on projected growth in gas demand in the EU markets, as well as the need to strengthen EU energy security. The launch of NS-2 can make a significant contribution not only to ensuring EU energy security, but also to mitigating military tensions between NATO and Russia in the Baltic region.

Geopolitics and economics of NS-2 in Baltic Region

Until recently, the global energy market was 90% dependent on economic factors and only 10% on geopolitical. Today, the situation has changed radically: geopolitics dominates.

Confirmation of how politics is trying to “steer” the economy and global energy is, for example, the actions of the United States, which has set the task of becoming an energy superpower, for which it is necessary to oust Russia from the markets and inhibit the modernization of the Russian energy sector using methods that aren’t traditional energy diplomacy and geopolitical factors. Recall the regular statements by American leadership that the United States is ready to fill Europe with liquefied natural gas, given the likely increase in export potential in the face of the declared continued growth in shale gas production. Another issue is energy security of the West, which the United States is considering the importance to reduce its dependence on oil and gas supplies from Russia – primarily to Europe, declaring than the Kremlin can use energy weapons to achieve the necessary Moscow policy. However, Europe cannot refuse Russian hydrocarbons, and rely on alternative LNG supplies from the USA, which Washington imposes on Europe. That alternative based on geopolitical considerations, will be too expensive from economic point of view. Besides, in order to receive large amounts of LNG, Europe needs to develop a new gas transmission infrastructure designed for pipeline gas, which will lead to additional costs.

Economic and geopolitical positions of supporters and opponents of the NS-2 project  

In recent months, under the influence of the Ukrainian crisis and other political problems, as well as imposed and envisaged sanctions against Russia in the media of the West, as well as from a number of senior representatives of the EU and the USA, the question of the supply of Russian gas to EU countries is often raised. This primarily concerns the construction of the Nord Stream-2 gas pipeline. From a conventional economic project, implemented on the basis of projected demand for Russian gas in the EU, the leadership of the United States and several countries of Eastern Europe are trying to politicize it and portray it as a geopolitical project. The media and political circles of a number of Western countries launched a fierce information war “not for life but for death” in order to prevent its implementation using, mainly, not economic, but geopolitical arguments. This is reminiscent of the actively promoted Polish initiative in 2004-05, supported by the United States, about the formation of an energy NATO to protect EU from Russian energy resources. The implementation of NS-2 will make a tangible contribution not only to ensuring EU energy security, but also to security in Europe as a whole. This is especially true for the Baltic region, in which there has been an increase in military tension, in recent years, between NATO and Russia. The development of energy infrastructure, including NS-1 and NS-2, on the reliable operation of which the economic well-being of many EU countries depends, can help mitigate the situation in the region[i].

Supporters believe that NS-2 is a purely economic project. Recently many German supported NS-2.  Berlin insists that Europe must decide for itself whom to buy natural gas from, taking into account the security of supply and market conditions, rather than being guided by the political situation”.  In addition to Germany, Austrian government joined the project, and the Czech Republic, in connection with the construction of NS-2, is expanding its gas transportation system and recognizes the project’s profitability for the country; French President E. Macron expressed support for all new gas pipelines if the current levels of gas consumption in the EU remain or increase in the future. Another positive is the possibility to use NS-2 for transporting the hydrogen from Russia to EU in the near future.

Opponents: transit countries that suffer losses for gas transit ; countries remote from the gas supply; Poland and Baltic countries, always speaking from Russophobic positions. Of particular note is the United States, which is actively opposing the project, based primarily on its geopolitical interests. Opponents of NS-2 believe that the new gas pipeline threatens Europe’s energy security and runs counter to a strategy that assumes diversification of energy supplies and a decrease in dependence on Gazprom, and the Third Energy Package should also apply to it.

In 2017-2020, the U.S. Congress voted in favor of legislation imposing sanctions on firms cooperating with Russian companies in energy projects including (CAATSA law).


To date, the NS-2 project is at the forefront of the political agenda not only in the EU, but also in international politics. The fact remains that NS-2 is causing disagreement between the EU and the USA; EU member states; between participating energy companies and EU member states; in relations between the EU and its international partners; in an academic / expert environment. The complexity of the NS-2 project implementation lies in the need to take into account EU energy legislation, as well as to take into consideration the growing influence of geopolitical factors on EU-Russia energy cooperation, connected with aggressive US energy diplomacy aimed at disrupting the NS-2 implementation, based on geopolitical Washington’s interests.

At the moment (September 2020), work on NS-2 despite new political obstacles is ongoing. The implementation of the NS-2 project can make a serious contribution to ensuring the energy security of Europe, as well as relaxing military tensions between NATO and Russia in the Baltic region, given the need for reliable functioning of the gas supply infrastructure, which excludes military conflicts in the region.

[i] Zhiznin S. Z., Timokhov V. M. // Economic and geopolitical aspects of the Nord Stream 2 gas pipeline. Baltic Region.- 2019. –Vol. 11. -№ 3.- (pp. 25-42).


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