Thursday, July 07, 2022

Canada's decision on Nordstream turbine is a tricky one

I'm sure I should have, but I hadn't appreciated until just this week that pipelines carrying Russian gas to Western Europe actually go right through Ukraine. In fact, there is a whole network of pipelines leading from Russia, via Ukraine, to several countries in Eastern and Western Europe. 

I suppose it's obvious when you think about it, geographically speaking. But, economically, ethically and logistically, it presents a huge dilemma. Nearly five months into a cruel internecine war, Russia is still paying Ukraine (in Euros, no less!) for its part in transporting Russian gas - a big part of it its economic lifeline - to Germany and points west. They are both helping to finance each other's wars.

It's a bizarre twist of fate, and a reminder that all is up for grabs in love and war, and that logic, as so often, goes out the window where energy is concerned.

However, we are not talking here about THAT pipeline, the one that has caused so much heartache and consternation. The Nord Stream 1 pipeline DOES go direct from Russia, through the Baltic Sea, to Germany. 

And now, even Canada is getting embroiled in the fraught ethical decision-making over German gas imports from Russia. Earlier last month, before the main sanctions on Russian gas were announced, a crucial turbine for the Nord Stream 1 pipeline was sent by manufacturer Siemens Energy AG for necessary repairs in Montreal, of all places (don't ask me why it couldn't be done in Germany), and now Canada has to decide whether or not to return it.

Germany is arguing that it needs the (Russian-owned) turbine in order to increase the flow of Russian gas, which was slashed by 60% in June over the turbine issue, so that it can fill up its storage capacities for the winter, so that it can then impose its own sanctions on Russian gas (which is a bit of a tortuous argument, but you can see where they are coming from). It argues that further energy rationing would hit German businesses and consumers, and drag Europe's largest economy into recession (and much of Europe with it). Russia, of course, would be more than happy to increase its gas flow again, and renew its depleted coffers for the ongoing war. On the other hand, it is argued, Russia could use the turbine issue as a wedge, and threaten to discontinue ALL gas exports to Germany (albeit at a financial loss to itself). Tricky.

Germany's Economic Minister Robert Habeck has suggested "with heavy heart", that to salve its conscience, Canada could deliver the turbine to Germany not to Russia (like that really makes a difference!) The whole issue is further complicated by the belief that Russia does in fact have at least one other working turbine that it could be using in the meantime (maybe, or is that just Russian misinformation and gaslighting?) So, it's not clear just how essential the stranded Canadian turbine actually is...

Returning the turbine into service would effectively contravene Canada's sanctions promises, and it could expect a lot of pushback from other European allies and from the US. Officially, Canada's response thus far has been non-committal: "We will not stop imposing severe costs on the Putin regime while their unjustifiable invasion is ongoing. We will continue to support our European friends and allies by working to help stabilize energy markets and to develop long-term term and sustainable solutions on energy supplies". Waffle, waffle (but understandably so).

But do we support our European friend Germany, or our European friend Ukraine? Even Germany is admitting that the decision is not an easy one for Canada to make. No doubt, whichever way it goes, the opposition parties will make hay out of the Liberals' discomfiture on this thorny (nay, impossible!) issue. It's one of those (many) occasions that I thank my lucky stars that I never went into politics.

UPDATE

The Liberal government has chosen Germany over Ukraine, and issued a special export license to return the turbine to Germany (which will then turn it over to Russia to install). The letter of the sanctions order has technically not been breached, although it clearly has in practice. 

Ukraine is livid; the USA is supportive; most other countries are keeping quiet, because they know they would probably have done the same thing in the same circumstances, but don't want to admit it. The Canadian opposition, of course, is also outraged (outraged, I tell you!), although we all know that they would have been equally outraged had the decision gone the other way.

No comments: