Russia Attempts to Strengthen Its Influence in Ukraine through the Nord Stream's Second Pipeline
The Nord Stream's second pipeline became operational on October 8th and began streaming natural gas directly from Russia's Yuzhno-Russkoye field to Germany. The pipeline will allow Russia to significantly reduce its dependence on Ukraine, a major energy transit state, strengthening Moscow's political leverage over Kiev.
Since the late 1990s, the revenue from natural gas exports to Europe has been one of the key pillars of Russia's political, economic, and military resurgence. Since the revival of Russian power, one of Russian President Vladimir Putin's top priorities has been drawing Ukraine back into Russia's sphere of influence. Until last year, however, Russia had to depend on Ukraine to transit approximately 80 percent of the natural gas exports to Europe, meaning that Moscow's influence over Kiev was always limited. Moreover, given the frosty relations between the two countries, Ukraine was never truly a reliable business partner. In fact, their price disputes in 2006 and in 2009 led to Russia temporarily halting its supply to Europe.
Nonetheless, after the first pipeline came on last year, Russia's dependence on Ukraine for natural gas transit was reduced by approximately 23%. With the second pipeline operational, the dependence could soon be reduced even further, making Russia a more reliable producer for the Western European consumers. On the other hand, Ukraine will lose a significant amount of transit revenue. While the Nord Stream does not completely negate Ukraine's status as a key transit state for Russian natural gas, the pipeline does give Moscow more political and economic leverage over Kiev than before, since transit fee is the largest source of revenue for Ukraine. Kiev could be more dependent on Russia economically in other ways, while Russia could be less dependent on the former.
Furthermore, the Nord Stream places a heavy psychological pressure on Kiev because of Moscow's current plan to build the South Stream, which would also bypass much of Eastern Europe. The project was announced to be completed by 2015, but it faces several political and economic obstacles and will probably not be completed by the deadline. The South Stream project, however, is a serious future concern for Kiev because Russia would no longer need Ukraine as a transit state if the pipeline is built. In that scenario, Ukraine could suffer further economic setbacks. At the same time, Ukraine faces the prospect of Russia selectively cutting off its energy supply to the former for political reasons. Ukraine imports much of its energy from Russia. Given that the Ukrainian economy, industries, and households depend heavily on Russian energy, Moscow could essentially be holding Kiev a hostage through economic means.
While Russia is already a very powerful player in Ukrainian politics, operation of the Nord Stream's second pipeline signifies that Russia's efforts to increase its leverage over Ukraine have indeed been succeeding. Given that both the European Union and Ukraine lack the means to reduce their energy dependence on Russia in the short term, Moscow's clout in Kiev will only grow stronger for now.
Submitted by Sungtae "Jacky" Park
Sungtae "Jacky" Park a M.A. Security Policy Studies candidate the George Washington University's Elliott School of International Affairs. He has previously published for CSIS (Center for Strategic and International Studies) and The International Affairs Review.
The opinions expressed are those of the author, and do not represent the opinions of Rutgers University or the Division of Global Affairs.