Mecklenburg-Vorpommern District

German Green Foundation joins efforts to complete Nord Stream 2


For years, the battle to complete Nord Stream 2 has played Washington against Moscow and divided Europe. Now a small German state has come into play with an unusual step: with the establishment of an environmental foundation to complete the gas pipeline.

In Mecklenburg-Western Pomerania (MV) on the northeast coast of Germany is the logistics hub and the end point of the contested project, which is almost complete but has been stalled for more than a year due to US sanctions.

This week, MV launched the Climate and Environmental Protection Foundation with 200,000 euros from government funds and 20 million euros from the pipeline project owned by the Kremlin-backed gas company Gazprom.

Opponents of Nord Stream 2 are baffled why one of the most populous federal states in Germany is publicly opposing powerful US sanctions. Meanwhile, German environmentalists accuse the state of “greenwashingâ€, its role in a geopolitical struggle that has nothing to do with climate change.

“A foundation that claims to promote environmental protection shouldn’t be created through a fossil fuel project,” said Theresia Crone, an activist who organized a protest and petition against the foundation with more than 24,000 signatures.

Nord Stream 2 declined to answer inquiries from the Financial Times, but said the foundation would “promote Germany’s climate goals and support work to complete the Nord Stream 2 pipeline”.

The US and most Eastern European countries argue that the € 9.5 billion project would increase Europe’s dependence on Moscow. But Washington is in a difficult position with Germany, an ally that supports what it calls a purely commercial endeavor.

The foundation comes at a delicate time for German-American relations as President Joe Biden seeks to restore ties that were tense during Donald Trump’s presidency. But in MV, a part of the former GDR, where Moscow is still popular enough to hold “Russia Dayâ€, the echo of the Cold War is echoing and Washington is being viewed with caution.

The Nord Stream 2 gas pipeline in Lubmin in northeast Germany © AFP via Getty Images

Local leaders also take a widespread position in Berlin – that US sanctions should force Europe to buy US liquefied natural gas.

Claudia Müller, a local Green MP who opposes both US LNG and Nord Stream 2, said the foundation was particularly questionable.

She pointed out that under its laws, Nord Stream 2 can propose the managing director for the foundation’s line of business and give it the right to elect two of the 18 board members. Erwin Sellering, one of three appointed foundation directors, is a former Prime Minister and a supporter of Nord Stream 2. Neither he nor the other chairs have an environmental qualification.

“It is very obvious that they [Nord Stream 2] rule this entity, â€she said. “So the question is: ‘Is that really a foundation?’”

Climate capital

Where climate change meets economy, markets and politics. Discover FT’s coverage here

Fossil fuel companies often finance foundations to compensate for environmental degradation, said Sascha Müller-Kraenner, director of the German Environment Agency (DUH). “But the involvement of a state government whose main purpose is to help build the pipeline itself – that’s new,” he said. “I find it very problematic.”

The DUH is filing two lawsuits against the foundation – one in German courts, in which it is argued that the company should not be viewed as a public foundation that enjoys looser regulatory and transparency regulations as 99 percent of the funds come from a Gazprom-owned project come. It has also filed a complaint with the European Commission alleging that a public project promoting a company’s project is in breach of state aid rules.

Christian level, energy minister at MV, defended the project and said that its main purpose was environmental protection, “on which Nord Stream 2 has no influence at all”.

Perhaps the most controversial aspect of the foundation is that it will also conduct business related to Nord Stream 2 by purchasing materials needed by companies interested in working on the pipeline but potentially facing US sanctions .

Mr Level said this would allow the project to be completed independently of U.S. curbs. “This foundation can now buy and store machines and products before the new sanctions come into effect. If they are needed in a year’s time and sanctions are imposed on companies, they will be available to them, â€said Ebene.

A US official familiar with sanctions laws was skeptical of the target, arguing that all companies selling products used by Nord Stream 2 will be held liable – regardless of whether the company sold directly to a sanctioned company or a public foundation .

“This is either a deliberate Russian disinformation system to collect supplies from naive companies, or it is a really irresponsible move by the foundation,” said Thomas O’Donnell, energy and geopolitics analyst at the Hertie School of Governance.

Despite the support from Nord Stream 2, Berlin has distanced itself from the foundation. Foreign Minister Heiko Maas said it was a state decision, “not a decision by the federal governmentâ€.

And while Mr Biden may be reluctant to argue over a foundation while trying to repair transatlantic fences, Secretary of State Antony Blinken said in his confirmation hearing this week that the government will use “any convincing tool” to combat the Nord Stream 2 project.

In MV, some officials say the foundation’s success may not be as important as local pride in this geopolitical scramble.

“To stand up against America here, plays well,” said one politician, “whether you win or lose”.

Twice a week newsletter

Energy is the world’s indispensable business and Energy Source is their newsletter. Every Tuesday and Thursday, Energy Source delivers important news, future-oriented analyzes and insider information straight to your inbox. Login here.