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Biden may lose ability to play around with Nord Stream sanctions: interview with Lana Zerkal

Photo: European Pravda
Biden may lose ability to play around with Nord Stream sanctions: interview with Lana Zerkal
Article by: Interview: Serhiy Sydorenko
Translated by: Christine Chraibi
Lana Zerkal is a familiar name in Ukrainian politics, especially in the field of European integration. As former deputy foreign minister, she was involved in the visa-free dialogue with the EU and prosecuted Russia in international courts. In 2019, Zerkal was supposed to join Zelensky’s team, but left in protest against the appointment of Andriy Bohdan as head of the Presidential Office.

Later, Zerkal became an adviser to the head of Naftogaz Ukraine, where she was also in charge of international affairs. It was in this position that she recently made headline news when she resigned after the change of directors in Naftogaz, which again strained Ukraine’s relations with the West.

Recently, the United States waived sanctions on the consortium in charge of building Nord Stream-2.

Are these decisions related? Is there any chance of stopping the construction of Nord Stream-2? Answers to these questions and more in the interview below.

– Will Nord Stream-2 be completed?

– I would very much like to say that no, they won’t finish it. But, in fact, no one has the answer.

A few months ago, we were convinced that the Nord Stream-2 AG consortium and its director would be sanctioned and so, the pipeline wouldn’t be completed. But, President Biden decided to lift the sanctions.

Way back in March, we already felt that something was wrong.

Then, I talked to the person in charge of sanctions at the National Security Council in Washington, who told me that certain standards of evidence were required for sanctions to be applied. Until that moment everything was fine, but suddenly, it was not… I had the feeling that the Germans were moving very fast and that their dialogue with the United States was on a different level than ours.

– I’ll ask a direct question. Is Biden ready to sacrifice Ukraine’s interests and restore relations with Germany?

– It seems that Biden’s relations with Germany are quite normal, pipeline or no pipeline.

It’s simply that he, as President of the United States, isn’t interested in seeing trade between the United States and the European Union suffer from sanctions and from the trade war that Trump started.

You know that as of June 1, customs tariffs on all American goods were supposed to double. That means that Americans would suffer significant losses on the European market, and of course, it would cost them a lot.

– So, they won’t double?

– No, they won’t. It’s on hold, as is the issue of sanctions on Nord Stream-2.

– It seems that Ukraine is a hostage in this story…

– We love feeling sorry for ourselves and saying that we’re hostages. But no, no one has limited us or forced us in any way. This issue is a matter of diplomacy. We need to find arguments that will interest and convince our partner.

– Is it realistic to say that Nord Stream-2 will begin operating soon?

– There are still some preconditions for it to start operating. Everything’s in the hands of the international community.

Germany can’t impose a moratorium on Nord Stream on its own, because they don’t have the tools to do so.

– And what tools can there be? The Americans have removed these sanctions from the list.

– I don’t think they’ve removed them completely. The sanctions have been lifted temporarily, which means that they can be renewed at any time. I believe the ultimate decision depends on the results of the Putin-Biden meeting and the Biden-Zelensky meeting.

Sanctions are still in place. They apply to the ships responsible for laying the pipes.

– Should sanctions be imposed on Nord Stream AG, the company that manages the project?

– This is the first option, but there’s a second one. One of the ships currently under sanctions, Akademik Cherskiy, still belongs to Russia’s Gazprom. This means that Gazprom may be subject to sanctions.

This will cut its funding, credit lines, the opportunity to obtain additional access to the stock market, etc.

– Is it possible to block Gazprom’s banking transactions?

– It’s one of the tools, but the procedure for applying sanctions is determined by the State Department.

– What exactly should we expect from the Biden-Putin meeting? Will Putin make the American president angry? Does it all depend on whether Nord Stream-2 becomes part of a major agreement between Russia and the United States?

– I don’t believe that there will be any major agreements between the United States and Russia. Russia doesn’t want that. In addition, Biden has known Putin for a long time, and has no faith in his promises.

I don’t know what needs to happen to get Biden to impose sanctions. It all depends on how this meeting takes place. But, in the meantime, we have to keep talking about it; we have to form our own proposals.

– What should Ukraine do?

– Sometimes it seems to us Ukrainians that the United States is very far away and no one there is following what’s happening in Ukraine. That’s not true!

There’s a whole list of measures that we have long promised to implement, promises to the IMF and to other international financial organizations. They have not been implemented. All of these factors are taken into account when the United States makes a decision.

– It’s unlikely that Ukraine’s move towards reforms will force the United States to impose sanctions on Nord Stream-2.

– The question is who will believe us when and if we start moving.

– There will be elections in Germany in the fall, and the Greens may come to power. Will they be able to stop Nord Stream-2?

– Only American sanctions can stop the completion of the pipeline.

But, there’s another open question. How will European legislation be applied to Nord Stream-2 if it is completed?

It’s the Germans who can fully ensure its implementation. Moreover, there are requirements for certification, separation between the pipeline and the supplier (which means Gazprom will no longer own this pipeline), the admission of third parties to the use of this pipeline, a maximum limit of 50% for one supplier, etc.

The completion of the pipeline doesn’t mean that it will start operating right away. There are specific conditions for the pipeline to begin operations.

– So, the new German government will be able to stop the commissioning of the pipeline?

– Maybe.

But, we must understand that they will be taking a new position on other things, too. The Greens are in favor of abandoning gas as such and switching to other energy sources much faster than Germany is currently planning.

– These will be the strongest sanctions against Russia.

– But we must be aware that the gas pipeline through Ukraine will also cease operating at some point if Europe becomes “green”.

– So, what will happen if Nord Stream-2 starts operations?

– Given the behavior of the Russian Federation, most experts predict that the Russians will begin to dismantle the pipeline leading to Ukraine, or do what they once did in Turkmenistan.

I’m talking about an accidental explosion. Then, it’s all over. Force majeure. No one is responsible for anything; the conditions related to guaranteed payments to Ukraine for transit won’t work. Of course, we can go to court, but that will last years. And just try getting money from Gazprom!

– Do the Germans understand this? Is it profitable for them?

– They have a different way of thinking. Even now, despite everything that’s happening, Merkel goes to the microphone and says: “Well, during the Cold War we didn’t have any problems with gas supplies from the Soviet Union, so what are the issues with gas supplies from Russia?”

They have different memories of the past. They don’t understand Russians as we do.

– There’s a rumour that this is just a simple case of corruption. Is that so?

– Gazprom is a very advanced company in terms of creating a certain image. But, they’re not really using corrupt mechanisms. They know when to stop.

Gazprom finances several football clubs in the pipeline area; they support the Nord Stream regions; they support the media. They organize business forums and give German business more opportunities to enter the Russian market; they create certain favourable conditions. They have a very well-thought-out policy.

– But no bribes?

– No. They know the limits of what’s allowed and try to balance their options.

– Who in the EU is for us and for stopping construction of Nord Stream-2, and who’s against?

– The East European countries – i.e. the Visegrad countries and the Three Seas Initiative.

– What about the French? They don’t benefit from a stronger Germany. They want to wield more power. So why aren’t they against?

– That’s a question of trade between Germany and France. Germany wants to get rid of nuclear energy and ban it in the EU. But, France runs mostly on nuclear energy. And here we can see an exchange of interests. France will continue using nuclear energy for its support of Nord Stream-2.

This is politics… and in politics, nothing is as clean as you’d like it to be. That’s why you need to understand the interests of those you’re dealing with. It all depends on what you can offer. But, if you ask me what we have to offer, I can’t give you an answer, because that’s a political decision, and I’m not a politician at the moment.

– Are there any people in our government who understand the situation and can draw up a balanced offer?

– There are enough people in Ukraine who know how to build a strategy. I don’t know if they’re involved in the process now. It’s a pity that we don’t yet have an ambassador to the EU.

We all hoped that Vsevolod Chentsov would be appointed ambassador to the EU and deal with this situation somehow. But, we’ve been waiting for the decree for over two months, even though an agreement with the EU was duly signed.

– What about the US? Who is for and who is against us with regard to Nord Stream-2?

– We’ve always worked very fruitfully with Congress and the Senate.

Back in 2019, there were many skeptics who didn’t believe that the United States could impose sanctions on the EU or take such harsh measures against Nord Stream-2. No one really believed in the success and possibility of these sanctions.

Congress and the Senate are still on our side.

They are even ready to go further and adopt a binding act that will make sanctions mandatory, thus the White House will lose the ability to play with them. This amendment was voted in the Senate Foreign Relations Committee. With the active cooperation of Congress and the Senate, it’s possible to make these legislative changes in the near future. We have the support of a bipartisan majority in the US

– Do you really think that this can be done before the last leg of Nord Stream-2 is completed?

– Yes, I do. But everyone has to get actively involved.

– But who’s against us? Biden and Blinken?

– They’re not against us, but for a paradigm shift in American relations with Europe.

Here’s how things stand. The person who is now in charge of sanctions on Nord Stream-2 in the US National Security Council is also in charge of working with Europe and the EU.

– And this person’s also a Germanophile…

– Yes.

– In fact, this means that a small number of people who support the completion of Nord Stream-2 control the situation.

– Yes. They’re changing the paradigm of relations with the EU.

– There are also people who aren’t officially in power in the United States, but work against us. They support Germany, Russia, whatever…

– Yes, and there are many, including Kurt Volker.

– But, everyone thought that Kurt Volker was pro-Ukrainian…

– That was true until we found out that he was working for a lobbying company that represents the interests of Nord Stream-2. Questions: “What was he doing in Ukraine? Did he come here to persuade us to give up on Nord Stream-2?”

NOTA BENE: Kurt Volker commented on Lana Zerkal’s remarks and underlined that he opposes Nord Stream-2 and is not involved in his employer’s lobbying campaign.

– But, didn’t Volker start working with them some time later?

– Yes, after all the impeachment hearings.

The Germans, who have many lobbyists in Washington, are also very active. The Nord Stream-2 consortium has many lobbyists, as well as Russia’s Gazprom.

Congress and the Senate are very large institutions where we need to work with everyone, and not just one person. This is the only way that we can promote our agenda, be on the inside, know what’s happening there, follow the trends and movements, and build our own information narrative. This is what’s meant by lobbying.

– A group of experts in Naftogaz worked on Nord Stream-2: Lana Zerkal, Vadym Hlamazdin, Oleksandr Kharchenko. Others travelled to Washington to lobby our interests. But, wasn’t there also a team of lobbyists working in the United States?

– Of course. Lobbyists can’t work alone, cut off from local teams, because all information is provided by local teams, meaning us.

Lobbyists set up meetings; they arrive and work on all these meetings. And then, negotiations begin. They then provide information, give persuasive arguments, and conduct a constant dialogue. For me at Naftogaz, it was a continuation of the work I’d been doing at the Foreign Ministry.

– We know that the three of you were fired by Naftogaz. And didn’t the lobbyists who were negotiating also leave?

– As far as I understand, they left.

A certain infrastructure has been preserved. There are contacts, plans, developments that need to be promoted, in particular, changes to the law, which establishes the obligation to apply sanctions.

– How much did the lobby team cost Naftogaz?

– That’s a good question. But, we should not forget how much Ukraine received from the delay in the launch of Nord Stream-2: $3 billion a year, or $8 million a day.

If you look at the amount Naftogaz paid to the lobbyists last year, it was about $ 2,600 a day. So doesn’t it make sense to involve lobbyists?

– How did our lobbyists manage to negotiate this $8 million a day? What’s the connection?

– In 2019 (at that time I was still involved in gas negotiations at the Ministry of Foreign Affairs), it became clear that tripartite negotiations between the EU-Russia-Ukraine on a new gas agreement weren’t working. At that time, we focused a lot of efforts on the American vector, although no one believed that it was possible for the United States to impose sanctions on Nord Stream-2. Even American politicians were very skeptical.

But within a year, we were able to convince both Congress and the Senate that sanctions could be legally applied. Although Trump was still president, and Trump-Putin relations were on a roll, the US included sanctions in the law on its defense budget. This made it possible to ensure effective negotiations with Russia.

I’m deeply convinced of one thing. If sanctions hadn’t been imposed, there would have been no contract for gas transit.

Of course, this happened not only because of the lobbying campaign. Lobbyists only provide opportunities, and then another question arises: Can you take advantage of these opportunities? Do you have valid arguments? Are you ready to work 24/7? Can you attend 15-16 meetings a day? It’s not easy!

– Does Ukraine need Russian gas?

– For me, Russian gas stands for corruption, because for Russia, gas is not a commodity, but a tool of influence. However, whether we talk about Russian gas as such or call it Central Asian gas, it will still be a matter of agreeing on some schemes. The Russians don’t work otherwise.

– The Slovaks, Austrians, and Germans buy Russian gas and they manage without getting involved in corruption.

– The Germans – perhaps, because they buy the gas on the stock market as a commodity. But, the issue of gas supplies to our neighbours still involves preferences and privileges.

I don’t see how we can communicate with Russia on gas as the European companies do. In Russia, it’s all regulated manually.

Read also:

Translated by: Christine Chraibi
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