In Geopolitics Today - Thursday, November 18th
Nord Stream 2 Certification Process Stalls and Poland Signs Missile Launcher Deal with the United Kingdom
Nord Stream 2 Certification Process Stalls
The German Federal Network Agency (FNA) has suspended the certification process of the Nord Stream 2 pipeline. In justifying the decision, the FNA outlined that the certification process cannot continue unless the operator of the Nord Stream 2 pipeline is operating within German territory and not on Swiss territory where the operator Nord Stream 2 AG is currently based. The FNA decision means that Nord Stream 2 AG must now facilitate the transfer of assets and personnel to a new organisation which is registered in Germany. The postponement of the certification process also means that the delivery of natural gas from Russia to Germany via the Nord Stream 2 pipeline is unlikely to begin before 2022.
The decision comes as Europe is in the midst of a natural gas supply crisis. Gas consumption in East Asia has risen rapidly, which has led to higher demand, increasing prices throughout East Asia, and thereby attracting liquefied natural gas (LNG) exporters like the United States to the region. This has had the effect of reducing US liquefied natural gas exports to Europe. The reduction in European imports across the Atlantic declined by nearly 16 per cent compared to last year. In addition, Russia has been unwilling to negotiate short-term contracts at a time when energy prices are rising, and is keen to secure lucrative long-term deals with European capitals.
As European countries struggle with lower supplies, Gazprom will be better positioned over any contractual negotiations regarding supply well in into the future. At the same time, the situation is somewhat different that previous such episodes, as Russia too is drawn in to the growing demand in Asia. Russia’s natural gas industry has found some success in negotiating alternative contracts in the form of rapid supply increases to China. A proposed new pipeline could even tap the same gas fields as those currently supplying Europe, allowing Moscow to switch between the European and Asian markets at will. This would strengthen Russia’s hand in any negotiations and leave members of the European Union increasingly dependent on the more expensive to transport US LNG.
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Poland Signs Missile Launcher Deal with the United Kingdom
The United Kingdom will be involved in helping Poland build a domestically-made short range air defence system. Poland has signed a framework agreement which will see Poland's state-controlled defence consortium Polska Grupa Zbrojeniowa (PGZ) work together with Britain's MBDA Missile Systems, for the production of a mobile short-range missile system (code-name Narew). The Polish president hailed the deal as “the largest” and “most complex” in the entire history of the Polish Armed Forces. The value of the contract is estimated to be anywhere between $12.5 to $17.6 billion.
Narew will replace three aging capabilities with one new system, and PGZ aims to create these short-range anti-aircraft missile launchers for use by the Polish army. The basic task of the Narew system will to protect Polish Armed Forces units, facilities and air bases together with US-made Patriot missile systems to create a national air defence system which is integrated with coalition forces. The primary role of the Narew system will be to engage multi-role aircraft, cruise missiles and unmanned aerial vehicles. According to initial forecasts, the first live firing of the system elements is to take place in 2026.
The agreement will provide enhanced security and defence development for both countries, simultaneously boosting the missile development in both Poland and the UK. The Narew system itself is also a state-of-the-art configuration that is planned to include early warning radars, optoelectronic sensors, and other critical components. The contract’s steep value is said to be justified by the fact that it includes a transfer of sensitive technologies to Poland. Moreover, the deal was structured in such as way that it will complement two other intermediate-range missile programmes The Narew is yet another significant defence contract signed by Warsaw in recent months as Poland recently acquired 250 M1A2 Abrams SEPv3 tanks from the United Sates and 24 Turkish-made Bayraktar TB2 drones.
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