Over the recent months, the debate around the issue regarding the regulatory aspects applying to the Nord Stream 2 pipeline project increased in intensity and arguments not only in the Member States (Denmark, Finland, Sweden) whose exclusive economic zones and/or territorial waters would be crossed by the pipeline, but also in the European public sphere, among the experts, commentators and media.
A chief reason for the heightening of the debate is related to the issuing of the pipeline’s construction permits by Denmark, Finland, and Sweden, which is scheduled to be ended by early 2018. Contrary to Finland, where the project has not triggered much controversy, Denmark and Sweden have witnessed a more intense political debate. Moreover, the Danish and Swedish governments requested the European Commission to assess the project, before proceeding with the procedures of permits issuing.
The issue of regulatory aspects applying to Nord Stream 2 is of paramount importance not only for all the opponents of the project (including the Central and Eastern European Member States), who expect the pipeline to be stopped by the application of EU energy law but also for the project’s promoters (the Nord Stream 2 AG and the five European companies which committed to finance the project), as it may affect the schedule and rapidity of pipeline’s construction. Before the Commission issued its response to the request of Denmark’s and Sweden’s governments, the issue of regulatory aspects applying to Nord Stream 2 had already became-through an agenda-building process triggered by Nord Stream 2 AG-an element of soft power’s aspect.
- Peering through the smokescreen’s thickness: the European Commission’s
“(…) We also see a lot of smokescreen thrown around” the regulatory situation of Nord Stream 2[i] , Sebastian Saas, the EU adviser of Nord Stream 2 AG, commented on the debate ignited with regard to the regulatory framework that applies to the pipeline. Mr Saas has repeatedly claimed, on various occasions, that the 3rd Energy Package provisions do not apply to the pipeline’s offshore section.
“We need to cut through the fog which some commentators in Brussels especially but also in Eastern European countries are throwing around the topic”[ii], Paul Corcoran, CFO of Nord Stream 2 AG, stated, with reference to the aforementioned legal controversy. Taking as absolute reference a document produced by the European Commission’s Legal Service, both Nord Stream 2 AG’s officials indicated that the Commission came to the conclusion the pipeline’s offshore part does not fall under the provisions of the 3rd Energy Package, and, consequently, any further debate on the matter would be irrelevant.
Nevertheless, despite the recourse to the above mentioned document, the debate on the matter should proceed, as the “smokescreen” (or the “fog”) revolving around it consists not only in “commentators” ‘opinions and views but in other documents produced by European Commission and various declarations of top Commission’s officials as well. However, the scope of this article is not to provide a recollection and/or a quantitative analysis of all the documents and declarations produced by the Commission and its officials on Nord Stream 2 from the ignition of the debate, but to attempt at shedding light on the controversy related to the Commission’s approach of the regulatory issue concerning Nord Stream 2. Therefore, it will be undertaken only the examination of the Commission’s documents (regardless their public disclosure), and of declarations and positions of the Commission’s officials which pertain to the issue. Given that it constitutes a response to a Commission’s letter and also its relevance to the issue, a document of the German regulator will be included in the analysis.
Hence, with the very scope of attempting to enlighten the European Commission’s approach on the regulatory controversy, better to take a peer through the several layers of the “smokescreen”.
1.1. DG Energy’s first position: EU law applies to the off-shore part, but an international agreement for a specific regulatory regime would be needed
The first layer is represented by a document produced by the Directorate General of Energy (DG Energy), dated January 15, 2016[iii], which, though not publicly disclosed, was quoted by media. The document plainly states:
“EU law applies to the off-shore part of NS2 under the Baltic Sea falling under the territorial jurisdiction of the respective Member States (territorial waters and/or exclusive economic zone of Finland, Sweden, Denmark and Germany) and to the onshore part in Germany. In view of their most direct implication, German authorities would be the primary (but not the only) responsible for ensuring the application of EU law”[iv].
Nonetheless, DG Energy reckons that the full application of the EU energy law- tariff regulation, third-party access, ownership unbundling and certification-will be highly challenging without changes to the project. Furthermore, “two sets of divergent regulator rules” would apply on the pipeline (the EU law and the Russian law), which will trigger a “conflict of laws” at the EU external border[v]. Hence, the DG Energy foresees two ways in order to solve the “conflict of laws”: i) the establishment, through international negotiations, of a specific regulatory regime for Nord Stream 2, which could include “some deviations from the full respect” of the 3rd Energy Package but would include “minimum rules”, such as: “some degree of unbundling”, “some oversight of operations to avoid discrimination” and “some level “ of third-party access [vi]; and -in the absence of the international negotiations– ii) the establishment of a specific regulatory regime for a certification procedure. The latter approach, DG Energy reckons, is more disadvantageous than the former, mainly because it would not be legally binding, would cover solely the unbundling matter, and, in the absence of talks between the Commission, the Member States and Russia/Gazprom, it would not lead to any legal obligation on Russia but only on Gazprom/ the project’s shareholders (at the time of document writing, the Polish regulator had not yet vetoed the Nord Stream 2 shareholder agreement).
The former approach-the establishment of a specific regulatory regime for Nord Stream 2-could be achieved, according to DG Energy, either through an EU-Russia international agreement (as it was the case of the Nabucco project with Turkey) or through an agreement between Russia and the Member States concerned: Denmark, Finland, Germany and Sweden. However, while an EU-Russia international agreement is deemed as “politically impossible”, an agreement between Russia and the Member States concerned is considered as “legally difficult”[vii]. Consequently, DG Energy concludes that there are two main possibilities: the full application of EU energy law-which, however, cannot be addressed without changing in the project; and the “flexibility option”- that could lead to the establishment of the abovementioned specific regulatory regime, and which could reduce the degree of changes but would entail legal difficulties and policy implications. Finally, the document states that it is rather “a political and not a legal matter” whether it would be chosen the “flexibility option” (interpreted in a broad manner and/or deviations from the full application of the EU energy law) or whether the “EU should insist on full respect of EU energy law”[viii].
An essential part of the opinion expressed by the document produced by DG Energy, referring to the application of the EU energy law, was endorsed by the Commission’s Vice-President, Maros Sefcovic, on April 6, 2016. He highlighted the need to achieve “a legal framework” for Nord Stream 2, which must take into consideration “the key principles” of EU energy law:
“If built, Nord Stream 2 would have to fully comply, as any other infrastructure project, with applicable EU law, including on energy and environment. Let me underline again that EU law applies in principle also to off-shore infrastructure under the jurisdiction of Member States including their exclusive economic zones. What exactly within EU sectorial legislation applies has to be assessed in regard to their specific provisions. The construction of such an important infrastructure project as Nord Stream 2 cannot happen in a legal void. This would also run counter to the interest of economic operators in having legal certainty. Neither can it be exclusively operated only according to Russian law. Against the background of colliding legal regimes, Nord Stream 2, if built, has to be operated under a legal framework which also takes duly account of the key principles of our energy market rules”[ix].
1.2. DG Energy a year later: a “specific legal regime” for Nord Stream 2, achieved through international negotiations. The German regulator: Nord Stream 2’s offshore section is not subject to 3rd Energy Package, its onshore part is too small to be regulated by EU energy regulations
The subsequent layer consists of two documents: a second document (which was not made public) produced by DG Energy, namely a letter sent by the Director General, Dominique Ristori, to the German regulatory authority on February 24, 2017 and the response to the latter.
Following the aforementioned approach of DG Energy from January 15, 2016, Mr Ristori recommends the establishment of a “specific legal regime” for Nord Stream 2, as the off-shore sections of new infrastructure cannot be built or operated under a third country law or in “legal vacuum”[x]. “In this context, he expects that the transparency of the pipeline’s operation should be ensured, tariffs should be set in a non-discriminatory way (by an independent operator, definitely not Gazprom), appropriate third party access should be provided (Gazprom must not monopolise the transmission capacity), and the required unbundling of ownership should be guaranteed (Gazprom must not be both a supplier and the operator). Dominique Ristori called on BnetzA to put in place appropriate regulatory framework for Nord Stream 2 in line with the guidelines described above”[xi].
Furthermore, this letter is in line with the first document issued by DG Energy-which clearly indicates that such a regulatory regime can be achieved only through the mean of a negotiated agreement-between EU and Russia or between Russia and the Member States concerned). An international agreement between EU and Russia is seen as the optimal solution, but it is acknowledged as “politically impossible”. Hence, the DG Energy puts forward a proposal included in its document dated January 2016, namely an agreement between Russia and the Member States concerned (Denmark, Finland, Germany and Sweden), which, however, can be legally questionable if not achieving the full application of the EU law.
The most relevant item of BnetzA’s response-which came on March 3, 2017-, is the opinion that Nord Stream 2 corresponds “to a single offshore pipeline project from an economic and technical perspective”[xii] . Moreover, the German regulator states that it shares the legal opinions expressed by the Federal Government and Commission’s Legal Service (see further below) , which consider that the import pipelines from third-countries to the EU are not subject of the 3rd Energy Package’s provisions. As the pipeline’s onshore section is only a few kilometres long, compared with the 1,200 km long offshore section, the application of “different energy regulations” to this section would be, in BnetzA’s view, “inappropriate” and “improper”. According to Nord Stream 2 AG, the pipeline will comprise onshore facilities, “including pipelines sections of some 0.4 km” at Lubmin 2 landfall point[xiii].
Put it differently, the German regulator considers that the 3rd Energy Package provisions should not be applied to both pipeline’s offshore and onshore section. Nevertheless, it should distinguish between the Nord Stream 2 onshore section and the pipeline’s onshore connections inside the internal market, which will transport the gas to Poland, the Czech Republic and further to Austria. Unequivocally, these onshore connections will be subject of EU internal energy market law. Furthermore, BnetzA’s position is carefully worded when stating that Nord Stream 2 cannot be built in “a situation where a legal void persists”; while it mentions the necessity to observe, “in particular, environmental and planning regulations”; it also says that it is “imperative” that Nord Stream 2 legal clarity to be established “as soon as possible”.
1.3. Commissioners Canete and Sefcovic: the offshore section requires a “specific legal framework” which should take into account the core principles of EU energy law
The third layer is represented by the positions of the European Commissioner for Climate Action and Energy, Miguel Arias Canete and the Commission’s Vice-President for Energy Union, Maros Sefcovic. These positions were publicly and simultaneously expressed during the ministerial meeting of the Transport, Telecommunications and Energy Council, held on February 27, 2017. According to Mr Canete, “the Commission sees no need for the infrastructure of the magnitude of Nord Stream 2”[xiv] ; he also said:
“If built, NS2 will have to fully comply with the applicable European law in all fields, including internal market energy, environment and competition. This means for the offshore section’s full compliance with the internal energy market rules-with the Gas Directive and the regulations-and as the offshore section cannot happen in a legal void or only according to the Russian law, it requires a specific legal framework. The Commission will pay close attention to any set up of specific legal framework which should take into account core principles (…): appropriate transparency in pipeline operations, non-discriminatory tariff setting, appropriate level of non-discriminatory 3rd party access and a degree of legal separation between the activities of supply and transmission”[xv]
Mr Sefcovic declared that he “fully subscribes to the position” expressed by Mr Canete, and actually presented a similar opinion:
“Nord Stream 2 concerns an offshore pipeline that enters the EU jurisdiction when crossing the jurisdiction border of the respective Member States and in order to ensure the coherent and practical framework along the entire route some key principles should be agreed, such as: appropriate transparency in pipeline operation, non- discriminatory tariff setting, an appropriate level of non-discriminatory third party access, a degree of legal separation between the activities of supply and the transmission (…) We invite the Bundesnetzagentur to let Commission know (author’s note- see the abovementioned document of Bnetz) how it intends to ensure a coherent regulatory framework for the NS2 pipeline, taking into account the above described principles “[xvi]
Clearly, the two Commissioners’ stances are consistent with the two abovementioned positions of DG Energy, namely the setting up a specific regulatory regime for Nord Stream 2, which could include some deviations from the full respect of the 3rd Energy Package but should include key principles such as: “appropriate transparency in pipeline operations”, “non-discriminatory tariff setting”, “appropriate level of non-discriminatory 3rd party access” and “a degree of legal separation between the activities of supply and transmission”. Worthy of note, Mr Canete and Mr Sefcovic did not mention any of the possibilities indicated by DG Energy in its documents to achieve the specific legal regime: an agreement between EU and Russia or between Russia and the Member States concerned. Given the context where the Commissioners’ positions were expressed- the meeting of EU energy ministers, during which certain tough positions on Nord Stream 2 were voiced- one can assume that this important element was left aside in order to spare the political sensitivities of some Member States which oppose the project.
1.4. DG Legal: “EU law has not foreseen any mechanism to achieve Gas Directive’s goals”; “conflict of laws” requiring international negotiations
The subsequent layer is made up by a document produced by the European Commission’s Legal Service (DG Legal) –and signed by the Director-General- whose date is not clear, and which was not publicly disclosed by the Commission but by Nord Stream 2 AG and the media. This document represents the core of the claim made by Nord Stream 2 AG that the 3rd Energy Package does not apply to the pipeline’s offshore section but also the legal basis of BNetzA’s response to the Commission.
The document states that Nord Stream 2 is a transmission line-actually, a single line connecting two transmissions systems-but it does not fall under the definition of the “interconnector”, as the Art 2, point 17, of Gas Directive, excludes from the interconnector’s definition a transmission line which crosses a border between a Member State and a third country. Nevertheless, the Article 36 of Gas Directive –which foresees, under conditions, the exemption of major new gas infrastructure from Gas Directive rules-refers only to “interconnectors”, and not to “transmission lines”. As the Gas Directive “sets up a coherent regime”, applying “certain rules” of the Gas Directive to Nord Stream 2 “without giving it the possibility to be exempted would depart from this coherent regime foreseen by the legislator and give that pipeline a different and less favourable treatment in comparison to a similar pipeline crossing an internal border”[xvii]. Furthermore, the document mentions the “silence of the Directive” with regard to the Member States’ obligations concerning a transmission line stretching into a third country , and it states that “it does not appear” that the Gas Directive imposes “any particular obligations” on the German authorities in the case of Nord Stream 2[xviii].
“In the absence of a clear provision in the Gas Directive requiring, for instance, a regime
of third-party access, tariff regulation or ownership unbundling to be put in place for pipelines connecting Member States with third countries, one must conclude that EU law
as it stands has not foreseen any mechanism that could achieve the goals of the Gas
Directive with regard to such pipelines”[xix].
Nonetheless, DG Legal points out that it is not possible to apply the EU law on the pipeline until the border on EU jurisdiction and “different rules” (the Russian law, in this case) “on the other part of the pipeline”, as that would not meet the purpose of Gas Directive, which is to ensure the non-discriminatory access to the gas transport network. Consequently, according to DG Legal, there is a “‘conflict of laws’, which would better be solved through international negotiations”[xx]. Unlike DG Energy, DG Legal refrains from suggesting any possibility through which the international negotiations should be achieved.
1.5. European Commission: a “specific legal regime including some fundamental principles stemming from EU energy law would need to be established” for offshore part
Another layer is represented by the European Commission’s letter sent to the governments of Denmark and Sweden -following the two Member States’ requests for the Commission to assess the Nord Stream 2 project before they decide on construction permits- which was quoted by the media on March 30, 2017.
The document, signed by the Commissioners Maros Sefcovic and Miguel Arias Canete, is consistent with the main content of the previous positions of DG Energy and it is in line with the aforementioned stances of the two Commissioners, expressed during the meeting of EU energy ministers.
“As regards to the specific application of EU energy law, it is clear that the Internal Gas Market Directive, the Gas Regulation and the related Guidelines and Network Codes are fully applicable to any on-shore infrastructure. As to the off-shore pipeline, it cannot be built or operated exclusively under the law of a third country or in a legal void. (….) it is our view that a specific legal regime would need to be established for the offshore section, and that such specific legal regime should include some fundamental principles stemming from EU energy law. Such principles include appropriate transparency in pipeline operation, non-discrimination in tariff-setting, an appropriate level of third-party access and a degree of separation between activities of supply and transmission” [xxi]
Furthermore, the letters provides a significant and new element regarding the way through which the Commission intends to pursue the achieving of the specific legal regime for Nord Stream 2. As it was largely described above, such a regulatory regime can be accomplished either through a negotiated agreement between EU and Russia or between Russia and the Member States concerned (Denmark, Finland, Germany, Sweden); the former was deemed by the Commission as “politically impossible” while the latter was considered “legally difficult” and questionable if does not achieve full application of the EU law. There are several aspects pertaining to the issue:
i) Firstly, concerning the type of agreement which the Commission is seeking to negotiate and how the exiting opposition to the project would be overcome within the different EU’s institutional actors which play a role in the external dimension of Union’s energy policy. The letter says: “(…) the Commission will seek a negotiating mandate from the Council for an agreement with Russian Federation as regards the above-mentioned key principles”. The first type of agreement can possibly be an Intergovernmental Agreement (IGA) between the Union and the Russia Federation. Nevertheless, such an agreement will need the cooperation of the institutional quadrangle formed by the European Council, the Council of the EU, the Commission and the European Parliament (EP). On the basis of the Article 218(6a) TFE, an agreement between the Union and Russia will require the EP’s consent, which will be highly challenging to be obtained given the broad opposition, manifested publicly on various occasions by the Members of the European Parliament.
Another type of agreement can be achieved between Russia and Denmark, Finland, Germany and Sweden. In the document dated 15 January 2016, DG Energy says that an “EU-Russia international agreement” would be “(…) the most legally safe and efficient solution (as was achieved for the Nabucco project with Turkey) (…)”. Nevertheless, the Nabucco agreement was an IGA signed between Turkey and four Member States (Austria, Bulgaria, Hungary and Romania) for which the Commission “acted as a facilitator in the negotiations for all sides”[xxii]. The Commission will be in a stronger position than it had been during the negotiations on Nabucco IGA, as following the review of the Intergovernmental Agreement Decision, it will have to undertake a mandatory ex-ante compatibility check of the future IGAs concluded with third countries in the energy field in order to ensure that they are compliant with the EU energy law. Though, an IGA on Nord Stream 2 between Russia and Denmark, Finland, Germany and Sweden would first and foremost imply a preliminary political decision of its future signatory parts. Would the Commission be able to convince the parties to enter the negotiations on one hand and address the further criticism and polarization within the EU-triggered by the possibility of the IGA-, on the other? So far, the auspices for achieving a treaty-either an IGA between the EU and Russia or between Russia and Denmark, Finland, Germany and Sweden – seem, if not impossible, at least improbable. The Nord Stream 2 already voiced its disinterest in such agreement and clearly rejected the possibility of specific legal regime’s establishment: “As far as an intergovernmental agreement is concerned, we don’t see a need for that, because for us the legal framework is clear”[xxiii]
ii) Secondly, related to the outcome of the Russia’s complaint over the EU 3rd Energy Package at WTO. Russia argues that the Directives, Regulations, implementing legislation and decisions of the 3rd Energy Package are inconsistent with EU’s obligations under the WTO law (especially Articles II, VI, XVI and XVII of the GATS and Articles I, III, X and XI of the GATT) as they unjustifiably restrict imports of natural gas originating in Russia and discriminate against Russian gas pipeline transport services and service suppliers. The following matters are at the core of Russia’s complaint: unbundling, third-country certification and infrastructure exemption measures; capacity allocation measures and “Projects of Common Interest” measures. Overall, there are 17 arguments made by Russia and the complaint is currently advanced to the panel stage, settled up by the WTO’s Dispute Settlement Body, and whose final report is expected no later than the end of 2017. Aside that the dispute itself is one of the most important energy disputes in the WTO framework, it will definitely impact not only the future of EU-Russia energy cooperation but also the possible negotiations over an agreement on Nord Stream 2.
iii) Thirdly, related to the future of EU-Russia energy cooperation. Basically, the legal framework for EU-Russia energy relations is the EU-Russia Partnership and Cooperation Agreement (PCA), signed in 1994 and entered into force in 1997. However, the PCA contains a slight basis for energy cooperation, as only the Article 65 deals specifically with the energy field: “Cooperation shall take place within the principles of the market economy and the European Energy Charter, against a background of the progressive integration of the energy markets in Europe”[xxiv][xxv]. Though a signatory part of the Energy Charter Treaty-which would have placed Russia’s pipeline network under regulatory framework and challenged Gazprom’s monopoly-Russia did not ratify the Treaty, and in 2009 ended its provisional application. The EU-Russia Energy Dialogue, set up in 2000, is a forum of discussion, but it does not produce legally binding norms. Important problematic issues pertaining EU-Russia energy relationship such as transit, investment, pricing, infrastructure ownership cannot be addressed under the current legal basis; they need a new, comprehensive legal framework with firm binding commitments, able to reconcile Union’s principles and regulatory developments, its institutional approach of wider Europe, the current realities of EU energy market, the underlying heterogeneity of Member States’ preferences on energy area with Russia’s interests as energy exporter. The controversy revolving around the Nord Stream 2 pipeline project not only features the array and the substance of the contentious issues involving the EU-Russia energy relation but it is also an outcome of the lack of such framework encompassing mutually reinforcing sets of legal instruments.
1.6. Commission’s Spokespersons: “We don’t like Nord Stream 2 politically”. Does the Commission act function of “political” preferences, made up on “liking”?
The final layer of made up by the succinct but at the same time intriguing declarations of two European Commission’s spokespersons, Anna Kaisa Itkonen and Alexander Winterstein.
On March 29, 2017, Reuters quoted a declaration given by Anna Kaisa Itkonen, spokesperson for Climate and Energy, to the Danish newspaper Politiken:
“The commission will ask member countries for permission to initiate negotiations with Russia in order to reach an agreement that pivotal principles from the union’s legal framework will be imposed on projects like Nord Stream 2”[xxvi].
A day after, on March 30, a declaration of Mrs Itkonen made to Brussels media- and afterwards largely quoted by the Russian media-introduces a new element: the Commission’s approach on Nord Stream 2 is based on political motivations:
“‘We don’t like Nord Stream 2 politically’, said Anna-Kaisa Itkonen, an energy spokeswoman at the commission. ‘This being said, there are no legal grounds for the commission to oppose Nord Stream 2… because (EU) rules do not apply to the offshore part of the pipeline’” [xxvii]
Mrs Itkonen’s stance was enhanced by the Commission’s Deputy Chief Spokesperson, Alexander Winterstein, who declared, on March 31, 2017, during the press briefing:
“Vice President Sefcovic and Commissioner Canete did send the letter to ministers Lilleholt and Baylan to again explain the Commission’s position on NS2. Now in a nutshell: we don’t like the Nord Stream 2 project politically. That is why building a strong Energy Union is key for this Commission since the very beginning of its mandate and a lot of work has been done on the Energy Union project already” [xxviii]
The declarations made by the two Commission’s spokespersons raise a few issues:
i) Firstly, related to the wording: “We”- “who is “we”? The European Commission as institution? The persons who expressed those declarations? Terms are so very fundamental in the public communication of institutions, which, when expressing a position, should not leave room for personalization; “Like”-since when a public institution “likes” or “dislikes” something? One of the tasks performed by public communication is to support the legitimacy of decisions. A decision can hardly be deemed as legitimate as it chiefly appears as based not on clear arguments but rather on beliefs stemming from inclinations, sympathies or feelings.
ii) Paradoxically, those declarations mirror-in a reverse mode-the Nord Stream 2 AG’s stance, expressed in the same timeframe : “It is not up to the European Commission to make a political judgment on whether investments are needed by the market or not”[xxix].
iii) Why the spokespersons preferred to emphasize-in a way which is not adequate for the language of public communication-political arguments regarding Nord Stream 2 and did not stick only with the argument of the need to establish a specific legal regime for the pipeline’s offshore section? The assertion that “EU rules do not apply to the offshore part” of Nord Stream 2 cannot be fully validated in the absence of other critical element, regarding the “conflict of laws” with regard to this pipeline’s section, and that was entirely overlooked in the spokesperson’s declaration. At the same time, the introduction and the emphasizing of the political rationale in the debate on Nord Stream 2, by the Commission’s spokespersons themselves, will only lead to the increase of controversy and give more arguments to those who claim that the Commission is acting neither as a neutral market regulator, nor as the guardian of treaties but principally as a political actor which designs and pursue its own goals.
- The applicability of the 3rd Energy Package –at the core of Nord Stream 2 agenda-building
2.1. Shaping preferences: why the agenda-building does matter
Power should not only be defined as synonymous with the resources but also with behavioural outcomes as power is “the ability to affect others to obtain the outcomes you want”[xxx]. Power has relational aspects, as it may affect and shape others’ preferences through commanding change, controlling agendas and establishing preferences[xxxi]. Framing/setting agenda and shaping others’ preferences are two out of the three soft power’s aspects[xxxii], “which rests on the ability to shape the preferences of others”[xxxiii]. Nevertheless, the information revolution and the crucial change that it triggered, namely the enormous reduction of the cost of transmitting of information, led to the diffusion of power, which nowadays “it is not the possession of any one country, nor only of countries”[xxxiv]. Non-state actors – corporations, non-governmental organizations, individuals, ad-hoc groups-are competing with the state actors in the sphere of soft power.
In this regard, it is worth mentioning that while highly impactful in the field of international relations, the “soft power” concept has met a lot of criticism and trivialization, as well; both its study and criticism have been largely and chiefly grounded on a narrower version of the concept, which refers to actions emanated and conducted by the state actors. The proliferation of non-state actors deserves more and in-depth studies related to the “soft power of non-state actors” and the way this is used, as for instance, in a framework created by a state actor, and/or independent of that.
As said above, framing/setting the agenda and shaping others’ preferences are soft power’s aspects, aimed at influencing others’ preferences and producing preferred outcomes. Agenda-building-whose theory originates from political sciences but which was further developed in the field of mass communication-, and agenda-setting[xxxv] can be effective tools in preferences’ formation as well and therefore they can constitute parts of soft power’s aspects.
Generally, in mass-communication, agenda-building is tracked through “association or similarities between the two agendas, (1) the agenda of sources and (2) the agenda of media”[xxxvi]. An agenda is made up of two levels: (1) the first level is “the topic level-the subject/object, such an organization or an individual figure, or a campaign or an issue (…) advocated by the subject/object”; (2) the second level of agenda is “the attributes tied to the topic”, such as characteristics, traits, but also the framing of the topic and subject’s position on an issue[xxxvii]. Finally, it should be mentioned that agenda-building is not a linear and unidirectional process, as sources and media can exert mutual influence on each other, and as well multiple sources can take part in the agenda-building process[xxxviii]. The proliferation of non-traditional media channels (social media’s, blogs, websites, and so on) adds even more complexity to the agenda-building process.
Concretely, states or non-state actors (corporation, non-governmental organization, and individuals) can build an agenda through campaigning on/advocating for an issue and further framing this issue in accordance with their interests and/or goals. In the era of “information revolution”, they can influence not only the media agenda but also the public’s perception via social media and other communication channels. Because it not only defines, but it also frames an issue, agenda-building is critical in the process of preferences’ formation (which includes also agenda-setting)[xxxix].
2.2. The agenda-building and its topic framing: the 3rd Energy Package does not apply to Nord Stream 2
What is the agenda-building in the case of Nord Stream 2? And if so, which is its main topic and how is this framed? In order to explore these issues, several elements should be identified: the agenda of source, the agenda of media; the subject, the topic, the subject’s position to the topic, the framing of the topic; and the similarities between the two agendas. Before proceeding, it should be mentioned that the analysis is based on the public communication undertaken by Nord Stream 2 AG through Twitter and company’s website between March-April 2017 and the media articles which covered the issue during the same period. The rationale for choosing this period is the frequency with which the topic (see below) appeared in the Nord Stream 2’s campaign. In this case, the agenda of source is the agenda of Nord Stream 2 AG, and the agenda of media is represented by the media articles.
Hence, applying the abovementioned theoretical framework to the agenda of source it results that: i) The subject is the Nord Stream 2 AG and its campaign regarding the project pipeline; ii) The topic (issue) is the applicability of the 3rd Energy Package to the pipeline; iii) The subject’s position to topic is that the 3rd Energy package does not apply to the pipeline; iiii) The main lines of the framing of the topic (attribute salience ) are: the European Commission (or EU Commission lawyers) confirmed that the 3rd Energy Package does not apply to the offshore part of the pipeline; consequently, the Commission has no legal basis to block the project or/ there is no legal basis for the project to be stopped. There is also a subline, related to the main ones, which is the following one: it would be discriminatory if, without legal reason, other requirements were to apply to Nord Stream 2 than to other comparable pipelines.
In the framing of the topic, relevant issues such as the existence of a “conflict of laws” (which should be better solved through international negotiations) and the dominant issue in Commission’s position- the need to establish a “specific legal regime” (which “should include fundamental principles stemming from EU energy law”) -were completely omitted or rarely mentioned (i.e.: “the conflict of law”) or, in the case of the legal regime, either generally presented as a “discriminatory requirement” (by agenda of source) or as a political solution per se, and not as an outcome resulting from a regulatory assessment (by media agenda).
“The public consumption of tweets may make tweets more influential on media coverage than traditional press releases”[xl]. Hence, Twitter’s important role in the overall communication of Nord Stream 2 AG may generally be explained by its two-way influence, simultaneously exerted over the way an issue is framed and covered by media, and on agenda-building as well.
“EU Commission lawyers and German authorities agree: internal market law applies not to pipelines like Nord Stream 2” ; “EU Commission legal service: 3rd energy package applies not to pipelines outside internal market like Nord Stream 2”; “EU Com Legal Service: 3rd Ener Pack applies not to pipelines outside internal market like Nord Stream 2”; “Nord Stream 2: the regulatory framework is clear”; “EU Commission confirms: 3rd Energy Package does not apply to pipelines like Nord Stream 2” –these are some of the tweets, made on behalf of Nord Stream 2 AG; they frame the topic and are as well part of the agenda-building process. A press release, posted to company’s website, frames the issue in a similar way, and, in addition, refers to BnetzA’s opinion, which is very favourable to its agenda:
“We also acknowledge that the European Commission confirmed yesterday, via a spokesperson (author’s note: the abovementioned declaration of Commission’s spokesperson) that the provisions of the 3rd internal energy market package are not applicable to offshore pipelines such as Nord Stream 2. This confirms an earlier opinion of the European Commission’s legal service, which came to the same conclusion”.
“An intergovernmental agreement is not a legal prerequisite or permitting criteria for a pipeline project like Nord Stream 2. The German regulator also stated that “it would be discriminatory if other requirements were to apply to Nord Stream 2” than to other comparable pipelines without legal reason. We are surprised that this clarification by the competent regulator is not reflected in the Commission’s letter to the Danish and Swedish Ministers “[xli]
As it was indicated above, the German regulator states that it shares the legal opinions expressed by the Federal Government and Commission’s Legal Service, which consider that import pipelines from third-countries to the EU are not subject of the 3rd Energy Package. Moreover, it says that it will be a discriminatory practice to apply the provisions of the 3rd Energy Package to Nord Stream 2, as “it is the long-standing regulatory practice of the European Commission not to regard such pipeline projects under the regime of the internal market”[xlii].
BnetzA exemplifies with the cases of Nord Stream 1, Green Stream and MEDGAZ pipelines, to which the 3rd Energy Package was not applied. Notwithstanding those arguments of the German regulator, it should be mentioned that the pipelines through the Mediterranean Sea-the Trans-Mediterranean Pipeline (commissioned in 1994), the Maghreb Europe Pipeline (commissioned in 1996), the Green Stream pipeline (commissioned in 2004) were planned and constructed when “the third energy package, and in most cases the second energy package did not exist”[xliii]. As Offenberg indicates, the Medgaz pipeline was commissioned in March 2011, right when the 3rd Energy Package entered into force and the Spanish regulator exempted the pipeline from third-party access based on a Spanish law; thus, “it can be argued as that through the national exemption process the 3rd Energy Package was formally applied”[xliv].
Though Offenberg considers that the 3rd Energy Package entered into force “without “retroactive effect”[xlv] , Riley points out that the Commission had required that the Polish section of Yamal-Europe pipeline-completed in 1999 and reaching current annual capacity in 2005-to fully comply with the 3rd Energy Package[xlvi]. As for the applicability of EU internal market energy law to Nord Stream 1, the matter is more complex than it suggests the argument of Nord Stream 2 AG. The legal and political context in which the pipeline was planned and built significantly differs from the current one: for instance, the pipeline was designated a “Project of European Interest” (2006) and promoted as enhancing EU energy security. Further, according to Offenberg, during the planning phase, Nord Stream 1 was presented as a pipeline connecting the Shtokman gas field to the EU; thus, “one possible explanation for the European Commission’s inactivity is that it considers Nord Stream 1 as upstream pipeline network, even though it has never stated this officially (…) The European Commission states that it ‘tolerates’ the current status of Nord Stream 1”[xlvii].
In the campaign over the project pipeline, the Nord Stream 2 consortium referred to several media articles to underpin the framing of the topic. As it was stated above, agenda-building is a bi-, even multi-directional process, as both sources and media can exert mutual influence on each other and multiple sources can take part in the agenda-building process.
An empirical, but illustrative evidence of the multi-directional dimension of the agenda-building process and the influence exerted upon it by different sources- is provided by an article (quoted by Nord Stream 2 consortium) suggesting that the fate of the Nord Stream 2 project would largely depend on high-politics decisions. The article also omits the very important regulatory aspects pertaining the issue and suggests the existence of an almost “fait accompli” : “EU officials said European Commission President Jean-Claude Juncker is considering to move forward on Nord Stream 2 and was “highly likely” to give the project the go-ahead in the coming months. The decision is expected in the next few months and could be announced after Germany’s general elections in September”[xlviii]. Aside the fact that the article entitles Mr Juncker with powers (i.e.: blocking or giving a green-light for a project as Nord Stream 2) which overpass the legally attributed competences of Commission’ President, it also leads to suppose that the fate of Nord Stream 2 would be, to a large extent, the result of some under-the-table-negotiations between the President of the European Commission and Germany.
As it was indicated above, the main lines of the framing of the topic (the substantive attribute salience) are: the European Commission/EU Commission lawyers confirmed that the 3rd Energy Package does not apply to the offshore section of the pipeline, therefore, the Commission has no legal basis to block the project. The framing of the topic is underpinned by the aforementioned documents of DG Legal and BnetzA. Worthy of mention-and relevant for the aspect regarding the sources’ role in the agenda-building process-, those documents were not made public by the institutions which produced them. They were leaked-by “sources”- to the media almost in the same time, resulting in a joint reference for media: “The move, revealed in documents seen by Financial Times (…)”[xlix]. Shortly after the leak, these documents were fully disclosed (again, not by the institutions which produced them) by a media outlet which published an interview with one of the Nord Stream 2 consortium’s representatives.
Another important element underpinning the framing of the topic is the declaration of the Commission’s spokesperson, which plainly states that: “[EU] rules do not apply to the offshore part of the pipeline”. There are several relevant aspects related to this declaration: i) It was made (and quoted by media) in the context of the letter sent by the Commissioners Canete and Sefcovic to the governments of Denmark and Sweden. While the letter carefully avoids to say that the EU law does not apply to the offshore part of Nord Stream 2 (“As to the off-shore pipeline, it cannot be built or operated exclusively under the law of a third country or in a legal void”), this declaration makes appear the Commission’s actions towards the Nord Stream 2 project as mainly politically motivated; ii) The spokesperson’ declaration was employed by the Nord Stream 2 AG to underpin the framing of the issue (see the above mentioned press release); iii ) The media article quoting this declaration includes the following paragraph: “In a March 28 letter to the Danish and Swedish governments, seen Thursday by The Wall Street Journal, the European Commission, the EU’s executive arm, said it has no basis to bar the planned pipeline”[l] . However, the carefully crafted wording of letter does not contain any statement related to the “basis to bar the pipeline”; moreover, the letter reiterates the principle “stemming from EU energy law”, which should be included in the future “specific legal regime”, namely appropriate transparency in pipeline operation, non-discrimination in tariff-setting, an appropriate level of third-party access, a degree of separation between activities of supply and transmission.
There are two main positions, differing in substance, articulated so far by the Commission on the regulatory aspects that may apply to the Nord Stream 2 project pipeline.
The first position, coherently expressed by Commission’s internal or public documents and the official declarations made by the Commissioners Canete and Sefcovic, considers that a specific legal regime, which would include core principles of the 3rd Energy Package, would need to be established-through international negotiations- for the offshore pipeline’s section. Initially assumed-in the first document produced by DG Energy- as a “flexibility option”, resulting from a political choice, the achieving of a specific legal regime is considered, by the Commission, as best to be implemented through an IGA between EU and Russia. The IGA will require the cooperation of the institutional quadrangle formed by the European Council, the Council of the EU, the Commission and the European Parliament and it may face significant political hurdles, stemming from the opposition of certain Member States and Members of the European Parliament. The realization of the IGA seems even more difficult in the context in which Nord Stream 2 AG has clearly expressed a negative stance towards the establishment of such an agreement.
The second position, revealing from an internal document of DG Legal, states the difficulty to apply the 3rd Energy Package provisions to the offshore part of the pipeline in a carefully crafted wording : “EU laws it stands has not foreseen any mechanism that could achieve the goals of the Gas Directive”. The DG Legal position is underpinned by the BnetzA’s stance and a declaration of a Commission’s spokesperson and has been widely instrumentalized by the Nord Stream AG in the framing of its agenda’s topic and subsequently in the agenda-building process. Nonetheless, the issue of the existence of a “conflict of laws” -which should be better solved through international negotiations-, mentioned in the document of DG Legal, was completely omitted in the agenda of the source (Nord Stream 2 AG). As a matter of fact, the agenda-building process-a critical element in preferences’ formation, which is one of the aspects of the soft power- revolves around the above mentioned position of DG Legal, framed under the following line: the European Commission (or EU Commission lawyers) confirmed that the 3rd Energy Package does not apply to the offshore part of the pipeline. The dominant issue in Commission’s position- the need to establish a specific legal regime- is presented, in conjunction with BnetzA’s position, as a “discriminatory requirement” (by agenda of source) not as an outcome mainly resulting from a regulatory assessment, but a political solution per se (by media agenda). Consequently, a legal matter, concerning the regulatory aspects applying to the Nord Stream 2, has became, through its instrumentalization into the agenda-building process, an element of soft power’s aspect.
[i] Gotev, Georgi, “Nord Stream 2 official: We see a lot of smokescreens thrown around”, EURACTIV, March 23, 2017
[iii] European Commission (Directorate-General for Energy), “Legal Consequences of Applying The Third Energy Package to Offshore Import Pipelines, in Particular Nord Stream 2”, January 15, 2016, Brussels. Author’s archive
[vii] Ibid., p.7
[ix] European Commission, “Speech by Vice-President Maroš Šefčovič on “Nord Stream II – Energy Union at the crossroads ”, April 6, 2016, Brussels, http://europa.eu/rapid/press-release_SPEECH-16-1283_en.htm
[x] Cf. Jakobik, Wojciech, “Nord Stream 2: Who is paralyzing the Commission ?”, April 11, 2017, https://wjakobik.com/2017/04/11/nord-stream-2-who-is-paralyzing-comission/
[xii] Bundesnetzagentur, March 3, 2017, http://en.euractiv.eu/wp-content/uploads/sites/2/2017/03/German-regulator-on-Nord-Stream-2.pdf
[xiii] Nord Stream 2, « Espoo Report. Nord Stream 2”, April 2017 ,p.3 https://www.nord-stream2.com/media-info/documents/
[xiv] Council of the European Union, “Transport, Telecommunications and Energy Council”-Public session, February 27, 2017. Author’s transcription of the speech http://video.consilium.europa.eu/en/webcast/545b989f-1309-40c6-ab87-981b6b0ddbf7
[xviii] Ibid., p. 3
[xxii] European Commission, “ President Barroso and Commissioner Piebalgs welcome the signature of the Nabucco Intergovernmental Agreement”, July 2009, Brussels, http://europa.eu/rapid/press-release_IP-09-1114_en.htm?locale=en
[xxiii] Peker, Emre, “EU Says It Can’t Block Russia-Backed Nord Stream 2 Pipeline”, Wall Street Journal, March 30, 2017
[xxv] “Improvement of the quality and security of energy supply, in an economic and environmentally sound manner”, formulation of energy policy” and modernization of energy infrastructure including interconnection of gas supply and electricity networks-are among the areas of energy cooperation mentioned by Article 65
[xxvii] Peker Emre, 2017
[xxviii] EC Midday press briefing of 31/03/2017. Author’s transcription of the speech http://ec.europa.eu/avservices/video/player.cfm?ref=I136446
[xxix] Reuters, “UPDATE 3-EU seeks to negotiate with Russia over Nord Stream 2 gas pipeline”, March 30, 2017
[xxx] Nye, S., Joseph, “The Information Revolution and Soft Power”, 2014 https://dash.harvard.edu/handle/1/11738398
[xxxi] Nye, S., Joseph , “The Future of Power”, Public Affairs, New York, 2011
[xxxix] Agenda- setting explores how news media influences the public’s attention or perceptions of certain objects and/or issues. This article will not explore, though, this process, for reasons related to space limitation and lack of empirical evidences, which need to be further researched.
[xli] Nord Stream 2, “Company response to the European Commission’s letter to the Energy Ministers of Sweden and Denmark”, March 30, 2017, https://www.nord-stream2.com/media-info/news-events/company-response-to-the-european-commissions-letter-to-the-energy-ministers-of-sweden-and-denmark-40/
[xlviii] Valero, Jorge, “Commission leaning towards Nord Stream 2 approval”, EURACTIV, March 14, 2017