My Other Major Point About Russian Tensions

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by Chris

I said that there were multiple angles to consider in the west’s drive against Russia.

The foiling of the grand Ukraine plot by Putin was what set a lot of things into a faster motion, but really any exertion of power or resistance by anybody, Russia or Chinese, was going to be met by NeoCon unhappiness.  They really prefer being the only power brokers on the block.

This next article really sets forth a pretty convincing case that more Russian gas to Europe, especially a new pipeline that cuts out Ukraine (and thereby effectively forces the west to either pony up the missing future billions of transit dollars or walk away from another ‘ally’ who gets to figure out the hard way that the west’s loyalties are not worth all that much).

Economics dictate national interests. Foreign policy is the tool used to advance it. Moscow has to fight back on all fronts, but the truth is that Washington does not care much about chemical attacks in Eastern Ghouta, the Salisbury poisoning, election meddling, or so many other fairy tales used to justify its anti-Russia policy. These are just pretexts to promote US economic interests abroad.

Gas exports to Europe present exciting opportunities but supplies from Russia are cheaper and more reliable. So the US needs to get rid of the obstacle in its way — the Nord Stream 2 (NS2) pipeline, which will carry natural gas from Russia to Germany. Washington will do anything to achieve this cherished goal.

On March 15, a bipartisan group of 39 senators led by John Barrasso (R-WY) sent a letter to the Treasury Department. They oppose NS2 and are calling on the administration to bury it. Why? They don’t want Russia to be in a position to influence Europe, which would be “detrimental,” as they put it. Their preferred tool to implement this obstructionist policy is the use of sanctions. Thirty-nine out of 100 is a number no president can ignore. Powerful pressure is being put on the administration. Even before the senators wrote their letter, Kurt Volker, the US envoy to Ukraine, had claimed that NS2 was a purely political, not commercial, project. No doubt other steps to ratchet up the pressure will follow.

Their loyal friends in Europe chimed in almost simultaneously with the US lawmakers. Polish Foreign Minister Mateusz Morawiecki has proven himself to be a master at telling horror stories about the scariest things that might happen once the pipeline is up and running. On March 2, the speakers of parliament in Ukraine and Moldova signed a letter addressed to the chairs of the parliaments of the EU countries, warning about the repercussions. This is “a destabilizing factor” that will weaken Europe, they exclaim. Of course it is. Paying more for gas brought in on ships that can change course to head for a new destination if the price of gas elsewhere becomes more alluring will naturally make Europe stronger. Good reasoning!

On March 11, the leaders of the parliaments of Poland, Latvia, and Lithuania signed another open letter to the parliaments of the EU states to warn them against the construction of NS2. It’s not a commercial project, they say, it’ll make you dependent on Russia. “Gazprom … is not a gas company but a platform for Russian coercionaffirms Anders Fogh Rasmussen, a former head of NATO who now works as a consultant for Ukraine. Estonia has also joined the choir as one of the strongest critics of Nord Stream. The European Commission opposes the project too, but lacks the legal grounds to prevent private investment from flowing in.

Europe needs this commodity and Russia sells it. What makes this “not a commercial deal”? Dependence? From this perspective, any customer who makes a choice then becomes “dependent” on the vendor. Who is keeping them from getting gas from other sources? The sea lanes are all open, if they need to use them. Poland and Lithuania have already built terminals for liquefied gas. But it’s more expensive and the prices in the Asia Pacific region make that market more attractive. To woo US shale-gas exporters Europeans will have to pay more. Don’t they have the right to choose what suits them best?

As practice shows, writing letters is not enough. There are “stubborn” leaders at the helms of some European states who dare to put their national interests first. Just think about it! If “America First” is fine as a slogan, then what’s wrong with an “Austria First” policy? One daring young man who is protecting the interests of his country is Austrian Chancellor Sebastian Kurz. He openly supports the Nord Stream 2 project. And he is not alone. Germany continues to back it despite the pressure. Chancellor Angela Merkel believes that the NS2 project “poses no danger to diversification.” The German-based think tank ewi Energy Research & Scenarios has estimated that the project “has a price decreasing and welfare enhancing effect in the EU-28 overall.”

But Washington could not care less about its allies, which is clear from its opposition to this project. Its interests are self-centered. The US is not only promoting its liquefied gas supplies in Europe but is also trying to make it easier to pay for its plan to keep Ukraine in its orbit to use as a springboard right on the Russian border. Nord Stream 2 will make the gas-transit route via Ukraine redundant, depriving that country of much of the €1.8 billion (nearly 2% of its GDP) it earns annually in transit fees. The blow to the Ukrainian economy would undercut the US and EU’s financial support for Kiev. In addition, the revenue from NS2 would mean profits for Russia, thus softening the impact of the West’s sanctions. The European countries that vehemently oppose NS2 also want the US military based on their soil. And even if that presence is already there, they want more of it.

Europe is split over a lot of issues, but in the EU, NATO, and the Council of Europe there is a pro-American camp ready to dance to the US tune. And Poland and the Baltic States are happy campers. Whatever happens, they’ll snap to attention, click their heels, salute, and do as they’re told by Washington. As a result, their taxpayers will pay for US weapons although less costly and more efficient systems could be acquired elsewhere. And it is the ordinary people who’ll have to shell out for US shale gas shipped by sea instead of the much cheaper supplies coming from Russia. It’s just as simple as that. European taxpayers will have to pay for this “America First” policy unless the governments of such European states as Germany and Austria stand tall and refuse to bow to pressure.

If Nordstream II comes online the main difficulty is that Russia can bypass Ukraine and leave the Russian hating Oligarch there to both lose a huge amount of income (I believe it’s truly significant, close to 8% of Ukraine’s GDP is simply transit fees) and have to find another source of natural gas.

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But the idea that the US is in any position to supply Europe with liquified NG from US sources is simply ridiculous a this point.

For starters, virtually every single field in the US is in decline except for the big three shale basins.

Yes those big three are really amazing, and will produce a lot of gas, but they are not infinite, and they too will have a beginning, a middle and an end.  there are already a lot of competing claims on that gas output including a resurgent chemical and fertilizer industry here in the US.

Those basins too will decline before too many more years pass if the other fields are any indication.   Peaking in perhaps 10 more years?  Would Europe really want to depend on US supplies if they are based on the (relatively speaking) flash in the pan shale fields?

Of note, and for context, Russia suppled 194 billion cubic meters of gas to Europe last year.   That translates in 6.85 trillion cubic feet, or 18 billion cubic feet per day (bcf/d).

Because it takes about 20% of the energy in gas to turn it into a liquid (as LNG for export) that translates into about 22 bcf/d that the US would have to commit to supply Europe.  That’s about 25% of current production and the US does not have that much to spare.

Further Europe’s own fields are in marked decline, so there will be a requirement for more and more as time goes on.

In other words, it is a work of pure fiction for the US to be implying that Europe would be better off with supplies from the US which would be far more expensive and far less certain over time than hooking up to the massive conventional Russian supplies.

I remain utterly stumped why anyone in Europe is even considering such claptrap.  It’s one thing for the US to be telling itself tall energy tales but it’s quite another for Europe to be buying into them as well without thinking this through.



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