Nord Stream Sanctions Are No Way to Treat European Allies

The United States should help Europe become less dependent on Russian gas, not punish it.

American president Donald Trump speaks with German chancellor Angela Merkel at the G20 summit in Hamburg, July 6, 2017
American president Donald Trump speaks with German chancellor Angela Merkel at the G20 summit in Hamburg, July 6, 2017 (Bundesregierung)

Senators in the United States have approved sanctions against companies that are involved in building the Nord Stream 2 pipeline between Russia and Germany.

The sanctions, which President Donald Trump has yet to sign into law, are a last-ditch attempt to halt the pipeline’s construction, which the Americans argue will only increase Europe’s dependence on Russian gas and hurt Ukraine’s position as a transit nation.

They’re not wrong, but placing sanctions on allies is no way to go about it, especially when they have no alternative.

Ukraine

Almost half the gas Russia pipes into Europe flows through Ukraine, which earns the country some $3 billion in annual transit fees.

Nord Stream 2, which doubles the capacity of the existing Nord Stream pipeline under the Baltic Sea, and TurkStream, which would service Turkey, Bulgaria, Serbia and Hungary, are designed to make Russia less dependent on Ukraine.

It is true that Russia has used its influence in the past to try to keep Ukraine in its orbit, most recently by cutting off gas supplies in 2009.

But now, by imposing sanctions on Europe, America is guilty of doing the same: using its economic leverage to try to keep Ukraine in the Western sphere.

Self-interest

America has an interest in curtailing Russia’s influence in Eastern Europe. It also has a commercial interest.

The Americans want to export liquified natural gas (LNG) to Europe, which is more expensive than Russian gas. By sanctioning the construction of a pipeline that could reduce the cost of Russian gas, they — in a mirror image of Russia — are using political means to achieve their economic goal.

If the worry is that Ukraine will lose transit fees, the United States could increase foreign aid. But — despite President Trump’s assertion that European nations are not contributing — the EU gives twice as much money to Ukraine as the United States and has provided two-thirds of all the foreign aid Ukraine has received since Russia annexed the Crimea in 2014.

Germany

Germany, the main partner in Nord Stream together with Austria and the Netherlands, is also acting out of self-interest.

Other EU member states, including those bordering Russia, have made their opposition to Nord Stream 2 clear. Germany has continued the project anyway.

This points to a contradiction in EU policy: member states are able to create their own energy mix but have to come to a common energy policy.

This is a problem, but Nord Stream 2 didn’t create it, nor will American sanctions solve it.

Time

The EU has taken steps to reduce its dependence on Russian gas, but demand for natural gas is rising faster.

The decisions by the Netherlands, the largest gas producer in Europe after Norway, to stop drilling in light of earthquakes isn’t making things easier.

New reserves have been found in the Eastern Mediterranean, but it will take years before infrastructure is in place to exploit them.

The Southern Gas Corridor, connecting Europe to the gas fields of the Caspian Sea, is nearing completion, but, as I explained in my last article, it will meet just 3 percent of European gas needs.

LNG can be imported, and is being imported, but aside from the high cost there is the challenge of regasification. Existing terminals have a regasification capacity that covers approximately 40 percent of Europe’s gas demand. Additional terminals are being built in the Baltic states, Germany and Spain, but — again — this takes time.

For now, Europe doesn’t have an alternative to Russia. It doesn’t deserve to be punished for this. The United States should drop the sanctions and assist Europe in its efforts to enhance its energy security. That is what an ally would do.


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