Wednesday, December 15, 2021

The pipe as the price of aggression. The fate of Nord Stream 2 is in doubt (Radio Liberty Interview with Paul Gregory)

for Russian text

The future of the Nord Stream 2 gas pipeline will be in question if Moscow does not make serious concessions. 

At best, its commissioning will take place in June next year and only if Russia fulfills the preconditions that will prevent the Kremlin from using this pipeline as an instrument of political and economic pressure. Such a forecast in the Washington edition of The Hill is made by Professor Emeritus of the University of Houston, researcher at the German Institute for Economic Research, economist Paul Gregory.

According to Paul Gregory, the first statements by members of the new coalition government of the Federal Republic of Germany, where the majority were Social Democrats, sounded partly sensational. Germany's new foreign minister, Annalena Berbock , a Green Party spokeswoman long known for her skepticism about Nord Stream 2, announced in a Sunday television interview that the new pipeline could not be operational as members of the government coalition believe it does not meet the requirements of European energy legislation. A few days ago, the new German chancellor Olaf Scholz in response to a question whether Nord Stream 2 could be used as an instrument of pressure on the Kremlin to prevent a possible Russian invasion of Ukraine, he said that such a move by Moscow would have consequences, which, according to Paul Gregory, means that the Kremlin will have to pay with Nord Stream 2 in the event of an attack on Ukraine.

If the new German government demands that Russia comply with all the requirements of European energy legislation, then the operating conditions of the new gas pipeline may be unacceptable for Gazprom and the Kremlin, Paul Gregory explained to Radio Liberty:
If he is forced l plummet.

- The problem for Gazprom is that if it is forced to comply with these requirements, the competitiveness of Nord Stream 2 will plummet. Gazprom will not be able to act as a producer and supplier of gas. He will have to allocate a certain share of the capacity of his gas pipelines to transport competitors' products. All rates must be made public. From my point of view, these conditions are unacceptable for Gazprom. I assumed that Germany might allow, roughly speaking, a shell company to take over the transportation of gas in order to separate producer and supplier. The new German government, apparently, will not allow this. Among other things, the start-up of the gas pipeline must be approved by the European Commission, which initially opposed this project,

Meeting European conditions will not only reduce the potential profitability of Nord Stream 2, but, more importantly for the Kremlin, prevent it from using the pipeline as a political tool, says Paul Gregory:

- The use of Nord Stream 2 as an instrument of pressure in the event of meeting European requirements will be impossible, and in fact it was conceived in many respects in order to exclude Ukraine as a transit country for Russian natural gas. The capacity of Nord Stream 2 is close to the capacity of gas pipelines passing through the territory of Ukraine. Russia, of course, needs the money it can get by putting into operation a new gas pipeline, but I think the ability to use gas as an instrument of pressure is still more important for it.

According to Paul Gregory, the current US sanctions and the possibility of new sanctions also continue to pose a serious problem for Nord Stream 2:

Any European company relat  constant da

- The Senate is very decisive about the sanctions against the gas pipeline. And now there is a struggle between the Senate and the administration, which, as you know, has decided not to subject the pipeline operator to sanctions. But the existing sanctions are very tangible for Gazprom, because any European company related to Nord Stream 2 is in constant danger, it could become the target of US sanctions. This threat is taken seriously by any business.

It is possible that in these new conditions, the future of Nord Stream 2 will be in question, says Paul Gregory:

- In my opinion, we can say that the fate of the gas pipeline is in question. So far, there is no answer to the question of whether it will be possible to start its operation in June 2022 or the process of obtaining final approval for its launch will drag on for several years. If I had been asked this question two weeks ago, I would have answered in the affirmative: yes, it will be launched in June. But the picture was radically changed by the comments of representatives of the new government coalition in Germany, although it has been in power for only a few days, so it is too early to draw final conclusions, says Paul Gregory.

Monday, December 13, 2021

Have Greens and European bureaucrats outsmarted Putin?

Now the bombshell: In her Sunday appearances on national TV, Baerbock declared that Nord Stream 2 could not become operational because, according to coalition agreements, the undersea pipeline was not consistent with European energy law. Hence, per Baerbock, Nord Stream 2 cannot be approved because it does not meet the decoupling, transparency, and capacity-sharing required by the EU’s Gas Directive. Who would have thought that the Social Democrats and Greens would be Ukraine’s savior?

 go to The Hill

Wednesday, December 8, 2021

Biden No Match for Putin


The December 7 virtual summit between President Joe Biden and Russian President Vladimir Putin proved (as expected) an uneven match. According to the short White House readout, Biden threatened Russia with “strong economic and other measures” in the event of military escalation and reiterated his support for Ukraine’s sovereignty and territorial integrity. (There was no mention of sanctions for Russia’s use of soft power to overthrow the democratically elected government of Ukraine).  In contrast, the virtual summit format gave Putin free reign to mount an uninterrupted 700-word full-throated attack on the West. Putin’s “frank” indictment of Ukraine, NATO, and the US was meant for his domestic audience and for those many in the West ambivalent towards Ukraine.  At no time in the two-hour discussion did Biden attempt to rebut any of Putin’s charges, no matter how outrageous.  With the attention of the world focused on the Russian build up on the Ukrainian border, Biden passed on the opportunity to present a clear account of his side of the case. Perhaps Biden is unclear as to what his “side” really is.

The two sides disagreed even on why the virtual summit was called. Per Biden, the summit was called to address the Russian threat to Ukraine. Putin claimed the main topics were the “the internal Ukrainian crisis and the lack of progress in the implementation of the Minsk agreements… which are the uncontested basis for a peaceful settlement.” Putin proceeded to complain about “the destructive line of Kiev, aimed at completely dismantling the Minsk agreements.” He also condemned “Kiev's provocative actions against Donbass." So Ukraine is the real threat not the 100,000 troops poised on Ukraine’s border. It would not be hard for Biden to have rebutted this claim.

So we learn from Putin’s summit monologue that the true aggressors are NATO and the United States. Ukraine is merely a puppet, but a dangerous one that has no claim to legitimacy. Given the alleged imminent threat facing Russia, Putin contends that the West should offer guarantees that would rule out NATO expansion to the east. (I guess the Swedish and Dutch armies should stand down with no invasion of Russia in the works.)

The Russian press release briefly mentions Biden’s "allegedly" threatening "nature of the movements of Russian troops near the Ukrainian borders and outlined sanctions measures that the United States and its allies would be ready to apply in case of further escalation of the situation.” Putin’s response is that NATO is the threat in its “dangerous attempts to conquer Ukrainian territory and building up its military potential at our borders.”

The Russian Interfax release characterized the conversation as “frank and businesslike" Both presidents agreed to instruct their representatives to enter into substantive consultations on these sensitive issues. Good luck.

After the summit’s conclusion, Biden sent out spokespersons to clarify that he meant business. The new sanctions could include the newly-completed Nord Stream 2 pipeline. The Kremlin meanwhile took advantage of Biden’s ambiguity by claiming that both presidents agreed to negotiate the status of Ukraine and that NATO's growing ties with Ukraine and the possibility of the alliance deploying missiles targeted against Russia there represent a "red line" that cannot be crossed.

The key takeaways from the December 7 summit are: First, we must recognize that the two sides are separated by a Grand-Canyon-like chasm. Second, the differences are too great for a political solution, unless the West decides to capitulate. Third, even in the case of capitulation, the Russian side cannot be counted on to live up to its side of the agreement.  (If it is agreed that Ukraine must remain neutral, Russia will proceed to destroy all politically neutral forces in Ukraine). Fourth, we cannot afford to have summits that allow Putin free reign to tell his version of truth unrebutted. We now see that Biden is clearly not up to the task. Let’s hope he gives up on the idea of personal diplomacy.

Monday, December 6, 2021

Why should Putin invade, when Ukraine can be destroyed from within — with help from its 'friends'?

When Biden zooms with Putin on Tuesday, he will see that Putin holds all the cards — and he only a pair of deuces, in the form of sending enough lethal military equipment to Ukraine to raise the cost to Putin of a military invasion.

 go to The Hill