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“Gas War”: Europe as a Battleground

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On October 11, the US Congress presented a bill aimed at reducing Russian gas supplies to EU (!). According to TASS, the document envisages the allocation of $1 billion to finance projects on the use of new sources of energy in the EU, as well as the provision of diplomatic and technical assistance to the European Union between 2019 and 2023. The bill envisages measures for a number of US government agencies to support private US investment in strategically important energy projects in Central and Eastern Europe.

It also proposes to allocate an annual $5 million for project evaluation and technical seminars for early stage project support. The State Department is advised to ramp up political and diplomatic assistance to certain countries in the development of their energy markets. The draft of the European Energy Security and Diversification Act was submitted by the chairman of the Senate subcommittee on European and regional security cooperation, Ron Johnson, and a fellow subcommittee member, Senator Chris Murphy.

On October 17, Russia’s Deputy Energy Minister Anatoly Yanovsky said that Russia is the only country capable of offering Europe such great volumes of natural gas so cheap, therefore there is no real alternative to pipeline gas coming to Europe from Russia. How realistic are US plans to phase Russia out of the European gas market?

Prerequisites for redrawing the European gas market arose in 2009 with the adoption of the EU’s Third Energy Package. Capitalizing on the fact that the policy of developing alternative sources of energy has led to stagnation or a bigger drop in hydrocarbon imports than expected, the European Union has switched to a strategy of diversifying supplies and, in general, imposing new rules of doing business with supplier countries. Comprehensive measures were later taken to develop a new gas import infrastructure. The past years have seen the integration of individual states’ pipelines via the construction of numerous interconnectors as part of the EU’s effort to make sure that the consumer, not the supplier, dictates the rules in the energy market. As a result, a conflict of interest between the consumer and the supplier has moved from the sphere of purely commercial disputes to the area of political confrontation between countries.

It is no secret that the United States had both geopolitical and economic reasons to encourage the Europeans’ policy, with experts still undecided which of these two reasons was actually prevalent. A more traditional standpoint explains this by the current tendency for the US to return to the world energy market as a potentially significant exporter. The energy boom that started in the US in the mid-2000s, caused by the wide-scale use of hydraulic fracturing (fracking), made the country much less dependent on foreign exports. This simultaneously revived Washington’s claim to be the main regulator (arbiter) of global hydrocarbon markets.

The United States accuses Moscow for its alleged attempts to exert political pressure against the EU and Ukraine as a pretext for its desire to limit Russia’s presence on the European energy market. When meeting with EU leaders in March 2014, US President Barack Obama demanded (!) measures from Brussels that would reduce its energy dependence on Russia. The very same desire is at the core of Washington’s rejection of the Nord Stream 2 project [1]. Last year, the US adopted the Countering America’s Adversaries Through Sanctions Act (CAATSA) that allows Washington to impose sanctions on companies participating in the construction of any new gas pipeline.  As an alternative to Russian gas, Washington is offering Europeans to buy liquid natural gas (LNG) from the United States. In summer 2017, President Donald Trump unveiled an ambitious plan to make the US the world’s number one gas supplier.

The White House hopes to make America a net exporter to the LNG market by 2020.

Well, these hopes are not entirely ungrounded though. In line with the strategy of increased gas production initiated by President George W. Bush, the US Department of Energy reported in the spring of 2018 that United States had (for the first time in 60 years) reached the net gas export. The growth of shale production allowed the United States to produce 733 billion cubic meters by the end of 2017. Now, according to lenta.ru, America accounts for 21 percent of global gas production, and Russia, for 16 percent.

That being said, there are quite a few hurdles on the way of expanded US gas supplies to Europe. There is a notable energy shortage in the US domestic market. Therefore, it is hard to imagine an effective strategy for seizing foreign energy markets based on increased export of resources that are not in sufficient supply at home. What is the point of selling what you do not have enough yourself, the business weekly Expert wonders. Storms and severe frosts that hit the US in the early 2018 led to increased consumption of natural gas in the country, effectively dashing hopes for exports abroad.

As a result, 2017 gas deliveries to Europe did not exceed 3 billion cubic meters, while Europeans’ gas consumption in 2017 had reached 500 billion cubic meters. Moreover, within the next two or three years the currently high prices in the European gas market may drop due to growing LNG supplies, Reuters reported early this month, citing Norway’s draft budget for 2019. 

Any further diversification of sources of gas supply, much talked about in the EU in recent years, will only reinforce this trend. How, in this case, US authorities will manage to convince their energy producers to continue supplies to Europe, where they will have to compete with possibly cheaper Russian or Iranian oil is a big question.

Despite a notable increase in political and sanctions pressure since 2014, in late 2017, Russia accounted for 35 percent of the European gas market. Still, it has had to pay a price for this by making concessions in terms of price and terms of supply. Anticipating a further sanctions squeeze, in late December 2017, Vladimir Putin ordered corrections to the country’s energy security doctrine, the transport strategy for the period until 2030, and also the energy strategy until 2035. He also ordered new projects in the field of LNG where Russia currently occupies a rather modest niche. Russian forecast an over 40 percent increase in global demand for gas by the year 2040. The largest uptick – up to 70 percent – is projected exactly in the LNG trade where competition will obviously heat up.

At the same time, Moscow will need to work out measures to prevent competition between Russian LNG and pipeline gas, Expert believes. This would call for urgent development of technologies and infrastructure in big- and medium-scale gas liquefaction and transportation.

The turn of 2019-2020 could become a turning point for the European gas market.  By the end of 2019, the ten-year Russian-Ukrainian gas transit agreement expires. To bolster its position, in 2018-2019, Gazprom plans to complete two gas transportation megaprojects – Nord Stream 2 and Turkish Stream. President Trump’s announcement of entering the market exactly in 2020 may have also factored in the assessment of Gazprom’s future plans and the EU’s next steps to “liberalize” the gas market.

Meanwhile, pragmatically-minded politicians in Europe, primarily in Germany, have consistently been supporting the idea of the entirely economic nature of the second leg of Nord Stream – Nord Stream 2.

On October 12, the Prime Minister of the German Federal State of Mecklenburg-Vorpommern, Manuela Schwezig, posted an article on the website of the weekly Wirtschaftswoche about a steady increase in energy demand in Germany, adding that natural gas is the most efficient way of meeting this demand. She refutes the notion that a new gas pipeline will allegedly make Germany more dependent on Russia. Berlin and Moscow are equally interested in ensuring reliable energy supplies, Schwezig noted. Despite some lingering disagreements between the two, they have shared interests too, including the possibility of an early return to a “close partnership.” She believes that a gradual lifting of sanctions from Russia could also speed up the normalization of relations.

There is one more geostrategic view on what is going on. Many Russian analysts believe that a long-term US strategy is not about a struggle for the gas market (European or even global) as such, but for its transformation by analogy with the current oil market. Washington’s goal is to block as many existing gas pipelines and those still under construction so that the lion’s share of gas is transported by sea in the form of LNG.

This will help ‘‘unpeg’’ gas prices from oil and transform the international gas market into a single whole – global and spot [2] – where transactions are short-term  and made in US dollars to minimize costs and risks. Such reformatting of the market will eventually make it possible to dictate terms to sellers and buyers through exchange rules and Fed policy. This means that the main purpose of the hype that has been going on about the “shale revolution” and “snapping up the world gas market” is to keep the world’s traditional energy market pegged to the US dollar.

Both the aforementioned scenarios are fraught with serious problems for Europe. If Russia halts gas transit via Ukraine from 2020, and all attempts to avoid the blocking of Nord Stream 2 fail, Europe will have to urgently look for alternative suppliers, and US LNG will be the first thing it will have to go for. However, in this case Germany’s economic leadership will be thrown in doubt, and, consequently, the prospects of strengthening the unity of the EU.

If the European Union is to fight for real energy independence, then it will have, among other things, to look for ways to bring down the share of international commodity trade made in US in dollars. In September 2018, the European Commission President, Jean-Claude Juncker, described as “absurd” a situation where 80 percent of the EU’s its energy imports (300 billion Euros a year) are paid for in dollars. Meanwhile, a mere 2 percent Europe’s energy imports come from the United States. Juncker said that the euro should become “an instrument of a new, more sovereign Europe” and promised to “present initiatives to strengthen the international role of the euro.”

German Foreign Minister Heiko Maas later came up with a proposal for the EU to have its own system of international payments. To make this happen, European financial authorities will need a greater deal of financial centralization of the EU and  a political partner for the European Central Bank in the form of a pan-European Finance Ministry.

In this largely unpredictable and controversial situation, it is necessary to prepare for different scenarios. However, this task per se could further stoke up conflicts  between EU members.

Faced with this largely unpredictable and controversial situation, countries need to get ready for different scenarios.

According to one such scenario, by increasing its LNG production and export capacity, the United States can toughen its sanctions on Russia. If and when Washington is ready to replace Russian gas with its LNG, the EU could once again consider restrictions on Russian gas supplies to Europe. According to expert estimates, shale gas liquefaction plants currently under construction in the US, will not be able to produce necessary volumes before 2020 and even 2022. In spite of all sticking points currently existing between the EU and the US, after meeting with President Trump in Washington in July 2018, Jean-Claude Juncker announced the EU’s intention to build “more terminals for importing LNG from the US.”

Another option could be a possible US attempt to impose a price war on Russia. If Washington shows readiness to sell its LNG to Europe at dumping prices, Gazprom would have to engage in an even tougher political and price struggle to keep the European gas market.

First published in our partner International Affairs

  • [1] Nord Stream 2 project envisages the construction of two legs of a gas pipeline to annually deliver 55 billion cubic meters of Russian natural gas to Germany under the Baltic Sea. The construction’s estimated cost is 9.6 billion Euros. Nord Stream 2 AG acts as the project operator, while Gazprom is the only shareholder. Due to be wrapped up before the end of 2019, Nord Stream 2 is a joint project of Russia’s Gazprom with France’s Engie, Austria’s OMV AG, UK-Dutch Royal Dutch Shell, and Germany’s Uniper and Wintershall, which will finance 50 percent of the construction costs (Deutsche Welle)
  • [2] Spot (business deal) a contract of buying or selling a commodity, security or currency for immediate settlement (payment and delivery) on the spot date, which is normally two business days after the trade date.

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Europe

Europe tells Biden “no way” to Cold War with China

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Amidst the first big transatlantic tensions for the Biden Administration, a new poll shows that the majority of Europeans see a new Cold War happening between the United States and China, but they don’t see themselves as a part of it.

Overwhelmingly, 62% of Europeans believe that the US is engaged in a new Cold War against China, a new poll just released by the European Council on Foreign Relations found. Just yesterday US President Joe Biden claimed before the UN General Assembly that there is no such thing and the US is not engaging in a new Cold War. So, Europeans see Biden’s bluff and call him on it.

The study was released on Wednesday by Mark Leonard and Ivan Krastev at the European Council on Foreign Relations and found that Europeans don’t see themselves as direct participants in the US-China Cold War. This viewpoint is most pronounced in Bulgaria, Hungary, Austria, Portugal and Italy, according to the study. The prevailing view, in each of the 12 surveyed EU member states, is one of irrelevance – with respondents in Hungary (91%), Bulgaria (80%), Portugal (79%), and Austria (78%) saying that their country is not in a conflict with Beijing.

Only 15% of Europeans believe that the EU is engaged in a Cold War against China. The percentage is so low that one wonders if there should even be such a question. It is not only not a priority, it is not even a question on the agenda for Europeans. Even at the highest point of EU “hawkishness”, only 33% of Swedes hold the view that their country is currently in a Cold War with China.  Leonard and Krastev warn that if Washington and Brussels are preparing for an all-in generational struggle against China, this runs against the grain of opinion in Europe, and leaders in Washington and Brussels will quickly discover that they “do not have a societal consensus behind them”.

“The European public thinks there is a new cold war – but they don’t want to have anything to do with it. Our polling reveals that a “cold war” framing risks alienating European voters”, Mark Leonard said.

The EU doesn’t have the backing of its citizens to follow the US in its new Cold War pursuit. But unlike the views of the authors of the study, my view is that this is not a transatlantic rift that we actually have to be trying to fix. Biden’s China policy won’t be Europe’s China policy, and that’s that, despite US efforts to persuade Europe to follow, as I’ve argued months ago for the Brussels Report and in Modern Diplomacy.

In March this year, Gallup released a poll that showed that 45% of Americans see China as the greatest US enemy. The poll did not frame the question as Cold War but it can be argued that Joe Biden has some mandate derived from the opinion of American people. That is not the case for Europe at all, to the extent that most of us don’t see “China as an enemy” even as a relevant question.

The US’s China pursuit is already giving horrible for the US results in Europe, as French President Macron withdrew the French Ambassador to the US. The US made a deal already in June, as a part of the trilateral partnership with the UK and Australia, and stabbed France in the back months ago to Macron’s last-minute surprise last week. Max Boot at the Council on Foreign Relations argues that it is Macron that is actually arrogant to expect that commitments and deals should mean something: “Back in February, Macron rejected the idea of a U.S.-E.U. common front against China. Now he complains when America pursues its own strategy against China. What’s French for chutzpah?” What Boot does get right is that indeed, there won’t be a joint US-EU front on China, and European citizens also don’t want this, as the recent poll has made clear.

The US saying Europe should follow the US into a Cold War with China over human rights is the same thing as China saying that Europe should start a Cold War with the US over the bad US human rights record. It’s not going to happen. You have to understand that this is how ridiculous the proposition sounds to us, Europeans. Leonard and Krastev urge the EU leadership to “make the case for more assertive policies” towards China around European and national interests rather than a Cold War logic, so that they can sell a strong, united, and compelling case for the future of the Atlantic alliance to European citizens.

I am not sure that I agree, as “more assertive policies” and “cold war” is probably the same thing in the mind of most Europeans and I don’t think that the nuance helps here or matters at all. Leaders like Biden argue anyway that the US is not really pursuing a Cold War. The authors caution EU leaders against adopting a “cold war” framing. You say “framing”, I say “spin”. Should we be in engaging in spins at all to sell unnecessary conflict to EU citizens only to please the US?

Unlike during the first cold war, [Europeans] do not see an immediate, existential threat”, Leonard clarified. European politicians can no longer rely on tensions with China to convince the electorate of the value of transatlantic relations. “Instead, they need to make the case from European interests, showing how a rebalanced alliance can empower and restore sovereignty to European citizens in a dangerous world”, Mark Leonard added. The study shows that there is a growing “disconnect” between the policy ambitions of those in Brussels and how Europeans think. EU citizens should stick to their sentiments and not be convinced to look for conflict where it doesn’t exist, or change what they see and hear with their own eyes and ears in favor of elusive things like the transatlantic partnership, which the US itself doesn’t believe in anyways. And the last thing that should be done is to scare Europeans by convincing them they live in a “dangerous world” and China is the biggest threat or concern.

What the study makes clear is that a Cold War framing against China is likely to repel more EU voters than it attracts, and if there is one thing that politicians know it is that you have to listen to the polls in what your people are telling you instead of engaging in spins. Those that don’t listen in advance get the signs eventually. At the end of the day it’s not important what Biden wants.

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Germany and its Neo-imperial quest

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In January 2021, eight months ago, when rumours about the possibility of appointment of Christian Schmidt as the High Representative in Bosnia occurred for the first time, I published the text under the title ‘Has Germany Lost Its NATO Compass?’. In this text I announced that Schmidt was appointed to help Dragan Čović, the leader of the Croatian HDZ party, to disrupt the constitutional structure of Bosnia-Herzegovina and create precoditions for secession of the Serb- and Croatian-held territories in Bosnia and the country’s final dissolution. I can hardly add anything new to it, except for the fact that Schmidt’s recent statements at the conference of Deutsche Atlantische Gesellschaft have fully confirmed my claims that his role in Bosnia is to act as Čović’s ally in the latter’s attempts to carve up the Bosnian Constitution.

Schmidt is a person with a heavy burden, the burden of a man who has continuously been promoting Croatian interests, for which the Croatian state decorated him with the medal of “Ante Starčević”, which, in his own words, he “proudly wears” and shares with several Croatian convicted war criminals who participated in the 1992-1995 aggression on Bosnia, whom Schmidt obviously perceives as his ideological brethren. The question is, then, why Germany appointed him as the High Representative in Bosnia? 

Germany’s policy towards Bosnia, exercised mostly through the institutions of the European Union, has continuously been based on the concept of Bosnia’s ethnic partition. The phrases that we can occassionaly hear from the EU, on inviolability of state boundaries in the Balkans, is just a rhetoric adapted to the demands by the United States to keep these boundaries intact. So far, these boundaries have remained intact mainly due to the US efforts to preserve them. However, from the notorious Lisbon Conference in February 1992 to the present day, the European Union has always officially stood behind the idea that Bosnia-Herzegovina should be partitioned along ethnic lines. At the Lisbon Conference, Lord Carrington and Jose Cutileiro, the official representatives of the then European Community, which has in the meantime been rebranded as the European Union, drew the maps with lines of ethnic partition of Bosnia-Herzegovina, along which the ethnic cleansing was committed, with 100.000 killed and 1,000.000 expelled, so as to make its territory compatible with their maps. Neither Germany nor the European Union have ever distanced themselves from the idea they promoted and imposed at the Lisbon Conference as ‘the only possible solution’ for Bosnia, despite the grave consequences that followed. Nor has this idea ever stopped being a must within their foreign policy circles, as it has recently been demonstrated by the so-called Janša Non-Paper, launched a couple of months ago, which also advocates the final partition and dissolution of Bosnia-Herzegovina. Such a plan is probably a product of the powerful right-wing circles in the European institutions, such as Schmidt’s CSU, rather than a homework of Janez Janša, the current Prime Minister of Slovenia, whose party is a part of these circles, albeit a minor one. To be sure, Germany is not the original author of the idea of Bosnia’s partition, this author is Great Britain, which launched it directly through Lord Carrington at the Lisbon Conference. Yet, Germany has never shown a will to distance itself from this idea, nor has it done the European Union. Moreover, the appointment of Schmidt, as a member of those political circles which promote ethnic partition as the only solution for multiethnic countries, testifies to the fact that Germany has decided to fully apply this idea and act as its chief promoter.

In this process, the neighbouring countries, Serbia and Croatia, with their extreme nationalist policies, can only act as the EU’s proxies, in charge for the physical implemenation of Bosnia’s pre-meditated disappearance. All the crimes that Serbia and Croatia committed on the Bosnian soil – from the military aggression, over war crimes, ethnic cleansing and genocide, up to the 30 year-long efforts to undermine Bosnia’s sovereignty and territorial integrity – have always had a direct approval and absolute support of the leading EU countries. During the war and in its aftermath, Great Britain and France were the leaders of the initiatives to impose ethnic partition on the citizens of Bosnia-Herzegovina, and now Germany has taken up their role. In such a context, the increasing aggressiveness of Serbia and Croatia can only be interpreted as a consequence of the EU’s intention to finish with Bosnia for good, and Schmidt has arrived to Bosnia to facilitate that process. Therefore, it is high time for the citizens of Bosnia-Herzegovina to abandon any ilussions about the true intentions of the European Union and reject its Trojan Horse in the form of the current High Representative.  

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Should there be an age limit to be President?

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The presidential elections in Bulgaria are nearing in November 2021 and I would like to run for President of Bulgaria, but the issue is the age limit.

To run for President in Bulgaria a candidate needs to be at least 40 years old and I am 37. I am not the first to raise the question: should there be an age limit to run for President, and generally for office, and isn’t an age limit actually age discrimination?

Under the international human rights law standard, putting an age limit is allowed in the context of political participation under the right to vote and the right to run to be elected. Human Rights Committee General Comment No.25 interpreting the International Covenant on Civil and Political Rights states that an age limit has to be based on objective and reasonable criteria, adding that it is reasonable to have a higher age requirement for certain offices. As it stands, the law says that having an age limit for president is not age discrimination, but is 40 actually a reasonable cut-off? National legislations can change. We need to lower the age limit and rethink what’s a reasonable age for President, and not do away with all age limits.

We have seen strong leaders emerge as heads of state and government who are below 40 years of age. Sanna Marin, Prime Minister of Finland, became Prime Minister at 34. Sebastrian Kurz, the Prime Minister of Austria, was elected at 31. Jacinda Ardern, Prime Minister of New Zealand, assumed her position at 37. So perhaps it is time to rethink age limits for the highest offices.

The US has plenty of examples where elected Senators and Congressmen actually beat the age limit and made it despite the convention. The age limit for Senator in the US is 30 years old. Rush Holt was elected to the US Senate at 29. In South Carolina, two State Senators were elected at 24 years old and they were seated anyways. The age limit for US president is 35 years old.

In Argentina, the age cut-off is 30. In India, it is 35. In Pakistan, it is 45 years old. In Turkey, it is 40 years old. Iceland says 35 years old. In France, it is 18.

Generally, democracies set lower age limits. More conservative countries set the age limit higher in line with stereotypes rather than any real world evidence that a 45 year-old or 55 year-old person would be more effective and better suited to the job. Liberal countries tend to set lower age limits.

40 years old to be a President of Bulgaria seems to be an arbitrary line drawn. And while it is legal to have some age limits, 40 years old seems to be last century. Changing the age limit for president of Bulgaria could be a task for the next Bulgarian Parliament for which Bulgarians will also vote on the same date as they vote for President.

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