Thread by @althecat

A short briefing from @France24 on the Elephant in the room in the #ukraine Crisis, which mentions the most important aspect at the end and leaves out several impt. Details.

Gas pipeline becomes bargaining chip against Russia

The US and UK have both made a big play of the announcement from the German FM confirming that NordStream 2 can be used as a “leverage” in this standoff. Which is true. But it is not quite so simple.

The report points out at the end that Russia is already restricting gas supply, leading to very high gas prices, which highlights the fact that Russian gas supplies to Europe also provides Russia significant leverage.

It also highlights the impracticalities implicit in US talk of Liquified Natural Gas shipments being used address supply shortages due to a war or sanctions induced outage.

The U.S. has talked a lot about their sanctions plans for Russia should this crisis escalate. It’s Senate is working on a “Mother of All Sanctions Bill” which could target both individuals, and the Russian public (via the Swift payment system).

They have even talked of using “pre-emotive” sanctions to discourage escalation.

But the gas supply issue is a large obstacle to all this.

If the U.S. imposes illegal unilateral coercive international sanctions - as it does fairly frequently - it will be expecting European Banks to help implement them. This is why sanctions against Iran are so effective.

And to be effective as “leverage” in this current crisis the sanctions would need to be pre-emptive as once an war starts it will be too late, and everyone will have lost. Also threats of pre-emptive sanctions are inherently weak.

And for its part Russia could simply respond to such threats with its own threats to respond to any such measures by further reducing gas supply. In which case Europe, and especially Germany, will have a major problem.

An additional wrinkle in all of this. If Putin’s real objective is to split the European/US alliance (NATO), as many suspect. Imposition of sanctions offering an excuse for Russia to retaliate by cutting gas supplies might be exactly where he sees the end-game playing out here.

So whilst German’s Russian Hawk FM may have said Nordstream 2 might be cancelled (even if no-one) wants this - practically that is not the pressure point. The pressure point is the risk that Nordstream 1 might be turned down, plunging Europe into an even deeper energy crisis.

Finally, for anyone interested in how European gas war scenarios might play out in world seeking to reduce carbon emissions, the Norwegian three season “Occupied” series is well worth watching.

Among other things it illustrates fairly realistically how political, diplomatic and military crises can very quickly spiral out of control leading to unexpected outcomes.

And a brief historical observation.

At the time of the last US-Russia Ukraine war/crisis in 2014, American fracking had crashed the price of oil, doing massive damage to the Russian Economy and bringing lots of natural gas online.

I am fairly sure this episode will be top of mind for Putin at this time. Many may also recall Trump’s antipathy to Nordstream 2, and his calls for Europe to instead import LNG from the US.

In summary, all that we are seeing unfold here was/is entirely predictable. It was even turned into a mini-series 5-6 years ago.

/ENDS

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