24.12.2019 Author: Valery Kulikov

United States Beefing Up Competitive Positions of Russian Gas

PIPE342342

In recent decades, owing to Washington’s efforts, natural gas is becoming a fairly dangerous weapon. The United States has been especially active in its desire to dominate the European Union’s gas markets and thereby outcompete the Russian Federation in the last decades.

Even in the late 1960s and early 1970s, a number of Western European nations (in particular, the Federal Republic of Germany, Austria and Italy) began to show an increased interest in natural gas deliveries via pipelines from the Soviet Union, in their preparation for the energy crisis stemming from elevated prices on fossil fuels. However, at that time, the USSR did not have enough technical know-how to manufacture large diameter pipes required to build pipelines. Still, it was interested in supplying natural gas to Western Europe.

A “gas-for-pipes” deal signed in 1970s allowed West Germany to take advantage of a huge contract to manufacture 2.4 million tons of large diameter pipes for constructing gas pipelines to the USSR, and gave the Soviet Union an opportunity to make a real breakthrough in the gas industry. The USSR received equipment thanks to which it was then able to build one of the biggest interstate pipeline networks in the world.

Trading gas gradually became not only a question of economics but politics as well for the Soviet Union and later for the Russian Federation. Increasing the dependence of European markets on deliveries of Soviet and then Russian natural gas allowed this nation to resolve numerous complex geopolitical issues, and not only receive money and increase its political influence in exchange for this energy resource but also to obtain critically important technologies.

It did not take long for Washington to realize that the development of ties between the USSR and Europe in the middle of the Cold War could have extremely negative political consequences for the United States. And at the beginning of 1981, Ronald Reagan became the U.S. President. He coined the term “evil empire” in reference to the Soviet Union, and made it his first and foremost priority to destroy the USSR primarily via economic means. The strategic plan to dismantle the Soviet Union, formulated and implemented by Ronald Reagan’s team, was, in a way, a textbook case for modern systemic wars in which economic pressure is employed as the key weapon of choice.

At the end of 1980, William J. Casey, the Director of the CIA during Ronald Reagan’s presidential term, had already started working on the concept behind the trade and economic war against the USSR. And he did not even conceal the fact that this was going to be a clandestine war in which the CIA was going to play a key role. At that time, William J. Casey created (within the CIA, other U.S. agencies and business circles) special economic warfare tools that were subsequently used to conduct secret operations against the Soviet Union. Their main aim was to obstruct, to the utmost extent, the export of raw materials (first and foremost, of oil and gas) and military equipment by the USSR, thereby forcing Moscow to spend its earnings from the sale of these goods on things that had nothing to do with the development of the Russian economy. At the end of 1981, information that Caspar Weinberger (the U.S. Secretary of Defense at the time) and John Poindexter (the Deputy National Security Advisor) were finishing their work on a 5-year scheme to undermine the stability of the USSR for their department leaked to the U.S. media outlets. A key role in this plan was to be played by America’s brand new weaponry and instruments of commercial warfare, and by sanctions policies against the Soviet Union.

However, Europe’s own interests outweighed those of Washington (which focused on imposing sanctions against the USSR’s gas industry). And during the 1982 NATO Summit, the leaders of foreign ministries of European nations stated they would continue their collaboration with the Soviet Union on the “gas for pipes” deal but would also avoid undermining U.S. sanctions against the USSR.

In this climate, Washington began working on schemes aimed at delivering natural gas to Europe by alternative means, in an attempt to convince Europeans to stop supporting Soviet gas export initiatives. Proposals made to Europe included ramping up natural gas production in Dutch fields in the North Sea; constructing a submarine gas pipeline from Algiers, and even developing Iran’s gas reserves and delivering the fuel to Europe via a pipeline traversing Turkey and Greece (despite existing tensions at the time between the United States + Europe and Ayatollah Khomeini’s Tehran).

However, Europe required gas pipelines as much as the Soviet Union, and not only because the former had to meet its energy needs. After all, the economic crisis had led to the collapse of markets, and rates of unemployment had risen to levels last seen in mid-1950s in Europe. Hence, Europe was prepared to lend money to the USSR under beneficial terms in exchange for partial future repayments in gas deliveries. Not only did contracts to supply equipment for the gas industry (pipelines, compressors, turbines for gas distribution stations, etc.) galvanize the European economy and trade, but also they facilitated the creation of tens of thousands of badly needed work places in Europe.

However, the policy for containing the USSR (formulated during the times of Ronald Reagan and William J. Casey) was still in place despite the fact that the United States continued to trade with Russia and cooperate with it in the aerospace sphere, and the bilateral trade between the two nations grew with each year! Although the United States does not have any strategic gas reserves (shale gas is one of the least sustainable options for producing electricity and its price tends to constantly increase), it nevertheless set its sights on managing global gas flows with the aim of “transforming” gas, just as petroleum, into its own strategic weapon. With this view, Washington has renewed its attempts to adopt tough control measures over the European gas markets; to push Moscow out of them, and to intensify sanctions not only against Russia but also any other nations that facilitate the delivery of Russia’s natural gas to Europe. In this context, Washington then chose what seemed to be the weakest link from its perspective, and began to impose sanctions not against Gazprom but instead against European companies involved in building Russia’s gas pipelines. At the same time, in Washington, statements were being more and more openly made about the fact that the United States was capable of causing real damage to the economies of its European allies in various spheres: by blocking any assets traded in U.S. dollars, and by freezing bank accounts and assets of companies and individuals involved in the pipeline construction work. In addition to the above, Washington initiated an active anti-Russia information campaign, with rallying cries accusing Russian pipelines of supposedly increasing Europe’s energy dependency on such a politically unstable natural gas supplier as the Russian Federation. Along with all of these statements, the United States began to more and more actively promote its energy resource, i.e. liquefied natural gas (LNG), in the European markets.

Recently, this policy began to more openly manifest itself in, for instance, its effect on the expansion of the gas supply network linking Russia and Europe, and especially on the construction of new gas pipelines originating in the Russian Federation, including Nord Stream 2. A clear indicator of the fact that Washington is using gas as its own strategic weapon is the inclusion of stronger sanctions against Russia (in connection with its Nord Stream 2 and TurkStream gas pipelines) in the draft 2020 National Defense Authorization Act by the U.S. House and Senate committees on armed services.

However, such clearly self-interested actions taken by the USA, which stifle healthy competition, are widely criticized in various parts of the world, including Germany and a number of other European countries where residents have come to a reasonable conclusion that Russian natural gas delivered via pipelines will be far cheaper for European consumers than American LNG being pushed by Washington.

In support of its policy directed towards the EU energy sector and in an attempt to portray the Russian Federation as an unreliable supplier of fossil fuels in the eyes of European consumers, Washington had already resorted to stopping gas flows to Ukraine in the 2008-2009 winter with the help of former Ukrainian President and U.S. stooge Viktor Yushchenko, and to blocking the Bulgarian South Stream initiative. However, all of these actions resulted in the completion of the Nord Stream and TurkStream projects thus enabling the Russian Federation to deliver natural gas to many more regions than before.

In addition, U.S. sanctions imposed against Venezuela and Iran weakened these strong rivals of Russia in the petroleum market. Furthermore, because of the still intensifying trade war between the United States and China, Beijing has started to increasingly depend on its reliable northern neighbor for supplies of energy resources.

All of these developments have helped Moscow enter new markets where it can sell its fossil fuels, and to develop relationships with Turkey, China and, overall, the nations in the East.

While U.S. politicians have been embroiled in internal conflicts on who had actually won the U.S. presidential election, and on who the most corrupt individual in U-S.-influenced Ukraine was, as well as in issues to do with the manner in which the United States has been imposing sanctions and other punitive measures during its “trade wars”, other leading nations of the world have been strengthening their positions and rapidly increasing their spheres of influence (as evidenced by the development of Russia’s gas industry). And in this context, the opening of the Power of Siberia pipeline, which is to be used to deliver Russian natural gas to China, will only serve to strengthen the Russian Federation’s standing as the world’s number 1 exporter of gas, and will become an unprecedented breakthrough for PRC-Russia relations.

As for the use of natural gas as a strategic weapon, the Russian Federation (with its vast reserves of this energy resource) is in a far better position than the United States to employ it not as a weapon but as an effective instrument to facilitate mutually beneficial economic cooperation.

Valeriy Kulikov, expert politologist, exclusively for the online magazine “New Eastern Outlook.” 

 

 

 

 

 


×
Please select digest to download:
×