How Russia Hooked Europe on Its Oil and Gas
The US has long speculated about Russian willingness to use trade to tie the hands of other countries.
The Biden administration hopes its threat of “” deters Russia from invading Ukraine – an event .
In response, the US said it may and other technologies to critical sectors like artificial intelligence and aerospace and of Russian President Vladimir Putin, among other sanctions.
Meanwhile, the Senate – such as against Russian banks and government debt – that could take effect even if Putin ultimately stands down from a military confrontation.
The US and its allies have been stressing – as seen in President Joe Biden’s 7 February 2022, – that they are united on the consequences for Russia should it invade.
But Russia has something that may undercut that solidarity: a network of European countries, , , especially natural gas. That may make them reluctant to go along with severe US sanctions.
This dependence didn’t happen overnight. And as while working on a book on US economic warfare against the USSR during the Cold War, this issue has tended to divide America and its allies – in part because of how Russia has exploited the ambiguity of its intentions.
A Cold War Concern
The US has long speculated about Russian willingness to use trade to tie the hands of other countries - a concern dating back to the early days of the Cold War.
For example, in the late 1950s and 1960s, as the USSR and the US were competing for postwar hegemony, each side tried to influence countries not formally aligned with either superpower. Some American analysts warned of a “Soviet economic offensive.”
This included Soviet efforts to and other economic assistance to Warsaw Pact countries and neutral targets like Finland, the and India in a manner that created sustained dependence on Moscow, possibly enabling future Kremlin coercion.
and thought Soviet trade was largely motivated by economics. and other efforts to curb their Soviet trade prospects.
These different perspectives demonstrate the ambiguity of Soviet intentions. Given the Cold War rivalry and the USSR’s status as a centralized, state-run economy, Moscow’s motives were not clear.
JFK Fights an Oil Pipeline
As the Soviet Union began developing oil and gas pipelines to Europe, European energy dependence on Russia became a particular concern in Washington.
In the 1960s, Western Europe from the Soviet bloc. But a – running all the way from the Russian far east, through several European countries including Ukraine and Poland, and terminating in Germany – suggested the Soviets hoped to change that. The prospect of greater dependence, as well as other strategic concerns, .
In 1963, the Kennedy administration of the Druzhba, or “Friendship,” Oil Pipeline by pushing an embargo on wide-diameter pipe to Soviet-aligned countries. Knowing it could not stop the project alone, it pressured allies – especially West Germany, a major pipe exporter – to join.
While , , permitting a partial NATO embargo.
Nonetheless, the pipeline with only minor delays.
Reagan’s Gas Gambit Sparks Crisis
About two decades later, the Reagan administration faced a similar dilemma.
In 1981, the Soviet Union was building a natural gas pipeline from Siberia to Western Europe. Seeing it as another threat, the such as France and Germany to join its embargo of not only pipeline equipment for the project but financing too. They refused, and the US responded with sanctions intended to prevent European companies from providing money or equipment to the project.
, sowing division between the US and Europe, and resulting in a sanctions retreat just a few months later.
Wielding Energy Dependence as a Weapon
The consequences of energy dependence on Russia began to manifest itself after the Soviet collapse in 1991 and the rise of Vladimir Putin a decade later. Unlike his Soviet predecessors, who refrained from shutting off energy exports, to conflate economic and geopolitical objectives in Russian energy policy, applying timely pressure on neighbours that he justifies in market terms.
In the mid-2000s, for example, Ukraine was still receiving the same heavily subsidised gas shipments from Russia as it did when it was part of the Soviet Union a few years earlier. The “Orange Revolution” near the end of 2004 , replacing him with one who sought closer ties with the West. A year later, for its gas.
When Ukraine refused, Russia restricted the flow of gas through the pipelines – leaving only enough to fulfil its contracts to countries in Western Europe. To many observers, the move seemed aimed at destabilising the pro-Western government in Kyiv. It was also later used as the that Ukraine was an unreliable gas transit country, which helped build support for a new pipeline named Nord Stream that .
That pipeline opened up in 2011 and resulted in the in transit fees. Nord Stream also significantly increased German energy dependence on Russia, which by 2020 of its natural gas, up from 35 percent in 2015. Natural gas is used not only to power industry but also for heating and to generate electricity in Germany.
That pipeline of all Russian gas exports to Europe. As a result, Russian gas exports to Europe reached a record level in 2021 – despite of liquefied natural gas to Europe.
Europe got a glimpse of the potential consequences of this dependence in December 2021, when as the crisis involving Ukraine was heating up. Although Russia was still technically meeting its contracts, it as it had in the past. The next month, the International Energy Agency European energy security.
Will Putin Do It Again?
Russia on its border with Ukraine - surrounding the country on three sides.
While Putin’s intentions remain unclear, the US is leading efforts to deter a potential invasion by showing that its Western allies are on board with devastating sanctions - a new $11 billion pipeline running from Russia to Germany known as Nord Stream 2.
But Europe’s – and specifically Germany’s – already-significant dependence on Russia for energy make them vulnerable given Russia’s history of threatening to cut off gas supplies to its neighbours – and sometimes following through. This could potentially undermine the West’s ability to execute a coordinated sanctions campaign.
For example, an energy crisis in winter could be a disaster for Germany, and fear of it may weaken German willingness to act against Russia. A recent example of potential German softness toward Russia can be seen in German Chancellor Olaf Scholz’s stopping the Nord Stream 2 pipeline as a potential sanction for an invasion.
Russia’s use of trade and energy to create dependencies has given it a strong hand – one that the US and its European allies have limited options to counter.
(Ryan Haddad is a Research Affiliate at the Ed Snider Center for Enterprise and Markets, University of Maryland. This article was originally published on The Conversation. Read the original article here.)
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