(When you read this article, you will note that the author refers to
the United States as if the American people are in favor of these sanctions –
which were passed by BOTH houses of congress by a veto proof margin – when, in
fact, the American people voted for Trump who was opposed to more war
mongering. He signed the law reluctantly – but here is my key point – who are
these people that WeDaPeople elect to congress and then act contrary to the
will of WeDaPeople?
When you answer that question – you have not only answered the
question, but have identified the crux of the problem. – CL)
The dispute between the US and Germany over the anti-Russian
pipeline provisions of the new sanctions law continues to mount, with RT reporting Klaus
Schaefer, a German businessman whom it describes as the CEO of German energy
major Uniper fiercely denouncing the new sanctions as a ploy to force Europe to
buy expensive liquified American natural gas instead of cheap Russian pipeline
gas.
The core reason (for the
sanctions) are strategic economic interests, meaning the targeted dominance of
the US in energy markets.
RT reports Schaefer
saying that liquified natural gas from the US would cost 50% more than pipeline
gas from Russia, and that “Nobody wants to pay such a premium“.
I
have previously discussed the economics for Europe of buying expensive American
liquified gas in place of cheap Russian pipeline gas in a lengthy article, in
which I also discussed how this was at least one motive for the new sanctions
law.
In
truth the new sanctions law serves multiple agendas. There is the wish of
some people in the US to give the highly contested claim that Russia meddled in
the US election the stamp of legal authority by imposing on the country and the
President a law which insists it. There was the desire of some people to
provoke Donald Trump into a head-on collision with Congress in a way that might
have set the scene for his impeachment (discussed by me at length here). There was
the desire of some people to protect the Maidan regime in Ukraine by blocking
the building of Russian gas pipelines that bypass Ukraine. There is the
widespread wish in the US – extending far back into the Cold War – to limit
economic contacts between the US’s European allies and Russia as much as
possible. Above all there is the overarching desire of the overwhelming
majority of the US political class – including above all its intelligence and
media communities – to maintain the confrontation with Russia and to block
President Trump’s attempt to end it.
Last but not least, there are undoubtedly
the tough minded commercial calculations of some people in the US – including
some US businessmen – who are looking to leverage this quarrel to gain
commercial advantages for the US and themselves by forcing the Europeans to buy
expensive American liquified gas instead of cheap Russian pipeline gas.
It
is the last which is provoking the greatest anger in Germany and Europe.
Pipeline
gas from Russia is inherently cheaper than liquified gas from the US because of
the geographic proximity between Russia and Europe and the simple and cheap way
it is transported.
Replacing
Russian pipeline gas by US liquified gas by contrast would require a stupendous
investment in new storage facilities and in building the large numbers of
specialised and expensive ships needed to transport it.
Whilst
the resources to do this exist in Europe and the US, doing so would come at a
fearsome cost, and would be a gross misallocation of resources making no
economic or commercial sense. Moreover even after the storage facilities
and the ships were built, the liquified gas transported to Europe from the US
would still be significantly more expensive than the pipeline gas Russia would
offer.
Meanwhile
the US and China – Europe’s biggest industrial competitors – would have the
competitive benefit of cheaper gas, in the case of the US from its own
production – though there are doubts as to how sustainable that is – and in the
case of China – far more sustainably – in the form of cheap pipeline gas from
Russia transported via the pipelines which are being built now.
What
makes this episode even weirder is that the one other country which might
conceivably have sufficient pipeline gas to replace Russian pipeline gas in the
European energy market cheaply and effectively – though this is doubted by many
– is Iran.
It
is precisely because some European officials see Iran as a major source of
energy for Europe that the Europeans have lobbied so hard for the sanctions on
Iran to be lifted. One of the strongest European advocates of the EU forging
energy links with Iran is Frederica Mogherini, the EU’s High Representative for
Foreign Affairs and Security Policy, who has just visited Iran to attend
President Rouhani’s inauguration, where she received an enthusiastic reception from some
Iranian parliamentarians.
The
US is however as adamantly hostile to Iran as it is to Russia. Indeed the
US military and the Republican Party appear if anything to be even more hostile to Iran than
to Russia. The US therefore opposes energy projects linking Europe to
Iran if anything even more fervidly than it opposes energy projects linking
Europe to Russia. One reason why the EU’s ill-starred Nabucco pipeline project failed was
precisely because as a result of US opposition and UN sanctions it was
prevented from drawing gas from Iran.
Faced
by this US hostility to any energy arrangement that makes for Europe economic
or commercial sense, it is not surprising if some European business people like
Klaus Schaefer, and some European governments like notably the Austrian
government, are now showing signs of growing anger and exasperation.
I
would add that gas is not the only example of the US leveraging its
geopolitical dominance in order to gain commercial advantages for itself and
for certain US businessmen at the expense of its European allies. My
cynical and no doubt controversial view is that the ongoing attack on the
German car industry and the criticism of its diesel engine technology is simply
another case of the same thing.
Suffice
to say that I do not think it is any coincidence that the whole emissions
scandal that suddenly targeted the German car industry came at precisely the
same time when certain people in the US were investing heavily in electric car
technology and were receiving huge subsidies from the US government to do so.
The fact that electric car technology still looks to me immature – and
therefore expensive and inefficient – is of course neither here nor there, and
is being drowned out by the blizzard of orchestrated publicity which invariably
accompanies such moves.
It
is however the issue of gas which possibly enrages the business community in
Germany the most, to the point where it is now reflected in the increasingly
angry words coming from German and EU officials. The insouciant way in
which the US Congress disregarded European economic interests – with some
members of Congress openly bragging about the fact – has unsurprisingly caused
particular offence, and seems for some people in Europe to have come close to
being the crossing of a red line. There is now even talk in some parts of
Europe that the new US sanctions law might harden European opposition to the
existing EU sanctions, and might lead to them being lifted more quickly.
The Russians doubt that will happen,
and so do I. Atlanticist voices within the European elite are still
strong and in my opinion are still dominant. Already some of them –
alarmed by the opposition in Europe to the new US sanctions law – are calling on Europe to drop its
opposition to the new sanctions law and to submit to it.
The
fact however remains that the European business elite has now been given an
object lesson in the cost the subservience of Europe’s political leaders to US
demands is causing them. The Russians are already driving the point home,
with Russian officials apparently already saying both openly and in private
that it was Europe that brought this calamity on itself by agreeing in 2014 to
the US demand for sanctions.
It
will be interesting to see for how much longer the European business community
is prepared to put up with it.
