Europe’s Energy Disaster
If the Europeans were willing to buy, would the Russians be willing to sell?
The European energy disaster gets worse by the day. Energy bills ten times higher than the year before threaten the closure of major industries and small businesses in Britain, Germany, and the rest of the E.U. The base case now seems to be that Europe will be almost entirely deprived of Russian gas during the forthcoming winter.
Over the last several months, a series of retaliations—some European states refusing to pay for gas in rubles, various closures by Poland and Ukraine of the pipeline network—have been paired with Russian reductions (from 40 percent to 20 percent to 0 percent) of the Nord Stream I pipeline. In the summer, the drama entailed a dispute over gas turbines for the pipeline, stuck in Canada because of the sanctions, then sent to Siemens Germany, then rejected by the Russians because E.U. sanctions made the transaction illegal.
Because each side said the other was lying, it was difficult to ferret out the truth. Were the Europeans refusing to buy? Or were the Russians refusing to sell? If the former, the Europeans were weaponizing the energy trade. If the latter, the Russians were doing so.
It has been difficult to tell which was which, but one thing is clear. Both sides are far more intent on assigning blame for the impending catastrophe than seeking an accommodation that would avoid it.
With the pipeline network facing obstacles, the obvious test for this great question—who is refusing to do what?—is the status of the Nord Stream II pipeline. Built side by side with Nord Stream I on the floor of the Baltic Sea, it apparently remains ready for service. Germany canceled its opening in February in response to the Russian invasion of Ukraine. For now, buying Russian gas through Nord Stream II seems off the table in Germany. According to German Foreign Minister Annalene Baerbock, German voters must sacrifice for Ukraine. This and other statements suggest that Europe is refusing to buy.
If the Europeans were willing to buy, would the Russians be willing to sell? At the beginning of the crisis, when the West was proclaiming it would refuse to buy, the Western assumption was that the Russians had to sell and would sell, as their “gas-station” of an economy depended on it. Then in late spring the answer from Russia became “yes, but you have to pay in rubles.” Some European states did; some didn’t; only the latter had their gas shut off. Russian president Vladimir Putin insisted in the summer that Gazprom would honor all its contracts and blamed the Europeans for the impasse. Now the Russian answer teeters on “no, never.” Putin on September 6 said that Russia remains willing to sell and portrayed the stoppages as a wound the West has inflicted on itself, but two days previously Dmitry Medvedev, former Russian president and resident Kremlin hawk, wrote that Germany had declared itself an enemy to Russia. No gas? Too bad.
Germany, now looking at imminent immiseration, has long been the paymaster of the E.U. One wonders how the E.U. can function when Germany’s vast manufacturing, chemical, and industrial complex, dependent on cheap Russian gas, is forced into closure or sharp curtailment. German largesse, funneled through the E.U., has facilitated many an internal E.U. agreement over the years. What happens to the E.U. when Germany becomes the beggar?
Luuk Middelaar, the grand theorist of the European Union, has noted that peace, prosperity, and power have been the three main goals of the European project. The European Union, to be sure, was never a “power project” in the military sense. The armed forces of its member states have been entirely subordinated to NATO. But the economic sanctions imposed on Russia vastly enlarges the EU’s claim to be a power project. The sanctions are on course to gravely imperil the E.U.’s status as a prosperity project. Its status as a peace project may not be far behind. These sanctions effectively represent a new purpose, unlike anything the E.U. has sought in the past. They introduce strong centrifugal forces into the Union.
To get the gas flowing would require a reversal in signal respects of the West’s sanctions campaign. Though desirable, there is no evidence that such a volte-face is in contemplation by any of the major states. On the contrary, the United States has succeeded in lining up the support of the G-7 for its plan to get Russian oil onto the market and simultaneously cap the price Russia gets for it. This plan, the apparent brainchild of Secretary of the Treasury Janet Yellen, is a contradiction masquerading as a policy, a hare-brained scheme that cannot possibly work. It requires the cooperation not only of Russia but of a host of other states, led by China, India, and Turkey. These buyers have all made it clear that their energy policy is not going to be dictated by the West or by the threat of Western sanctions. The Russians have dismissed the plan as ridiculous: “We will simply stop supplying crude and fuels to countries that introduce a price cap.”
If the West goes ahead with the Yellen Plan, and Russia refuses to play along, what then? The logical outcome, absent a grave turndown in the global economy, is severe upward pressure on energy prices. Coming in December is the promised implementation of the Yellen Plan, similar attempts by the E.U. to either embargo or cap energy prices paid to Russia, and the cessation of the million-barrel-a-day release from the U.S. Strategic Petroleum Reserve. The Biden administration’s main plan for avoiding a price spiral is to force the Russians to eat crow. It delusively believes it holds the cards in this showdown. It doesn’t.
In the law of war, civilian immunity has long been held as a desirable principle. Indeed, the U.S. armed forces take it as a point of pride that, by law, they must observe the targeting rules that seek to secure that outcome. In economic warfare, however, these barriers to civilian harm have been breached on numerous occasions. With hardly any domestic recriminations, the United States follows policies in Afghanistan, Syria, and Venezuela which starve the population; the same indifference to civilian suffering attends the total economic and financial war against Russia. Usually, the objection to such measures is the harm inflicted on innocents in foreign countries; in the instant case, harm to the West’s own citizens has also emerged as a clear and present danger.
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Proposals to limit the impact of war on civilians was part of the first breath of American diplomacy. In 1783, Benjamin Franklin sought to improve the law of nations by securing agreements to prohibit “the plundering of unarmed and usefully employed people.” In 1785, Franklin, together with John Adams and Thomas Jefferson, representing the United States abroad, signed a treaty with Frederick the Great of Prussia intending to introduce as customary practice far-reaching restrictions on military targeting of civilians in war.
Adams was “charmed to find the King do us the honor to agree to the platonic philosophy of some of our articles, which are at least a good lesson to mankind, and will derive more influence from a treaty ratified by the King of Prussia, than from the writings of Plato or Sir Thomas More.” These diplomats were appalled that farmers and fishermen, traders and mechanics, scholars and housewives, should invariably be caught up in war’s destructiveness. The United States was once closely associated with this principle. Today’s policymakers, however, have no pangs of conscience in sweeping innumerable innocents into the web of its sanctions. It’s how things are done in our progressive new century.
Even if it is conceded that the sanctions war is just, it does not follow that it is prudent. On the contrary, the consequences of the West’s course are manifestly inconsistent with the public good and entail the high risk of losing more than is gained. The sanctions only make sense on the idea that they are a necessary and effective means of forcing the Russians out of Ukraine, when their real ability to do so is nil. This would be so even if the sanctions were biting Russia to the point of destitution, which they are not. But Western policymakers think otherwise, or say they do. That suggests the light at the end of the tunnel is an incoming train.