Orangutan Pipeline

Trump’s Russian pipeline policy

Opposing the Nord Stream 2 project finds favor with Central Europe.

By ANCA GURZU

The Trump administration is on a diplomatic offensive against Russia’s Nord Stream 2 pipeline, lobbying across Europe to kill off the project while also boosting its own gas sales to Europe.

The geopolitical rationale behind the U.S. position is to keep Russia from dominating European gas markets. There is also a growing commercial imperative as the U.S. starts to sell liquified natural gas to the EU and Russia’s Gazprom becomes a competitor.

Unlike Donald Trump’s decision to withdraw from the Paris climate agreement, breaking with Obama administration support, the new administration is sticking with its Democratic predecessor’s position on the pipeline — even if the commercial reasons are more obvious.

The U.S. offensive also comes as EU countries consider whether to give Brussels the green light to start negotiating with Russia on how the pipeline should be regulated. The issue is so contentious, there is even a push to get on the EU leaders’ agenda at this week’s summit.

The U.S. administration’s pressure on the pipeline was boosted by a separate move late last week from the U.S. Senate, which  proposed new sanctions against companies supporting Russian energy export projects. The move sparked a furious response from Germany and Austria. Both have companies helping Russia’s Gazprom with the €9.5 billion pipeline.

“They are actively trying to promote their LNG in Europe and make a business case out of it,” said Severin Fischer, senior researcher at the Center for Security Studies in Zurich, referring to the administration’s efforts to kill the pipeline project.

The pipeline would carry an additional 55 billion cubic meters of gas directly from Russia to Germany, doubling the capacity of the existing Nord Stream 1 pipe.

Although the chances of stopping the pipeline are remote, the European Commission and Eastern European and Baltic countries oppose the project, worrying it would tighten Moscow’s grip on the region’s gas market, undermine EU efforts to diversify supplies away from Russia and bypass the Ukrainian transit route. Nord Stream 2 would see 80 percent of Russian gas imports to Europe flow directly into Germany.

That’s also the U.S. concern.

“A project that could increase or centralize deliveries of gas through one particular route to Europe is something that ought to be thought about carefully,” said Mary Warlick, acting special envoy for international energy affairs at the U.S. Department of State.

She passed that message along to European capitals in May, visiting Austria, Latvia, Slovakia and Norway. She also had several bilateral meetings with Polish and Lithuanian officials. Her trip came just weeks after Robin Dunnigan, the U.S. deputy assistant secretary for energy diplomacy, traveled to Denmark and Brussels, where she also met EU officials on Nord Stream 2 with the same message.

“Europe needs to really think about its total energy balance and its energy security, and recognize how dependent they remain on Russia,” U.S. Secretary of State Rex Tillerson said at a U.S. Congress hearing last week.

At a time when the Trump administration has few warm West European friends, its efforts to block Nord Stream 2 find favor with Central European countries worried about a resurgent Russia. Most of the Polish government turned out last week to celebrate the first U.S. LNG delivery to Poland’s new Baltic terminal.

“The first gas delivery from the USA to Poland will be noted in future history books,” Prime Minister Beata Szydło said.

The U.S. diplomatic push “gives Central Eastern European countries the reassurance that Uncle Sam is still looking out for them,” said Sijbren de Jong, strategic analyst with The Hague Centre for Strategic Studies.

But there’s a strong commercial interest at work as well.

American LNG has been delivered to Spain, Portugal, Malta, Italy, and the Netherlands as well as Poland, and Warlick said that there’s a “strong signal” from European countries for increased supply. The topic came up “with quite a few number of officials” during her trip to Europe, she said.

The U.S. will become a “dominant energy force” in the world by using its “massive shale gas resources to begin shipping [LNG] overseas,” U.S. Secretary of Energy Rick Perry said at the end of April. “Energy policy is not just a vital element of U.S. economic policy, but also a vital element of U.S. foreign policy.”

Washington’s effort to build an anti-Nord Stream 2 coalition puts it at odds with Berlin and Vienna, which see the pipeline as a commercial venture and not a geopolitical threat. Warlick said she encouraged EU countries “to weigh in to reflect their national concerns” over proposed negotiations between the European Commission and Russia on how to apply EU energy rules to the offshore project.

But German Chancellor Angela Merkel, who rarely speaks publicly about the project, last week rejected the need for EU-Russia talks on the pipeline.

Germany, together with Austria, also hit back last week at proposed U.S. Senate sanctions that would threaten European companies participating in the project, accusing the U.S. of politicizing its economic interest in selling natural gas to Europe.

“We cannot accept … the threat of illegal extraterritorial sanctions against European companies that participate in the development of European energy supply,” German Foreign Minister Sigmar Gabriel and Austrian Chancellor Christian Kern said in a joint statement.

Gabriel and Kern said the aim of the Senate bill is to secure jobs in the U.S. oil and gas sector, adding that “Europe’s energy supply is a matter for Europe, and not for the United States of America.”