On September 13, U.S. Secretary of Energy Rick Perry told his counterpart in Moscow, Russian Minister of Energy Alexander Novak, that the United States could impose sanctions on the German-Russian pipeline project Nord Stream 2, which would make Europe even more dependent on Russian gas. Today, Washington has two unprecedented tools to accomplish its long-term aim of easing Europe’s vulnerability to Russian energy influence: 1) the threat of sanctions on the Kremlin’s pipeline project; and 2) the ability to export American liquefied natural gas (LNG) to Europe.
America’s LNG exports are a relatively recent phenomena, launched in 2016 following the country’s shale boom. Since then, the greatest demand for American LNG has been in Asia, though the looming U.S. trade war with China could pose difficulties. In the past two years, however, a large of mix of European countries also imported American LNG including Turkey, Spain, Portugal, Italy, the United Kingdom, Lithuania, the Netherlands, Poland, and Malta. By contrast, Russia accounted for about 30 percent of the European Union’s total gas imports in 2017, though this figure may soon rise to 40 percent or more if Gazprom implements the Nord Stream 2 gas pipeline.
As I argued in my recent testimony to the Senate Committee on Energy and Natural Resources, stopping the Nord Stream project and sending American LNG to Europe will have significant national security, economic, political, and geopolitical benefits for the United States and its European allies.
National Security Benefits
As the largest NATO power and a key security guarantor for many European members of the Alliance, the United States cannot escape the security repercussions of Europe’s energy dependence. In Europe, Russia and its national gas company Gazprom have used gas exports as a tool of political influence, coercion, and weaponry via gas supply cuts and price increases. This has directly threatened the national security of European NATO member states that the United States is obligated to protect.
As the United States is gearing up to be the world’s third largest LNG exporter by 2020, gas exports to Europe will be of economic benefit to the U.S. energy sector, trade balance, and the economy overall. However, if Europe buys more Russian gas via the Nord Stream 2 pipeline than American LNG, then economic benefits will accrue to the Kremlin regime, notorious for widespread corruption, money laundering, and exporting the worst type of business practices.
Russia has effectively weaponized gas, using supply interruptions to harm our European allies. For instance, in the winter of 2008 to 2009 Gazprom cut supplies to Ukraine, and gas shortages were felt for two weeks in six EU states. As a result, Poland suffered at least ten casualties when citizens froze to death without access to gas heating. The less European economies rely on Russian gas, the safer they will be.
There are few today who would deny that Russia gas exports serve not only as a source of revenue but more importantly as a means of seeking political influence and forging alliances in Europe. As a result of its gas trade with Western European states, dating back to the late 1960s, Moscow has established close ties with European business and political elites.
This is particularly evident in Germany, which is Gazprom’s largest European market. For instance, Germany’s largest companies with business ties with Russia were among the harshest critics of Western sanctions against Moscow since 2014. Moreover,Gerhard Schröder, Germany’s ex-Chancellor, has served as the chairman of Nord Stream AG since 2005, and as the chairman of Russia’s biggest state-owned oil producer Rosneft since 2017. The implementation of Nord Stream 2 would only serve to strengthen Russia’s influence in German business and politics—a dangerous development for the leading nation of the European Union and one of the leading European members of NATO.
Similarly, Italy has continued to rely on greater Russian gas imports as Italian energy company ENI struck deals with Gazprom. On the back of this relationship, Russian President Vladimir Putin established a personal friendship with Prime Minister Silvio Berlusconi.
Further south, NATO’s strategic member Turkey is Gazprom’s second largest European market, and its Russian gas imports have consistently grown. On the back of this relationship, the Kremlin has been trying to woo Erdogan and isolate Turkey from its Western NATO and EU allies.
Without Russian gas, many of these ties would weaken, and European states would enjoy greater political autonomy.
The exports of U.S. LNG would serve to strengthen Washington’s global leadership and serve as a source of leverage in the emerging geopolitical competition for influence with rival powers such as China and Russia.
Whoever supplies the European Union will have substantial political and economic influence over the continent, including in Europe’s key industrial nations such as Germany and in the politically and economically contested regions such as Ukraine.
Going forward the United States can expect increasing competition in the global gas markets from traditional LNG suppliers such as Qatar and Australia and from emerging Russian LNG suppliers such as Novatek, as well as continued Gazprom efforts to secure their key markets such as Germany and Turkey via Nord Stream 2 and the Turk Stream pipeline projects, respectively. The United States would be wise to take advantage of its current favorable position in the markets rather than leave these open to its competitors.
Today the U.S. government is weighing the difficult and important decision of how far it is prepared to go to block the Nord Stream 2 pipeline. During these times of diplomatic tension it is not easy to pursue sanctions against a project where European energy companies are taking part. But Washington should not hesitate.
Unfortunately what is currently at play in some European countries is a mix of reflexive anti-Americanism, short-term thinking, and business capture. Sanctions may be among the most effective tools remaining to stop a project that has long-term negative strategic and security implications for the United States and its allies. Here Washington must ask itself: What is the real cost of the European Union’s freedom, independence and democracy?