CEPA STRATCOM PROGRAM
Edward Lucas
AUTHOR:Edward Lucas
31 July 2017

A house divided

Some Europeans are cool to new U.S. sanctions on Russia. They shouldn’t be.

It’s not just Russia protesting against the latest round of American sanctions and expelling hundreds of embassy workers in Moscow and elsewhere. Germany’s foreign minister and Austria’s chancellor issued a joint statement saying the sanctions damaged Western unity on Ukraine. And on 16 July, German ex-diplomat and power broker Wolfgang Ischinger wrote in the Wall Street Journal that they would “compromise European energy security and damage U.S. relations with Europe” to the benefit of Russia.

Energy, these Europeans argue, should be just another commodity, like soap. But instead of letting commercial considerations reign, the United States is self-interestedly bringing politics to bear on the Nord Stream 2 pipeline, which will carry Russian gas to Germany across the Baltic Sea. Crimping Europe’s supplies of pipeline gas from Russia will boost U.S. sales of liquefied natural gas (LNG).

This is nonsense on several levels. Europe’s gas business is inherently political. Pipelines, like railways, are a legacy of colonialism. When the Soviet empire collapsed, it bequeathed a set of east-west gas—and oil—pipelines to the former captive nations. These made it simple to keep on buying from Russia, and costly and complicated to diversify supplies. The pipelines also allowed the Kremlin to export influence and corruption. Murky transit payments and trading arrangements not only enriched middlemen, but also offered ways of pumping money clandestinely (and sometimes overtly) into the political systems of neighboring countries.

It took 15 years after the Soviet collapse before the West began to wake up to the danger of Russia’s energy weapon. The Kremlin deployed its combination of dirty money and muscle-flexing mainly in ex-communist countries, below the radar of Western policy-makers. Even after the European Union’s enlargement in 2004, energy security was seen as a minor issue, pursued by self-interested or obsessed people on Europe’s fringe.

But thanks to the determination of EU officials in the Competition and Energy directorates, and to the heroic stance of the Lithuanian and other governments, the EU’s policy changed. It forced “unbundling” on a reluctant Gazprom, splitting the wholesale, retail and import businesses. It banned country-by-country pricing and the use of restrictive destination clauses that prevented gas trading. The EU also financed new gas interconnectors, linking Russia’s customers so that they can shift molecules from north to south, rather than just from east to west.

All that has been an unsung EU success story. So, too, are the new LNG terminals in Lithuania and Poland, which allow American LNG imports—a small but welcome counterweight to Russia’s still-overwhelming presence in some parts of Europe.

Russia, understandably, doesn’t like this. But it has only itself to blame. If the Kremlin had played its cards better, it could have avoided the mistrust and suspicion that surrounds its energy industries. It could have been scrupulously fair and transparent with its customers, in which case pressure to change the post-1991 arrangements would have been negligible.


But having chosen to promote a politicized, cronyist business model, the Kremlin and its European allies must accept continuing pushback from those who see the danger. Sadly, the European Commission has been unable to find a legal means of stopping Nord Stream 2. Just as sadly, the German government has put business relations with Russia ahead of its allies’ interests. Luckily, Washington sees the danger and is applying pressure.

The administration is not acting unilaterally. As Anders Fogh Rasmussen, the former secretary-general of NATO, noted in the Financial Times, the sanctions bill’s energy measures are not automatic but are applied only at the president’s discretion. Its language explicitly stresses coordination and unity with allies.

Europeans like lamenting a lack of American leadership under the Trump administration. They should try seeming a bit more grateful when it actually happens.



Europe's Edge is an online journal covering crucial topics in the transatlantic policy debate. All opinions are those of the author and do not necessarily represent the position or views of the institutions they represent or the Center for European Policy Analysis. 

Photo: Alexander Shcherbak/TASS