Is the New Russian Nord Stream Pipeline the Start to Another Cold War?

Fractivists

K.J. Rodgers
Crownsville, Maryland  

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Nord Stream 2, a Russian pipeline project, is going to increase natural gas market share for the Kremlin, but is it going to become the next Cold War?

Being born in the early 1980’s, I missed out on the majority of the Cold War. Recently, I have been reading a lot about this period of time and how it began, what played out, and the way it ended. Since the fall of the Soviet Union, the Cold War has largely been considered over. The way I see it, though, their battle for control over natural gas could be my generation’s Cold War.

Historically, major exporters of oil and natural gas have been bullies. Russia has held the world hostage for decades by leveraging their oil and natural gas as bargaining chips; “do what we want or we cut off your supplies.”

Those supplies heat people’s homes, power their grids and fuel their industries. People around the world depend on oil and gas, so when there is a threat to be cut off, countries have long just fallen in line. This is not an empty assessment as Russia has done just this numerous times, especially in Central and Eastern Europe. Gazprom, Russia’s state-run natural gas company, has increased market share from a quarter to one-third of the EU’s gas market since the 1990’s. This significantly increases their sway within the EU.

Nord Stream 2 PlanNow, there is a chance for Russia to swell their market share even further and, defacto, their political influence as well. Russia has been working on a new pipeline in conjunction with energy companies from France, Germany, the Netherlands, Great Britain and Austria. This new pipeline, Nord Stream II, will cross the Baltic Sea heading towards Germany, bypassing Ukraine, whose bread and butter is transferring gas across their country.

Nord Stream 2

Russian Prime Minister Vladimir Putin (L) and Gazprom CEO Alexei Miller looks at a screen as they observ the Nord Stream Project information mount at the gas compressor station (Photo: ALEXEY NIKOLSKY/AFP/Getty Images)

This has put US administration officials on alert. They say the $11 billion pipeline is giving Russia political power to coerce countries to fall in line. In fact, Secretary of State, Rex Tillerson referred to it as an “Energy Weapon.” President Trump is not backing Russia in this endeavor. Rather, the US is imposing sanctions on Russia to make funding more difficult, which could also create pressure on  European companies depending on the deal to resist Russian entreaties. Meghan O’Sullivan, Director of the Geopolitics of Energy project at Harvard University’s Kennedy School, sums it all up saying:

“Even if Gazprom takes no actions to exert political power through energy trade, the fact that it has the means to do so, the mere threat of a cutoff, gives Russia political leverage.”

The Russians and Europeans working with them are obviously feeling the US pressure and getting quite defensive about it, suggesting US fears are on the money. The Nord Stream website not so persuasively argues the increased power of Russia is no big deal:

“This kind of scaremongering does not reflect reality. The only country completely dependent on Russian gas is Russia. Russian gas currently accounts for around 30% of the EU’s gas consumption. This share will not fundamentally change with Nord Stream 2 because it will only account for part of the increased import capacities that the EU will need. Diversification is a real EU success story. There are 22 LNG terminals, and with a capacity of 216 bcm, they could import 50% of the current demand. However, these terminals are only utilised [sic] at some 20%. Meanwhile, pipelines connecting the Central and Eastern European countries can already deliver 147 bcm from West to East. Even Ukraine’s import demand has been fully supplied via a West-East connection since November 2015. Think resilience, not dependence.”

The importance of this and the many not-covered moving parts is the opportunity for the US exported Liquefied Natural Gas. Not all countries are buying the Russian pipeline. Poland and Lithuania have built LNG import terminals for US Gas. Poland has already received US LNG with a first shipment to Europe from Cheniere Energy’s Sabine Pass (as I covered here). Those European countries with good memories have every right to be fearful of the Russian Bear and this is an opportunity for the US as we are well-poised to further increase our LNG exports to them.

Cold WarJust as happened in the Cold War, propaganda and political pressure from the Soviets/Russians is going to be used to interfere as much as possible with the any nation foolish enough to tie into the Russian gas line. While it may be unlikely we’ll ever have to face off in a nuclear contest as was once feared, the battle over gas may well become my generation’s Cold War.

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One thought on “Is the New Russian Nord Stream Pipeline the Start to Another Cold War?

  1. I think the Cold War began in1943 when it became clear that Germany would lose WW II and never stopped. If you want to generous the second Cold War with Russia started in 1999, when Putin began running the country in various guises as President and Prime Minister. It has been his obvious goal to re-establish Russia to the preeminence of the Soviet Union in the 20th century.

    The two pipelines in the Baltic Sea have more capacity than all Russian gas production now, so obviously they plan a big increase in production. The same fracking technology that revolutionized the US was to be sold to the Russians by Rex Tillerson, then head of Exxon and recipient of the Russian Medal of Friendship from Putin. That plan was put on hold when the Obama administration sanctioned Russia for their invasion of Ukraine. It seems that only after he became Secretary of State did Tillerson understand Lenin’s quote that “ A capitalist will sell you the rope you will hang him with”.

    Nor was it the Trump administration that came up with the new round of sanctions back in August, but rather Congress as per these quotes (https://www.nytimes.com/2017/08/02/world/europe/trump-russia-sanctions.html):

    “The legislation, which also includes sanctions on Iran and North Korea, represented the first time that Congress had forced Mr. Trump to sign a bill over his objections by passing it with bipartisan, veto-proof majorities.”

    “The measure reflected deep skepticism among lawmakers in both parties about Mr. Trump’s friendly approach to President Vladimir V. Putin of Russia and an effort to prevent Mr. Trump from letting the Kremlin off the hook for its annexation of Crimea, military intervention in Ukraine and its meddling in last year’s American election.”

    Russia’s follow up will almost certainly be huge pipelines to East Asia and, given China’s need for gas and Putin’s willingness to help North Korea evade sanctions, the economic war will be “interesting”.

    Whether for the European or Asia markets, we will be on the end of a 3,000 to 8,000 mile long string of multi-billion dollar LNG tankers and export terminals, competing with OPEC, Australia and Russia. Remember a few years ago when the Saudis flooded the world with cheap crude and our natural gas industry had a near death experience? Think Russia might want to try it with gas?

    Clausewitz said “War is merely the continuation of policy by other means”. You can substitute politics or economics for war and get the same meaning.

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