One month into the Ukraine war, reigning in Russia using sanctions still proved difficult for the European member countries who were deeply entangled with Putin due to their reliance on Russian gas and oil. How did that reliance come about and is there any chance for them to break free from the need for Russia’s energy?
The current European dependence on Russian oil began decades ago, during the Reagan era and with the promise of a pipeline. That Soviet pipeline traverses the landscape between Siberia and Germany and brings with it much needed gas imports that, according to a March 1981 CIA memo, were needed to offset likely declines in oil supplies for the six European countries in question. They also argued that “related equipment sales by West European firms would create thousands of jobs and billions of dollars in business.”
Despite those positives, the CIA warned of some serious risks in creating this type of infrastructure with the Soviet Union. In their memo titled USSR-Western Europe: Implications of the Siberia-to-Europe Gas Pipeline, they find that such a pipeline would “provide the Soviets one additional pressure point they could use as part of a broader diplomatic offensive to persuade the West Europeans to accept their viewpoint on East-West issues,” citing, as an example, an attempt to undermine “European willingness to act in concert with the US on economic sanctions against the Soviets or on security issues.”
They also cite a potential for a “natural gas weapon,” stating that “the likelihood is strong that the Soviets will attempt subtle exploitation of the developing natural gas relationship” and warning that the effects of that pressure would depend on “West European and NATO cohesion and will” and “progress over the next few years by Western Europe in installing ‘insurance’ in the form of strategic reserves and fuel substitution capability.”
A bitter dispute followed. Reagan vehemently opposed the pipeline and issued sanctions preventing American corporations from participating in the construction and operation of that pipeline. But after what The New York Times calls “a public-relations and lobbying blitz that played out across newspaper opinion pages, congressional committees and a direct appeal to the White House,” Reagan backed away from the sanctions, and the pipeline moved forward.
In the decades since, two more pipelines—the Nord Stream and Nord Stream 2—have been added, both running under the Baltic Sea and taking gas from the Russian coast to Germany. Together, they could deliver 110 billion cubic meters of gas to Europe every year. But while the Nord Stream has been operational since 2011, the $10 billion Nord Stream 2 project has now been put on hold. The US, UK, Poland and Ukraine strongly oppose the project, fearing that it would provide Russia with an even greater stranglehold on Europe. Ukrainian President Volodymyr Zelensky has called it “a dangerous political weapon.” And German regulators are fearful that because Russian state-owned firm Gazprom owns both a 50% stake in the pipeline and all the gas that goes through it, Russia would have too much control over supply.
That supply is substantial. Even without the Nord Stream 2, Russia currently provides roughly 40% of the European Union’s natural gas imports. Russian supply drying up leaves Europe vulnerable, especially Germany and Italy who consume 42.6 billion cubic meters and 29.2 billion cubic meters respectively. Belarus, Turkey, the Netherlands, Hungary, Kazakhstan, Poland, China and Japan are also at risk if Russia cuts off the supply.
And Russia has a history of tinkering with the supply when they feel politically justified in doing so. The Soviets cut off oil supplies to Yugoslavia in 1948, to Israel in 1956, and to China in the early and mid-1960s. More recently and more notably, Russia cut off gas supplies to the European region in a 2009 diplomatic dispute with Ukraine. According to The New York Times, they left “tens of thousands of homes without heat” and “more than a dozen people froze to death, mainly in Poland, before Russia reopened its pipelines.”
The risks the CIA warned us of in 1981 are just as real today, and we are just as unprepared for them. The EU had proposed a plan to end reliance on Russian oil by 2030 but now, eight years ahead of that date, finds itself scrambling to find alternatives in order to end their participation in the funding of the attack on Ukraine. The US has committed at least 15 billion cubic meters to Europe in the remainder of 2022 along with its commitment to making “sure the families in Europe can get through this winter and the next while we’re building the infrastructure for a diversified, resilient and clean energy future,” as Biden said in a recent statement at the U.S. Chief of Mission Residence in Brussels. But 15 billion cubic meters won’t be enough to meet that goal, and without help from Saudi Arabia, the United Arab Emirates, Iran and Venezuela, there seemed no real plan on how to offset European reliance on Russian gas and oil.
Or there is one more route, according to Bloomberg, If there’s any country that might’ve been in a position to rescue Europe from its energy crisis, it’s the U.S. — home to vast shale fields holding a seemingly endless supply of natural gas and giant terminals capable of liquefying it and shuttling it abroad.
But American shale drillers refuse to drill more. Why? We will explain in our next video.