As much as with “brain dead” NATO (copyright Emmanuel Macron) no one ever lost precious assets betting on the incompetence, narrow-mindedness and cowardice of political “leaders” across the Atlanticist EU.

There are two main reasons for the latest German legalese gambit of suspending the certification of the Nord Stream 2 pipeline.

1. Retaliation, directly against Belarus and Russia, “guilty” of the disgraceful refugee drama at the Poland-Belarus border.
2. Politicking by the German Greens.

A high-ranking European energy executive told me, “this a game where Germany does not hold a winning hand. Gazprom is very professional. But imagine if Gazprom decided to deliberately slow down their deliveries of natural gas. It could go up tenfold, collapsing the entire EU. Russia has China. But Germany does not have a workable contingency plan.”

This ties up with a proposal that is sitting at a crucial desk in Moscow for approval for two years now, as I reported at the time: an offer by a reputable Western energy firm of $700 billion for Russia to divert their oil and gas exports to China and other Asian customers, away from the EU.

This proposal was actually the key reason for Berlin to resolutely counteract the U.S. drive to stop Nord Stream 2. Yet the torture never stops. Russia now faces an additional hurdle: a carbon tax on exports to the EU which include steel, cement and electricity. That may well be extended to oil and natural gas.

Every sentient being across the EU knows that Nord Stream 2 is the easiest path to lower natural gas prices across Europe, and not the EU’s blind neoliberal bet of buying short term in the spot market.

“They are going to freeze”

Seems like the Bundesnetzagentur, the German energy regulator, woke up from a deep slumber just to find out that the Swiss-based company Nord Stream 2 AG did not meet the conditions to be an “independent transmissions operator” and could be certified only if it was “organized in a legal form under German law.”

The fact that neither the Germans nor the Swiss company were aware of it during the long, previous, always turbulent stages is very hard to believe. So now it looks like Nord Stream 2 AG will have to establish a subsidiary under German law only for the German section of the gas pipeline.

As it stands, the company is not “in a position” to comment on details and especially “the timing of the start of the pipeline operations.”

Nord Stream 2 AG will have to transfer capital and personnel to this new subsidiary, which will then have to present a full set of documentation for certification all over again.

Translation: gas from Nord Stream 2 will be absent during the coming winter in Europe and the pipeline, at best, might start running only by mid-2022.

And that certainly ties in with the politicking angle, as the German regulators are de facto waiting for the new German ruling coalition to emerge, including the neoliberal Greens who are viscerally anti-Nord Stream and anti-Russia.

The European energy executive did not mince his words on a quite possible scenario: “If Germany does not obtain their oil and natural gas by land now they cannot fashion a fall back position, as there is not sufficient LNG capacity or oil for that matter to supply the EU this winter. They are going to freeze. Much of their economy will be forced to shut down. Unemployment will soar. It would take four years to build up LNG capacity for natural gas but who will build it for them?”

Germany has zero margin of maneuver to dictate conditions to Gazprom and Russia. The gas that Gazprom won’t sell to northern Europe will be sold to eastern and southern Europe via Turk Stream, and most of all to Asian clients, which do not engage in blackmail and pay much better than the Europeans.

What is also clear is that if by a misguided political decision Nord Stream 2 gas is eventually blocked, the fines to be collected by Gazprom from the European consortium that begged for the construction of the pipeline may exceed 200 billion euros. The consortium is made up of Engie, Shell, Uniper, Wintershall Dea and OMV.

It’s against this background that the offer on the table in Moscow becomes even more than a game-changer. The bold recommendation to the Kremlin – with financing already in place – is that Russia’s natural resources including oil and natural gas should be redirected to China, as part of the Russia-China strategic partnership.

The proposal argues that Russia needs no trade with the EU, as China is way ahead of them in most advanced technologies. That certainly provides Moscow with the upper hand in any negotiations with any German government. As I mentioned it to the European energy executive, his terse comment was, “I doubt they will desire to commit suicide.”

It’s all Putin’s fault

It would be too much to expect from German and EU politicians the clear-sightedness of the government of Serbia, which is considering importing 3 billion cubic meters of Russian natural gas annually for 10 years. Gazprom has been on the record for years demonstrating the practical, reliable and cost-conscious aspects of long-term contracts.

Russian Foreign Minister Sergey Lavrov, commenting on the migrant crisis at the Poland-Belarus border, noted how “Poland behaves outrageously, while the leadership in Brussels applies double standards that are so apparent and naked that they can’t fail to understand that they are embarrassing themselves.”

The case of Nord Stream 2 adds extra layers to EU self- embarrassment as it concerns the wellbeing of populations already living inside Fortress Europe. Let them freeze, indeed – or pay virtual fortunes for natural gas that should be readily available.

As we all know, Germany, Nord Stream 2, Ukraine, Belarus, it’s all interlinked. And according to a Ukrainian lunatic profiting from an Atlanticist platform, it’s all Putin’s fault – guilty of conducting hybrid war against the EU.

It will be up to the “resolve of Poland and Lithuania” to “counter the Kremlin threat”. The ideal framework in this case should be the Lublin Triangle – which unites Poland and Lithuania with Ukraine. These are the lineaments of the new Iron Curtain, erected by the Atlanticists, from the Baltic to the Black Sea, to “isolate” Russia. Predictably, German Atlanticists are a crucial part of the package.

Of course, to be successful, these actors should “also seek greater U.S. and UK engagement”, with every movement complementing “the role of NATO as the ultimate guarantor of peace in the region”.

So behold, EU mortals: a “perfect storm of Russian aggression during the coming winter months” is all but inevitable. Watch it on your screens while you properly freeze.

Russophobia and geopolitical cynicism know no bounds among certain Western politicians and media commentators. Thankfully, however, such a negative mindset is increasingly exposed for its ridiculous irrationality.

This week as Europe’s energy crisis broke new records in terms of soaring consumer prices, Russian President Vladimir Putin stepped in with a promise to increase exports of natural gas. The news had an immediate calming effect on Europe’s energy markets which saw prices whipsawing to lower levels.

Rather than simply greeting the development as a positive move, there were predictably sinister comments from some quarters. Russia was accused in Western media of “holding Europe hostage” over the continent’s energy crisis and using its vast supply of natural gas as a “geopolitical weapon”.

Jake Sullivan, the United States national security advisor to President Biden, told the BBC that Moscow was “exploiting” Europe’s energy crunch.

This is an overwrought, convoluted way of interpreting what is normal economic interplay of supply and demand. But the irrationality betrays an obdurate mindset of Russophobia that is untenable. If politicians and experts are so possessed of such foolish bigotry then their assessments on the subject and much else besides are hopelessly unreliable.

Europe’s current energy crisis and market turmoil have nothing to do with Russia as a primary factor. The pent-up demand after a year of economic quiescence due to the coronavirus pandemic, the low storage of natural gas by European countries due to government policies, the switch to renewable energy sources not being able to meet demand, and the approach of winter – have all compounded the overall supply of gas. This has, in turn, caused benchmark prices for the fuel and other forms of energy to skyrocket. Gas prices are up more than five-fold. What has that got to do with Russia? Nothing, at least in causality.

Russia is historically Europe’s biggest supplier of natural gas. It accounts for about 40 percent of the continent’s consumption. As President Putin pointed out this week, Russia’s state-owned Gazprom has met all its contractual deliveries of natural gas to Europe.

The allegation from some quarters that Russia is withholding gas supplies to Europe in order to exert political pressure on Europe is a baseless lie that stems from anti-Russia prejudice and propaganda.

The fact is Europe is faced with an energy crisis – partly of its own making – and Russia is able to alleviate it by increasing its already substantial supply of natural gas. What is there to complicate about a straightforward economic relation?

This week saw a technical step being completed for the opening of the new Nord Stream 2 pipeline from Russia to Germany and the rest of Europe. The new pipeline will greatly expand the existing flow of Russia gas to the European Union. German regulatory authorities are reviewing the new supply route and it may take a few months for delivery to become operational. The ball is in the EU’s court. If Europe wants more Russian gas that is its prerogative. How is that supposed to be Russia holding someone hostage? The slander is not only insulting, it is moronic.

Russia has proven to be a reliable supplier of energy to the rest of Europe over several decades, including during the former Cold War period when Western ideologues demonised the Soviet Union as an “evil empire”. Russia presently is ready to meet increased demand with a new supply route under the Baltic Sea while also honouring existing contracts for overland transit. The notion that Ukraine will lose out on transit fees is groundless as Moscow has repeatedly stated it will honour existing contracts with Ukraine up to 2024. Russia is not obligated to keep paying transit fees indefinitely if logistically more efficient supply routes are innovated. That is a reasonable exercise of Russia’s or any nation’s sovereign right.

The main obstacle to improving efficiency in energy trade between Russia and Europe is the negative political attitude of certain European politicians and successive American governments. Washington and its European surrogates have been playing anachronistic Cold War politics with a matter of vital interest for the whole of Europe. The Nord Stream 2 pipeline should have been completed over a year ago but was not only because of U.S. sanctions and the negative attitude of eastern European states. The irony is that the detrimental impact of Europe’s energy crisis on households and industries is attributable to the irrational objection by Washington and certain anti-Russian European states towards Russia as a natural strategic partner with Europe. Yet these culprits persist in their perversely pejorative mindset towards Russia, accusing the latter of wielding energy trade like a geopolitical weapon.

It is the United States that is cynically using Europe’s energy market as a geopolitical weapon with a view to selling its own expensive and environmentally dirty liquified natural gas. There is also a bigger ideological aspect to all this skulduggery. If Russia and Europe were permitted to develop their naturally mutual partnership in energy trade the consequence would undermine the contrived propaganda construct of Russia as a “threat” to European security. That construct is vital to maintain for the purpose of promoting the U.S.-led NATO military alliance and lucrative American weapons sales to Europe. It is also vital for Washington’s hegemonic influence over European allies by polarising relations with Russia.

Europe’s energy crisis and Russia’s readiness to alleviate vividly demonstrates a fundamental win-win partnership. That reality has become so obvious that objections to the relationship look increasingly irrational and ridiculous from their congenital Russophobia.

US sanctions are planned to hit European companies involved with Russia’s Gazprom in the construction of the 1,225-kilometer pipeline under the Baltic Sea which will deliver natural gas from Russia to Germany and elsewhere across the European Union. The €9.5 billion ($11bn) project is 80 per cent complete and is due to be finished early next year.

It is quite clear – because US politicians have openly acknowledged it – that Washington’s aim is to oust Russia as the main natural gas exporter to the giant EU market, and to replace with more expensive American-produced gas.

What’s hilarious is the way American politicians, diplomats and news media are portraying this US assault on market principles and the sovereignty of nations as an act of chivalry.

Washington claims that the sanctions are “pro-European” because they are “saving Europe from dependency on Russia for its energy”. The American hypocrisy crescendoes with the further claim that by stopping Russia earning lucrative export revenues, then Moscow will be constrained from “interfering” in European nations. As if Washington’s own actions are not interference on a massive scale.

European politicians and businesses are not buying this American claptrap. The vast overstepping by Washington into European affairs has prompted EU governments to question the nature of the trans-Atlantic relation. About time too. Thus, Washington’s hubris and bullying are undermining its objective of dominating Europe for its own selfish interests.

Russia, Germany and others have defiantly told Washington its weaponizing of economic sanctions will not halt the Nord Stream nor the Turk Stream projects.

As German Foreign Minister Heiko Maas said earlier this month, “it is unacceptable” for the US to brazenly interfere in European and Russian energy trade. The American pretext of supposedly “protecting” the national security of its purported European allies is frankly laughable.

The American agenda is a blatantly imperialistic reordering of the energy market to benefit US economic interests. To pull off this audacious scam, Washington, by necessity, has to demonize and isolate Russia, while also trampling roughshod over its European allies. Europe has partly aided this American stitch-up of its own interests because it has foolishly indulged in the US antagonism towards Russia with sanctions due to the Ukraine conflict, Crimea and other anti-Russia smears.

The legislation being whistled through the American Congress by both Republicans and Democrats (collectively dubbed the War Party) is recklessly fueling tensions between the US and Russia. In trying to gain economic advantages over Europe’s energy, Washington is wantonly ramping up animus towards Moscow.

Apart from the sanctions against Russian and European companies partnering on Nord Stream, the US Congress passed separate legislation which seeks to boost American oil and gas production in the East Mediterranean.

A Radio Free Europe report this week was headlined: ‘Congress Passes More Legislation Aimed At Curbing Russia’s Energy Grip On Europe’.

The headline should more accurately have been worded: ‘Congress Passes More Legislation Aimed At Bolstering America’s Energy Grip On Europe’.

The RFE report states: “The bipartisan Eastern Mediterranean Security and Energy Partnership Act, which was approved on December 19, is the latest piece of US legislation passed this year that aims to diversify [sic] Europe’s energy sources away from Kremlin-controlled companies.”

Again, the American double-think is jaw-dropping. Such is the arrogance of a flailing, delusional empire when it can publicly justify with a straight face an energy-market-grab with a veneer of virtue.

US oil and gas giants are moving into the East Mediterranean. Exxon Mobil announced the discovery of a major natural gas field off Cyprus in February this year. American firms are also partnering with Israeli companies to begin gas production in the Leviathan Field located off the coast at Haifa.

There is no doubt that the US sanctions targeting Nord Stream and Turk Stream are part of a bigger concerted pincer movement by Washington to corner the EU energy market of 500 million consumers (more than double the US population).

Colin Cavell, a US professor of political science, commented to Strategic Culture Foundation: “What should be hammered down in this continuing debate over which country will be able to deliver oil and natural gas to Europe is the fact that neither the United States nor, and especially, the Republican Party, stand for so-called free trade.”

Free-trade capitalism is supposed to be an ideological pillar of the US. In this ideology, governments should not interfere with market supply and demand. But paradoxically as far as US-imposed sanctions on Russian-European energy companies are concerned the American Congress is “quintessentially anti-free market”, notes Cavell.

In its shameless profiteering, Washington is acting aggressively towards Russia and Europe while flouting its own supposed economic principles and relying on brute force to win its arguments. America’s imperialist agenda towards Europe and Russia is how world wars are instigated.

There is a large group of US lawmakers chomping at the bit to support anything that would bring Europe to heel and hurt Russia. Their target is the Nord Stream 2 gas project that has a pipeline running under the Baltic Sea from Russia to Germany with an annual capacity of 55 billion cubic meters. That joint venture between Russian energy giant Gazprom and the French company Engie, Austria’s OMV AG, the British-Danish Royal Dutch Shell, and Germany's Uniper and Wintershall is expected to be operational by the end of 2019. The US president has the authority to impose sanctions on the project under the CAATSA sanctions law, but there is a risk that he will not. And so some US lawmakers believe that should be rectified by making those punitive measures mandatory.  

On July 18, Senator John Barrasso (R-Wyo.) introduced a bill, co-sponsored by Sens. Cory Gardner (R-Colo.) and Steve Daines (R-Mont.), to allow NATO member states to — in his words — “escape from Russia’s political coercion and manipulation.” That’s too much of a good thing, but then nobody in Europe asked for such “help.”  The senator’s website claims “the Energy Security Cooperation with Allied Partners in Europe Act, or the ‘ESCAPE Act,’ enhances the energy security of NATO members by providing those countries with reliable and dependable American energy. It also mandates sanctions on the Nord Stream II pipeline that would carry natural gas from Russia to Germany, along with other Russian energy export pipelines.”

In short, the legislation is intended to provide Europeans with guidance on what to do, as they clearly lack the ability to understand what’s good for them without the benefit of highly valuable advice from overseas. They just fail to see the need to “diversify their energy supplies and routes in order to enhance their energy security,” as that insidious “Russian President Vladimir Putin uses his country's natural gas to ‘extort and threaten’ US allies.” Gullible enough to be easily manipulated, Europeans are too short-sighted to realize they are being “threatened.”  America’s Republican senators know better.

Take Germany for instance. It receives between 50-75% of its gas supplies from Russia. US President Donald Trump lambasted Berlin at the July NATO summit for its reliance on Russian oil and gas supplies, which are "inappropriate" and make Berlin "captive" to Moscow. This can’t go on and their American friend is determined to put an end to it and shore up the president’s tough stance with legislation.  Gas makes up only around 20% of Germany’s total energy mix, but the Americans are happy to ignore that inconvenient fact.

Mr. Barrasso wasted no time launching an effort to save his friends from falling into the trap laid by those wily Russians who dare to offer the stable, cheap energy that Europe needs so badly to boost its economic performance. The best way to do it is to punish the EU (for its own good), by authorizing mandatory sanctions on the Nord Stream 2 gas project, while promoting America’s liquefied natural gas (LNG) exports. The legislation includes a number of requirements that force the administration to exert pressure on the Europeans. “Lending a helping hand” to those who aren’t asking for it is a way to strong-arm them into compliance.

The US policy obviously runs counter to the interests of the EU, which does not need the US LNG at all, as its members are linked via pipeline to Russia, Norway, and Algeria. That’s cheaper and much more reliable.  Europe is far from being fully dependent on Nord Stream. It has competitive options, but Europe’s demand for gas is growing, which emphasizes the importance of lower prices. The Russian gas delivered under the sea can offset the declining production in the UK, Netherlands, and Denmark. It should be noted that Nord Stream 1 was already being utilized at full capacity in 2018. Europe will need an additional 120 billion cubic meters (bcm) of imported gas by 2035.

Russia’s gas exports to Europe rose 8.1% last year to a record level of 193.9 billion cubic meters (bcm), despite growing competition. More than 670 companies from 23 countries are involved in the project. As a result of these investments, Germany alone will benefit economically to the tune of over two billion euros and 13,000 full-time jobs. This positive effects will be even greater during the construction phase. Things may change as time goes by, but at present LNG is not as economically attractive as piped-in gas, because of the time needed for transportation by sea, regasification, and storage. Europe needs to spend money to construct facilities in order to increase the number of ports able to receive and reprocess the LNG. That’s a lot of time and effort. 

Europe’s right to make its own decisions is at stake as the ongoing battle over Nord Stream 2 heats up. It has the tools to stand up to America’s pressure. There is no doubt the bill will be pushed through Congress via an expedited process, but it can be fought. A strong European resistance could make US lawmakers think twice before throwing their support behind a bill curtailing the US president’s foreign-policy prerogatives. This is the time for the EU to stand tall and refuse to bow to outright pressure. The choice is between a strong and independent Europe that is able to defend its own interests and independence or a puppet on a string dancing to Washington’s tune. 

Austria was the first Western nation to enter into a gas-supply agreement with the Soviet Union in 1968. Today Russia is responsible for roughly 60% of Austria’s gas imports. Last year this trade was valued at $4.1 billion, an increase of 4.5%, while Russian exports to Austria grew by 78.9%. to $1.9 billion. Despite the sanctions, Russia’s imports from Austria also expanded by 18.5%, to reach $2.2 billion. Russia’s total investments in Austria were worth $22.9 billion as of mid-2017, and Austria held $4.7 billion of investments in Russia. Austrian companies have no plans to cut back on their business activities in Russia. Vienna strongly supports the Nord Stream 2 offshore project to supply Europe with cheap natural gas via the Baltic Sea.

The Austrian government pursues an independent foreign policy, opposing the EU leadership on such issues as migration and what it believes to be excessive interference in the internal affairs of the bloc’s member states. It has also formulated its own policy toward Russia.

In July Austria takes over the EU rotating presidency for six months. Its government wants to use this opportunity to build some bridges between Europe and Russia. The Freedom Party (FPÖ), a part of the ruling coalition, has on many occasions called for an end to the sanctions imposed against Russia by Brussels. An FPÖ delegation visited Crimea in 2017.

Vienna refused to join the over 20 EU member states that expelled Russian diplomats over what is being called the Skripal case. During President Putin’s talks with Austrian Chancellor Sebastian Kurz and his meeting with President Alexander Van der Bellen on June 5, both sides seized the opportunity to emphasize their desire to boost bilateral relations. Mr. Kurz called Russia a superpower with which he’d like to “keep the channels of communication open.” The Austrian chancellor chose Russia as his first non-EU destination after he took office in December 2017. That visit took place in February.

There are signs that the EU-Russia relationship is beginning to gradually recover, given the deepening rift dividing Europe and the US, including the recently unleashed trade war. Austrian Vice Chancellor Heinz-Christian Strache, who also heads the Freedom Party (FPÖ), believes that lifting the anti-Russian sanctions would be the right thing to do in response to the US imposition of tariffs on aluminum and steel imports from the EU. Last year, the Austrian party signed a partnership agreement with the United Russia party, which enjoys a majority in the Russian parliament. Some prominent members of the FPÖ support the unification of Crimea with Russia.

Austria’s neighbors, including Hungary, Slovenia, and Italy, are also frustrated with the EU, especially regarding its stance on the influx of immigrants. They are concerned about US policies and want to improve relations with Russia. Sebastian Kurz may use his upcoming EU presidency to lead the emerging group of states that long for change.

All this brings to mind the words of French President Emmanuel Macron, who told Le Journal du Dimanche in May that he opposes the idea of isolating Russia and wants to be a link that can connect Russia with Europe. Marine Le Pen, the head of the French National Rally party, sees Putin’s visit to Vienna, along with the rapprochement between Hungary and Italy, as the beginning of the process of Europe’s liberation. On June 5, Italian Prime Minister Giuseppe Conte told the Italian Senate that his government wants the anti-Russian sanctions to be revised, with no strings attached. “We will be the advocates of an opening towards Russia,” he said, opening a rift within the EU over the issue. He’ll make his stance known during the G7 summit June 8-9 in Canada. Conte’s remarks coincided with Putin’s visit to Vienna. Matteo Salvini, the interior minister and leader of the Northern League, which is a part of Italy’s ruling coalition, said that he was an admirer of the Russian president, and believed Mr. Putin was “one of the best statesmen.”

The shifting political winds in Europe are paving the way for positive changes, moving toward normalizing the ties between the EU and Russia. Obviously Vladimir Putin does not lack friends in Europe.

Gas exports to Europe present exciting opportunities but supplies from Russia are cheaper and more reliable. So the US needs to get rid of the obstacle in its way — the Nord Stream 2 (NS2) pipeline, which will carry natural gas from Russia to Germany. Washington will do anything to achieve this cherished goal.

On March 15, a bipartisan group of 39 senators led by John Barrasso (R-WY) sent a letter to the Treasury Department. They oppose NS2 and are calling on the administration to bury it. Why? They don’t want Russia to be in a position to influence Europe, which would be “detrimental,” as they put it. Their preferred tool to implement this obstructionist policy is the use of sanctions. Thirty-nine out of 100 is a number no president can ignore. Powerful pressure is being put on the administration. Even before the senators wrote their letter, Kurt Volker, the US envoy to Ukraine, had claimed that NS2 was a purely political, not commercial, project. No doubt other steps to ratchet up the pressure will follow.

Their loyal friends in Europe chimed in almost simultaneously with the US lawmakers. Polish Foreign Minister Mateusz Morawiecki has proven himself to be a master at telling horror stories about the scariest things that might happen once the pipeline is up and running. On March 2, the speakers of parliament in Ukraine and Moldova signed a letter addressed to the chairs of the parliaments of the EU countries, warning about the repercussions. This is “a destabilizing factor” that will weaken Europe, they exclaim. Of course it is. Paying more for gas brought in on ships that can change course to head for a new destination if the price of gas elsewhere becomes more alluring will naturally make Europe stronger. Good reasoning!

On March 11, the leaders of the parliaments of Poland, Latvia, and Lithuania signed another open letter to the parliaments of the EU states to warn them against the construction of NS2. It’s not a commercial project, they say, it’ll make you dependent on Russia. "Gazprom … is not a gas company but a platform for Russian coercion", affirms Anders Fogh Rasmussen, a former head of NATO who now works as a consultant for Ukraine. Estonia has also joined the choir as one of the strongest critics of Nord Stream. The European Commission opposes the project too, but lacks the legal grounds to prevent private investment from flowing in.

Europe needs this commodity and Russia sells it. What makes this “not a commercial deal”? Dependence? From this perspective, any customer who makes a choice then becomes “dependent” on the vendor. Who is keeping them from getting gas from other sources? The sea lanes are all open, if they need to use them. Poland and Lithuania have already built terminals for liquefied gas. But it’s more expensive and the prices in the Asia Pacific region make that market more attractive. To woo US shale-gas exporters Europeans will have to pay more. Don’t they have the right to choose what suits them best?

As practice shows, writing letters is not enough. There are “stubborn” leaders at the helms of some European states who dare to put their national interests first. Just think about it! If “America First” is fine as a slogan, then what’s wrong with an “Austria First” policy? One daring young man who is protecting the interests of his country is Austrian Chancellor Sebastian Kurz. He openly supports the Nord Stream 2 project. And he is not alone. Germany continues to back it despite the pressure. Chancellor Angela Merkel believes that the NS2 project “poses no danger to diversification.” The German-based think tank ewi Energy Research & Scenarios has estimated that the project “has a price decreasing and welfare enhancing effect in the EU-28 overall.”

But Washington could not care less about its allies, which is clear from its opposition to this project. Its interests are self-centered. The US is not only promoting its liquefied gas supplies in Europe but is also trying to make it easier to pay for its plan to keep Ukraine in its orbit to use as a springboard right on the Russian border. Nord Stream 2 will make the gas-transit route via Ukraine redundant, depriving that country of much of the €1.8 billion (nearly 2% of its GDP) it earns annually in transit fees. The blow to the Ukrainian economy would undercut the US and EU’s financial support for Kiev. In addition, the revenue from NS2 would mean profits for Russia, thus softening the impact of the West’s sanctions. The European countries that vehemently oppose NS2 also want the US military based on their soil. And even if that presence is already there, they want more of it.

Europe is split over a lot of issues, but in the EU, NATO, and the Council of Europe there is a pro-American camp ready to dance to the US tune. And Poland and the Baltic States are happy campers. Whatever happens, they’ll snap to attention, click their heels, salute, and do as they’re told by Washington. As a result, their taxpayers will pay for US weapons although less costly and more efficient systems could be acquired elsewhere. And it is the ordinary people who’ll have to shell out for US shale gas shipped by sea instead of the much cheaper supplies coming from Russia. It’s just as simple as that. European taxpayers will have to pay for this “America First” policy unless the governments of such European states as Germany and Austria stand tall and refuse to bow to pressure.

Russian President Vladimir Putin believes that the world is witnessing an increasing number of examples of politics crudely interfering with economic, market relations. In his address to the final plenary session of the 14th annual meeting of the Valdai Discussion Club on October 19, Putin said “Some do not even conceal that they are using political pretexts to promote their strictly commercial interests. For instance, the recent package of sanctions adopted by the US Congress is openly aimed at ousting Russia from European energy markets and compelling Europe to buy more expensive US-produced LNG although the scale of its production is still too small.”

The US is striving to control the EU decision-making process. According to Washington’s logic, building a pipeline to reduce costs and raise reliability and efficiency proves that Russia is politically motivated, unlike the US with its new law adopted to pave the way for American LNG exports to Europe using coercive measures! The US staunch allies ready to cede economic profits for Washington’s friendship – Poland, the Baltic States, and, since recently, Denmark – are mobilized to hinder Nord Stream-2. Not an EU member, but a member of Energy Community, Ukraine also goes to any length to obstruct the project.

Poland tried to reverse the EU decision through courts but to no avail. In July, a court in Duesseldorf, Germany, lifted restrictions on Russian gas company Gazprom’s access to the German Opal gas pipeline, online documentation by the court showed, echoing a ruling on July 21 by the European Union General Court.

Defying the US pressure, the EU exempted OPAL gas pipeline (delivering gas from Russian Nord Stream to Europe) from the Third Energy Package after 6 years of debates. The decision opened the way for Russian plans to expand Nord Stream’s capacity and bypass both Ukraine and Poland as a gas transit route. The Western companies have immediate interests in Nord Stream 2, which is a joint venture between Gazprom (50% share) and five of the largest European energy companies: E.ON, OMV, Shell, BASF/Wintershall and Engie (each 10% share).

Actually, this is a déjà vu story. Washington has a long history of meddling into European energy policy. The Yamal and Nord Stream 2 gas projects present several striking similarities. In 1980-81, the Yamal pipeline (Urengoy-Pomary-Uzhgorod) project was presented to be negotiated between the Soviet Union (Soyuzgazexport) and Western Europeans (Ruhrgas and Gaz de France). Back then, West Germany’s Chancellor Helmut Schmidt was willing to preserve the achievements of Willy Brandt’s Ostpolitik. The USSR and West Germany concluded an agreement on the deal in November 1981.

The joint project was fiercely fought by President Ronald Reagan. He saw Yamal through geopolitical lens and considered it one of Soviet Union’s significant tool aimed at spreading Moscow’s influence over the Europeans, and in particularly over NATO. The US launched a coordinated diplomatic offensive aimed at convincing European allies to abandon their participation in the Yamal project. It offered to supply the West Germany with energy in the form of coal, but his proposal was turned down as not viable economically.

Those were the days of great tensions between the West and the East marked by NATO’s deployment of intermediate range ground-based missiles in Italy, the UK, West Germany, the Netherlands and Belgium. In 1979, the USSR launched an operation in Afghanistan.

The US insisted the Yamal project threatened NATO security just like nowadays Nord Stream-2 does amid the Russia-West divisions over Ukraine and a host of other issues. President Reagan used the geopolitical tensions as a pretext to deprive the Soviet Union of profits. With Germany refusing to bow, the US administration used the Polish crisis in 1980-1981 to impose sanctions banning sales of equipment to the USSR.

In December, 1981, President Reagan banned all the gas and oil equipment and technology exports produced in the United States to the Soviet Union. In June, 1982, the US administration announced the extension of the sanctions on all foreign companies exporting equipment involving American technologies. The US sanctions drove a wedge between the United States and its Western European allies, as the latter refused to follow the lead. The landmark deal went through to be joined by France, Austria and Italy. West German, French, Italian and British companies won multi-million contracts for pipes and various equipment orders. The America embargo was lifted in 1982. In 1984, the Yamal pipeline became operational to benefit all.

Today, the US uses Ukraine instead of Poland but the goal and the methods to achieve it remain the same.

If Germany had not had the advantage of stable gas supplies from Russia, it would not have become the locomotive driving the European economy and the EU leader defining the decision making process. Other European countries have also gained a lot. Today, the demand for Russian gas keeps on growing to make Moscow increase supplies via the pipeline going through Ukraine and Nord Stream. Europe badly needs the stable supplies, if it wants to achieve economic progress. To protect its vital interests it has to defy the United States. The history appears to repeat itself.

There is also a second plane, however, where everything looks different. During bilateral talks with Russian representatives, the EU member countries voting at their summits to extend sanctions against Russia are increasingly questioning the detrimental effect of the ‘sanctions war’ unleashed by Brussels on the interests of their countries. Just a couple of years ago, there were very few such statements. Today, however, Europe is starting to realise that the lack of trust between Russia and the European Union is not benefiting either side.

Austria – one of the engines of European integration that has, at the same time, maintained its historical and privileged relations with the countries of Central and Eastern Europe, not to mention Germany – is playing an important role in this reassessment of values. Therefore, the mood in Vienna can boldly be projected onto the processes currently under way both within German politics and in the countries of the former Eastern Bloc and the Balkan region.

This mood is being expressed to some extent by Austria’s charismatic and ambitious foreign minister, 30-year-old Sebastian Kurz. In January 2017 he visited Moscow, where, following talks with his Russian counterpart Sergey Lavrov, he stated that the economic sanctions against Russia could be «lifted at any time by a unanimous decision of the 28 EU Member States». Whatever the intention behind these words, they reflect a reaction to the damage that the ‘sanctions war’ is inflicting on relations between Austria and Russia. The potential for cooperation between these two countries in the economic and investment sectors cannot be overemphasised. First and foremost, this includes the gas energy sector, transport infrastructure development, and the high-end engineering sector.

The possibility of transforming the Central European Gas Hub in Baumgarten, Austria, into Europe’s largest gas hub capable of handling pipeline gas supplies to the countries of Central, Eastern and Southern Europe is an absolute priority and is at the heart of relations between Austria’s OMV AG and Russia’s Gazprom. In 1968, OMV became the first Western company to enter into a long-term contract for the supply of gas from the USSR to Europe, and today it is Gazprom’s main partner in Austria and one of the key stakeholders in the Nord Stream 2 pipeline construction project.

Working meetings and talks between Alexey Miller, Chairman of the Gazprom Management Committee, and Rainer Seele, Chief Executive Officer at OMV, have become fairly regular in recent years. The most recent such meeting took place on 20 April. After addressing issues related to the development of bilateral cooperation, the meeting’s participants noted that Austria continues to increase its gas imports from Russia amid Europe’s growing demand for Russian gas in light of the region’s declining indigenous production. Between 1 April and 19 April 2017, Gazprom’s exports to Austria were 69.9 per cent higher than in the same period of 2016. The heads of Gazprom and OMV also reiterated the importance of Nord Stream 2 for ensuring reliable gas supplies to European consumers.

In terms of a more general trend, in 2016 Gazprom exported 6.1 billion cubic metres of gas to Austria – 37.9 per cent more than in 2015. Price dynamics are also bolstering this trend. Mario Mehren, the CEO of Germany’s Wintershall, predicts that «Russian gas prices will shortly fall below the price of LNG from the US or Qatar», and that «pipeline gas will remain the cornerstone of gas supplies to Europe for a long, long time to come».

At present, cooperation between the heads of Gazprom and OMV is also regulated by the Basic Agreement on Asset Swap signed on 14 December 2016. In accordance with this agreement, Gazprom will receive a 38.5 per cent stake in OMV Norge AS, a company focused on geological exploration and production in Norway, and OMV will obtain a 24.98 percent stake in the project for developing Blocks 4 and 5 of the Achimov formation in the Urengoy oil, gas and condensate field.

Another promising area of bilateral cooperation is Russia and Austria’s joint investment and project activities to build a broad-gauge railway line between Kosice and Vienna. The integration of this project into the Europe-Asia transcontinental freight system through Russia could turn Austria into a key logistics centre for Central, Eastern and Southern Europe.

In 2010, a corresponding project put forward by Russian Railways was endorsed by the political leaders of Russia, Austria and Slovakia. The project involves the construction of a 1520 mm gauge railway through Slovakia following the Kosice-Bratislava-Vienna route at a cost of around €5 euro. By 2025, the volume of traffic along the Kosice-Bratislava section of the new broad-gauge line could reach 23.7 million tonnes and allow for 18.5 million tonnes of freight traffic between Bratislava and Vienna. The total length of the railway line will be around 500 km.

The aim of the project is to connect Central Europe’s railway system to the Trans-Siberian railway and encourage freight traffic between Asia, Russia and Central Europe. When completed, the project will prevent overloading at stations connecting Europe’s railway lines to the broad gauge track. According to Russian Railways’ calculations, the project will also halve delivery times from Europe to Asia compared to the sea route (from 30 days to 14 days).

A number of European countries are gravitating towards the planned railway line including Slovakia, Austria, the Czech Republic, Hungary, Germany, Switzerland, Italy, Slovenia, Serbia, and Croatia. An analysis of the locations of natural resources and the markets for finished goods shows that the geography of the 1520 mm broad gauge line will be of huge benefit to transport operations between Europe and Asia. Manufacturers and suppliers will save between $100 and $1000 on the transportation of a single standard container. Both containerised cargo and raw materials (iron ore, ferrous metals etc.) will be transported along this line to Europe, and in the opposite direction will be predominantly containerised cargo.

Yet another promising area of bilateral cooperation between Russia and Austria is the high-tech manufacturing segment of heavy engineering associated with hydropower and the supply of related equipment and materials, in which the cooperation between Russia’s RusHydro and Austria’s Voith Hydro plays a central role. In November 2013, before the start of the ‘sanctions war’, the management of RusHydro approved a loan agreement for €200 million secured by Oesterreichische Kontrollbank Aktiengesellschaft to modernise the Saratovskaya hydropower plant. This is being carried out in cooperation with Voith Hydro and involves the comprehensive modernisation of the hydro turbines in accordance with the agreements signed between RusHydro and Voith Hydro in 2012 and 2013. Over the next 10 years, five hydro-turbine units will be replaced with new turbines. The cost of the entire Saratovskaya HPP modernisation project being carried out by RusHydro in partnership with Voith Hydro is estimated at €1 billion and it should be completed by the end of 2025.

Lukoil’s acquisition of OMV’s loss-making lubricant blending plant is another example of a successful bilateral cooperation between companies in Russia and Austria. By taking advantage of the relative cheapness of Russian oils, the deal has turned the plant from loss-making to profitable, created new jobs, and provided the conditions for the subsequent promotion of Lukoil-OMV oils on global markets. At the same time, Lukoil’s production facility in Austria has been certified as conforming to the German Association of the Automotive Industry’s VDA 6.3 standard and classified as a ‘Grade A Supplier’, the highest certification level, confirming the willingness of German car companies to fill the cars on their assembly lines with Lukoil oil.

It goes without saying that all of this merely reinforces the positions of those political forces in Austria who are fully aware of how much their country could benefit from the development of economic cooperation opportunities with Russia. The significance of these opportunities goes far beyond bilateral relations, and business people, unlike political demagogues, understand this very well. Noting that «Austria maintains good relations with Moscow», there is good reason why the influential Swiss newspaper Neue Zuercher Zeitung called Vienna «a neutral intermediary» in the rebuilding of relations between Russia and the West.

The problem is that politics is entering into a dispute with economics and is slowing it down – insofar as the policy parameters of the EU member states are determining the anti-Russian policy of the EU’s central institutions. There are indications, however, that Austria no longer considers this flawed political paradigm to be the only option. And that is the subject for a separate discussion.

Gazprom had only planned to export between 166 and 170 billion cubic meters of gas in 2016 (in 2015, 158.56 billion cubic meters of gas were delivered to non-CIS countries).

But even this new high is not the limit. Gazprom’s latest calculations envision a further uptick in shipments in 2017, and those will primarily be to the European Union. The key factors here are, first and foremost, the weather conditions (this winter promises to be a more severe one in Europe than last year), and second – the jump in demand for gas in Europe that has been seen in recent months in the face of lower domestic production in EU countries.

The biggest consumers of Russian gas are still Germany (47.4 billion cubic meters in 2015), Turkey (27 billion), Italy (24.4 billion), Great Britain (22.5 billion), and France (10.5 billion). And Russian gas shipments play a very important role in ensuring the energy security of Southeastern Europe. In 2015 Bulgaria purchased 3.1 billion cubic meters of gas from the companies that make up the Gazprom Group, while Greece bought 2 billion cubic meters, Serbia – 1.9 billion cubic meters, and Croatia – 0.6 billion cubic meters.

The market price for Russian gas has taken some interesting twists and turns. It is worth noting that that figure has risen right along with the increase in supply. This proves once again that the close interdependence of European consumers and Russian energy suppliers is «overriding» the market formula: simultaneous growth in both supply and price is an atypical phenomenon in a market environment, however, it proves once again that any moves aimed at «replacing» Russian gas or «displacing» Russia from the EU gas market might be disruptive for Europe’s energy sector.

The attempts by some countries to block Russian gas supplies look particularly irrational in this context. This primarily applies to Poland, which rushed to the European Court to appeal the European Commission’s decision to allow Gazprom greater access to the OPAL pipeline that links Nord Stream with the gas-transit system of Central and Western Europe.

The Polish media cites the official spokesperson for the Polish Ministry of Finance, Joanna Wajda, in its reports that Warsaw has already asked the European Union to suspend the implementation of the European Commission (EC) decision. The EC’s official reaction to this proposal is still unknown, but it will be interesting to see.

The OPAL gas pipeline has a capacity of 36 billion cubic meters of gas per year, but Germany’s network regulator has only been permitting Gazprom to use 50% of that, meaning that it can pump no more than 18 billion cubic meters of gas annually. The European Commission ruled in October (which should take effect on Jan. 1, 2017) that Gazprom may bid for the right to pump another 7.7-10.2 billion cubic meters of gas through that pipeline, thus using an additional 21-28% of OPAL’s capacity.

In light of these developments, it is hard to see the position being taken by Poland – and by those in solidarity with Warsaw over this matter (or who are clearly urging that country to embark on such initiatives) – as anything but a deliberate attempt to jeopardize Europe’s energy security in order to keep gas flowing through Ukraine, so as not to threaten the survival of the regime in Kiev that is close to bankruptcy and desperately in need of that revenue in order to survive. This political objective entirely trumps any rational economic considerations.

Poland has begun criticizing not only Russia and the European Commission but also Germany over the question of gas transit through Ukraine. The Polish online news site Biznes Alert has accused the German Federal Network Agency (Bundesnetzagentur) that manages the operation of gas pipelines of colluding with Gazprom and the German companies that «trade Russian gas that passes through OPAL».

Polish politicians and the media are not displaying much ingenuity in their attempts to claim that the sun is really the moon. However, if Gazprom’s export capacity and the real picture in Europe’s energy markets are being weighed on one side of the scale, while on the other side is the political flap over the question of gas shipments through Ukraine, European countries are unlikely to act against their own interests in order to back plans being made by Warsaw and its overseas handlers. After all, this could be a really harsh winter.

The coming cold on the Continent, coupled with forecasts predicting a winter of unprecedented severity, has led to a chain of unexpected events in the energy industry. For example, there was the unexpected news that the European Union had made concessions to Gazprom by offering expanded access to the OPAL onshore gas line that connects to the Nord Stream pipeline. This decision will entitle Gazprom to the exclusive use of 50% of the gas line’s capacity and allow it to independently purchase the rights to an additional 40% from the pipeline operator. Exempting the OPAL gas pipeline from the rules of the EU’s Third Energy Package opens up new possibilities for the Nord Stream 2 project.

At almost the same time, reports emerged that an antitrust case against Gazprom had been settled. This feels like a package deal in which Gazprom has managed to maintain what is essentially a monopoly on the EU market in exchange for surrendering some of its basic principles. For example, Gazprom will likely lift restrictions on cross-border resales of its gas within the EU, meaning that it will turn a blind eye toward “virtual reverse flows” of Russian gas.

In anticipation of abnormally cold weather, Brussels is ready to do anything to ensure that winter gas shipments to the EU are not disrupted by the actions of a third party such as the transit country of Ukraine. The first snows of the season offer a reminder each year of that country’s role and position within the international gas-shipping network. This is why President Putin, speaking at an Oct. 27 meeting of the Valdai Club, expressed his unease about the way in which Ukrainian gas is being pumped into underground storage facilities. “We are concerned about what is currently happening in regard to the energy factor -which is quite important – in Ukraine… The necessary amount of gas needs to be pumped into underground storage facilities in order to ensure uninterrupted deliveries to Europe. And that gas is intended for transit, not domestic consumption,” stated Putin. He claims that currently not enough gas has been pumped into storage. And yet Putin has stipulated that if Kiev runs into problems, Russia is ready to provide them with all the gas they want in exchange for payment in advance.

These fears are justified. As the winter heating season is beginning, there are 14.7 billion cubic meters of gas stored in Ukraine’s underground storage facilities (filling them to 49% of total capacity), but Kiev has announced a halt to the gas pumping. And since autumn’s cold weather arrived a month earlier, Ukraine has already begun to tap into those tanks. In 2015, Ukraine entered its winter heating season with reserves of 17.5 billion cubic meters, which has been the minimal level for many years. The country really needs 20-22 billion cubic meters to be safe, since quite a bit more will be consumed during a truly cold winter.

Another alarming fact: the sharp drop in the volume of Russian gas that is traveling through Ukraine. European consumers obtained 104.2 billion cubic meters via the Ukrainian gas-transportation system (GTS) in 2011 and 84.2 billion in 2012. That went up to 86.1 billion in 2013, but had plunged to 59.4 billion cubic meters by 2014. And if the quantity of transiting gas falls below 60 billion cubic meters, the GTS begins to lose money. It’s possible that Ukraine, instead of earning $2 billion in profits from its role as a transit route for Russian gas, could instead be forced to actually pay for the transit of gas to Europe. In that case a big question arises: would Ukraine provide this transit at all?

These fears are reinforced by the condition of the Ukrainian gas-transportation system. Experts estimate that the gas pipeline through Ukraine will no longer be usable by 2020 – about $10 billion needs to be invested in it immediately.

And Brussels has generally always understood that Russia is the only reliable source of fuel. One can only play politics without fear of punishment as long as there is no threat of extreme cold. Currently the policy makers’ pragmatic logic holds the upper hand: Ukraine can be sacrificed as a player in the gas market (it is itself doing all it can to ensure this), and it’s always nice to have new fuel-supply routes. Which, incidentally, is in keeping with the desire to create a network of interconnections all across Europe, since OPAL is connecting the Nord Stream pipeline with JAGAL (Yamal to Europe) on one hand and STEGAL (a Central European transit system) on the other. On the German-Czech border there are plans for the pipeline to link up with the Gazela pipeline in order to plug into the gas-pipeline system of the Czech Republic. This system for intra-European gas distribution requires a robust external source of fuel, and that is destined to be the Nord Stream 1 and Nord Stream 2 system.

Currently, 55 billion cubic meters of gas pass through Nord Stream’s first two lines headed for Europe. And once Nord Stream 2 is operational in late 2019 that figure could increase by another 55 billion cubic meters to 110 billion. Thus, getting access to the OPAL pipeline will make it possible to eliminate Ukraine as a transit zone, while still ensuring that the countries of Central Europe can still get their Russian gas.