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Has The U.S. Lost The Nordstream 2 Battle?

The Nordstream 2 pipeline represents the last stand of U.S. influence over the internal affairs of Europe.

Once finished it will stand as a testament to the fundamental split between the European Union and the United States.

Europe will see this as its first successful defense of its newly-declared independence. And the U.S. will have to come to terms with no longer having control overseas.

This is a theme repeating itself all around the world right now.

Your view of Nordstream 2 depends on who you are.

  • If you are the U.S. it is a massive rebuke of the post-WWII institutional order mostly paid for by the U.S. to rebuild Europe and protect it from the scourge of the U.S.S.R.
  • From Europe’s perspective it’s, “Job well done and all that but Russia isn’t a threat anymore and it is time for us to come out from underneath the U.S.’ shadow.”
  • And if you are Russia, Nordstream 2 is the wedge driving these two adversaries apart while improving national security on your western border.

Europe has imperial ambitions of its own and Nordstream 2 is a very important part of that. Those ambitions, however, are not in line with those in the U.S., particularly under the “leadership” of Donald Trump.

Trump has this strange idea that the U.S. has gotten nothing in return for our running the world these past seventy-odd years. Our massive trade deficit is wealth stolen by our trade partners in Trump’s simplistic mind. Related: Are Oil Markets Too Tight For Trump?

He refuses to see the wealth we’ve ‘lost’ as squandered by decades of corruption, sloth, regulatory over-reach, etc.

And so, to Trump, Nordstream 2 is an abomination because he’s funding NATO to protect Europe from Russia but they then are increasing the amount of gas they buy from that very same ‘enemy.’

And that should tell you where all of this is headed in the long run.

The dissolution of NATO through attrition by both Russia and the EU.

So, no matter how much the U.S. and the anti-Russian forces within European and British society want to stop this pipeline, as evinced by this week’s non-binding vote against it in the European Parliament, there isn’t the appetite in the U.S. to actually do it.

The U.S. Senate has no interest in telling the President to sanction the companies building Nordstream 2. It may not stop Trump from doing so anyway.

The real reason Trump won’t sanction Nordstream 2 is the same reason he will fold to China on trade: dollar liquidity and world trade.

He’s already done enough damage. Now he’s staring re-election in the face with a hostile Federal Reserve.

If he was going to sanction Nordstream 2, he would have. In fact, this vote in the European Parliament is a feeble last gasp to stop the pipeline not the shrewd move of a guy holding pocket aces.

Precisely because the U.S. hasn’t imposed sanctions on it yet this is all we have left, pathetic virtue signaling.

If it’s going to happen it has to be before the European Parliamentary elections in May when we can expect at least a doubling of Euroskeptic representation.

If things continue to spiral out of control in France, Italy hardens even further against the EU and Brexit is postponed Euroskeptics could be the largest block in the Parliament come July.

At that point we’ll see a sincere lowering of the influence of the infamous Soros List in that body and possibly in the European Commission itself. And, if anything, more pipeline deals and investment in Russian energy.

In fact, a Euroskeptic Parliament could lift sanctions on Russia completely. Related: Cuba Faces Oil Crisis As Venezuela Crumbles

Moreover, Ukraine’s upcoming elections will likely bring someone to power not thoroughly beholden to the U.S.’s strategy there.

Between that and Ukrainian parliamentary elections later this year we’ll likely see Ukraine and Gazprom renegotiate the gas transport contract, bringing even more Russian gas to the continent.

And that will only make Trump even madder than he is now. He has staked so much of his overall strategy on the U.S. as a powerful petroleum exporter. He needs markets for that gas.

Europe and China are two obvious ones, but Russia has him outflanked now on both.

The end of this interminably shallow expansion brings the U.S. face to face with an unsustainable fracking boom as debt-servicing spikes demand for the dollar sparking a sharp rise in interest rates.

The shale market will break again.

All of this confirms for me that the Garden Summit last summer between Putin and German Chancellor Angela Merkel laid out their strategy to beat Trump on Nordstream 2 and begin the next phase of relations between Russia and Germany.

Optics are important and this image captures what both parties wanted to convey.  This meeting is the beginning of a shift in the relationship between Germany and Russia for the better.

And the question is why?

The obvious answer is necessity brought about by pressure being placed on both countries by Donald Trump through sanctions and tariffs and their shared interests represented by the Nordstream 2 pipeline.

And all that implies.

By Tom Luongo via Zerohedge.com

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Leave a comment
  • Mamdouh Salameh on March 18 2019 said:
    The US has not only lost the battle for Nord Stream 2 gas pipeline but it has been routed morally, geopolitically and economically. As a result, Nord Stream 2 is unstoppable.

    Morally, the United States’ opposition to Nord Stream 2 was based on false pretences which the Europeans have seen through. In fact, it was mostly motivated by self-interest and partly by geopolitics. A huge part of US opposition to Nord Stream 2 is that it hopes to sell more of its LNG to the European Union (EU). And while the EU is willing to buy US LNG as part of its energy diversification, it is not prepared to buy it at any price.

    Geopolitically, the Nord Stream 2 has become a battle of wills between President Trump and German Chancellor Angela Merkel. Despite threats of sanctions by President Trump against Germany, the German Chancellor stood her grounds and never succumbed to US threats against her country. There is plenty of will in Berlin to go ahead with the Nord Stream 2 project. Mrs Merkel believes that EU energy policies should be determined in Europe and not in Washington. Moreover, President Trump knows that if he imposes sanctions on Germany, the EU has the economic muscle to retaliate against the United States.

    Economically, Germany and Russia have always considered Nord Stream 2 first and foremost an economic project which will bring uninterrupted and cheap Russian gas supplies to Germany and the EU thus ensuring energy security to the whole of the EU. Even if the United States decides to impose sanctions on European companies involved in the financing and the construction of Nord Stream 2, Russian gas giant Gazprom and Germany can finance the project without any need to borrow money. Until US LNG matches the price of Russian piped gas, it stands no chance against Russian gas supplies to the EU. The Europeans buy Russian gas not because it is imposed on them but because Russian gas supplies are reliable, efficient and cheap.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • Douglas Houck on March 18 2019 said:
    There are a number of fundamental misunderstanding with this article. The overarching misunderstanding is it that all nations have their own "National Interests" and act accordiningly.

    Nord Stream 2 is to provide a route for a portion of existing Russian natural gas to Europe that bypasses Ukraine resulting in a more secure and cheaper supply of natural gas. Turk Steam is the second pipeline that almost makes up the remaining difference. There is no increase in natural gas supplies to Germany as a result of this pipeline. For that to occur there will need to be Nord Steam 3 or something else.

    All during the Cold War, Europe found the USSR to be a reliable and low cost source of natural gas. It still does.

    Gazprom can sell all the natural gas Europe wants at $4/mmbtu while the US can sell LNG at $6.50/mmbtu.

    Pretty simple math.

    PS
    The US is no longer the world's hegemony (Europe is not banning Huawei, disagrees with the US on the Joint Comprehensive Plan of Action (JCPOA), etc. etc.) and the US needs to accept it and act accordingly.
    This is not going to break up NATO unless the US walks. Europe still gets military coverage for low costs to itself and likes the current arrangment.
  • Bob Berke on March 19 2019 said:
    This is an interesting, "under the radar" article that raises important issues, particularly Europe's declining relationship with the US, while Russia relationship, illustrated by the new Nordstream pipelines to Europe, is getting stronger. My problem with the article is that there are lots of assertions that are unsupported by any evidence. Without that, my opinions on the author's predictions can only be, maybe.
  • James Willis on March 19 2019 said:
    Gee, another Trump hater crops up. Color me surprised. I happen to agree with Trump's "simplistic mind" that we ARE getting ripped off via the trade imbalance. If Germany and Europe want Nordstream 2, they can start paying for their own defense against the Russian bear they want to hop into bed with. Good riddance. And by the way, I'd NEVER use Zerohedge's advice--for anything. I don't trust their "leadership."

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