The summer of 2018 will go into history as the moment when a US president fundamentally and decisively changed the international world order which its predecessors worked hard on during the past decades. Within approximately a week from 11 July until 16 July, President Donald Trump achieved to insult its key allies in Europe and fundamentally undermine NATO and the EU, while cozying up to what seems to be the most important adversary of the West. While this week will go into history as an arduous one for the presidency of Trump, for President Vladimir Putin, in contrast, it is one of his best since the Ukraine crisis began in 2015.
The strategic interests of Russia were met in considerable ways as its key adversaries are divided due to Trump’s bellicose and aggressive language before and during the yearly NATO summit in Brussels. The unprecedented attack on Germany during a televised lunch, which caught off-guard the host Secretary-General Stoltenberg, in many ways showcased the current administration’s interest in the financial and energy domain.
Trump claimed “Germany is totally controlled by Russia. They will be getting between 60 and 70 percent of their energy from Russia and a new pipeline.” Although this is factually untrue, Germany imports 33 percent of its gas and 40 percent oil from Russia, these statements spread confusion as to what Trump’s actual endgame is. Several options are possible as to the true intentions of these statements. Related: Houston To Get Its Own Crude Oil Futures As U.S. Exports Rise
This could be a negotiating strategy of Trump by putting pressure on Germany in order of significantly increasing its defense expenditure. Although NATO leaders reaffirmed after the gathering on 12 July their commitment to the pre-Trump agreement of gradually increasing defense expenditure, the US president seems adamant on even more. Trump claimed that the remaining NATO members have agreed to increase expenditure to 4 percent instead of 2 percent. This was rebuffed by the other alliance members.
Another alternative goal of the presumed negotiating strategy could be not defense spending but forcing US energy on Europe and primarily Germany. The shale revolution has transformed the North American country from an importer into an exporter within a couple of years. Some analysts have long predicted that the US’ intentions on obstructing the construction of Nord Stream 2 are not based on benign security concerns but commercial interests.
Russian natural gas traveling through pipelines is significantly cheaper than LNG. Therefore, US exporters would be facing major difficulties in finding buyers for their product as commercial customers obviously will want to pay as less as possible. The US’ objections have been steadily increasing and changing from political pressure into the threat of sanctions as Nord Stream 2 is partly financed by Western companies but wholly owned by Gazprom.
The most stunning of Trump’s actions during the past week came during his press conference alongside Russian president Vladimir Putin in Helsinki on 16th July. Although the Kremlin did get nothing on several crucial subjects such as the lifting of sanctions, Syria, and Ukraine, Trump did manage to provide Putin something he has long aimed for, legitimacy as a great power. Since his ascension as President of the Russian Federation, he has sought equal footing with the American superpower in order to reposition Russia globally.
On the energy side, Trump’s actions caused even more confusion. Although it could be said that the US president in some ways reduced his opposition to the construction of Nord Stream 2, his erratic and unpredictable behaviour give no cause for celebration for the Russians yet. Trump declared that the US will compete for market share with Nord Stream 2, thus acknowledging its construction. Vladimir Putin from his side, reaffirmed his commitment to maintaining using Ukraine’s transit role even after the pipeline has been built.
President Trump’s unpredictable behaviour does not provide analysts and policymakers with clear outcomes when it comes to the US’ objections on Nord Stream 2. Recent developments have proven that the US’ position towards the construction of Nord Stream 2 is not decided yet, despite bellicose language before the meeting with Putin in Helsinki. However, European resolve will be the decisive factor in this matter as Trump increasingly has put pressure on his allies. European policymakers have to decide soon whether the time has come to confront the US on topics where soft language has proven not to work.
By Vanand Meliksetian for Oilprice.com
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