Imagine My Surprise

Uncle Volodya says, “In the end, we will remember not the words of our enemies, but the silence of our friends.”

I had this crazy dream last night. It must have been next year sometime, because it was the opening ceremony for the Nord Stream II pipeline, in Germany. President Putin was there for the ribbon-cutting ceremony (naturally), flanked by a beaming Gerhard Schroeder and Donald Tusk. Maros Sefcovic was aglow with bonhomie as he presented the ceremonial silver shears, and a beaming Petro Poroshenko, backed by members of the Atlantic Council, applauded politely as Mr. Putin stepped forward to cut the ribbon. As the two cut ends fluttered to the floor, a pig flew in through the open window, and described a lazy parabola around the ceiling fixture. Stroking past me, it executed a casual barrel-roll, winked, and burst into a cloud of red sparks: Lady Ashton – caught in mid-clap – exclaimed, “Gosh!” It looked like a Berkshire to me, although I am not a reliable judge of swine.

I’m just kidding, of course; there was no dream. That was just stage-setting. But you’re getting good, and require less and less such trimmings, and I know you spotted right away what made the situation ridiculous enough that it must have been a dream. That’s right! With the exception of Messrs Putin and Schroeder, none of the people mentioned would be happy at the opening of Nord Steam II. The Atlantic Council, in particular, would rather crawl through the garbage chute the day after the annual seafood buffet. In case you are unsure about their rigid and unblinking opposition to the project, you might want to refresh yourself with this: “Nord Stream 2 is a Bad Deal for Europe”.

The authors – a Lithuanian-born American who is also the author of “The New Politics of Natural Gas”, a paean of approval for American shale gas, and a fellow Lithuanian who is an intern at NATO’s Energy Security Section – list four reasons why Nord Stream II must be stopped. Just before we start looking at them, I’d like you to remember the alternative is the status quo ante: continued transit through Ukraine. The amounts will be roughly the same, but one option will see gas transiting through Ukraine as it does now, and one will not. Let’s examine each point in their argument in that context, because if they are arguing that Nord Stream II should not be built – and they are – they should be able to demonstrate how the present option improves upon the possibility. Ready? Let’s get started.

One: it undermines European energy security strategy. Really? How would it do that, in a way the current situation does not? How secure is having 30%-plus of your gas supply shut off? Doesn’t sound like much of a strategy to me. Has that ever happened under the current system? Sure has. It was blamed on Russia, of course, by Ukraine, which was siphoning off large amounts of gas meant for Europe for its own use and profit, confident that Russia would not dare shut the gas off because it was Europe’s supply. Beautiful, no? Ukraine gets free gas, as much as it wants, and the Russians grind their teeth in frustration but can ultimately do nothing. That was when Russia and Ukraine got along more or less all right, although Ukraine has regularly tried to leverage its gas-transit status. The two countries are now bitter enemies, and there is no incentive whatsoever for Ukraine to safeguard Russia’s interests, while there is every incentive to steal from Russia at any opportunity, since it will get a pat on the head from the west for doing it. A track record of pilfering, followed by deteriorating relations and an environment in which hatred of its gas supplier is encouraged: hmmmm…I’m not getting that old it’ll-be-all-right feeling.

Merriam-Webster defines “security” as “the quality or state of being secure: such as (a) freedom from danger, and (b) freedom from fear or anxiety”.

The more pipelines Russia builds into Europe, the more nervous Europe gets. Under the current system, I count four – Yamal, Brotherhood, Soyuz and Nord Stream I.  The authors assume – likely correctly – that Brotherhood and Soyuz, through Ukraine, will be phased out, or will be used only for domestic delivery within Ukraine rather than carrying supplies for Europe, which would be subject to transit fees. So, four pipelines, scary – three pipelines…so much more scary? Does that make sense? Or does it sound more like making up reasons to be scared? Granted, under certain circumstances, Russia probably could pump more gas into Europe using three pipelines than it currently can using four, because Ukraine’s gas transit system is falling to pieces. Circumstances like, say, if Europe asked for more gas. If Russia pumps more gas than Europe needs, does Europe have to buy it? Show me that, in any agreement or proposal. If Europe asks for more gas and Russia supplies it at the agreed price, how does that threaten Europe’s energy security strategy? Is it more strategic to ask for gas that cannot be supplied, or something? Help me out here.

Two: it will help Russia export corruption to Europe. Ha, ha! Sorry; I didn’t mean to laugh out loud, but I couldn’t help it, that was just so stupid. How many Billion Cubic Meters (BCm) of corruption per day do you think Russia could get through a pipeline? More than it is already, I mean, piping it through Ukraine, where it damn sure picks up some corruption on the way – Ukraine’s GDP is still more than half controlled by its oligarchy, with 45% of GDP controlled by its 50 richest citizens. The country’s president is still at the same time a flourishing businessman, whose wealth has increased significantly during his presidency even as the standard of living of his countrymen crumbled. He has continuously concealed the true state of affairs with his major earner, Roshen, because he promised during his election campaign to sell the company if elected. Although he was among the first to express shock and disgust at the opulent lifestyle of the deposed President Yanukovych, Poroshenko and his family recently took an expensive vacation to the Maldives, under assumed names. At least he’s eating responsibly, going at breakfast like a boss, eating less at lunch and still less at supper; the President spent almost $11,000.00 for breakfasts for a week. True, that was for him and eight other adults plus two children. But the per-capita GDP of Ukraine, unadjusted for purchasing power, is $2,991.63 USD. And that amount is surely skewed away from an accurate picture of what the middle class lives on by the rich upper class that screws Ukraine out of as much money as it can. So the President spent almost four times as much on breakfasts for himself and eight adults and two children, for a week, as the average Ukrainian has to live on for a year. Corruption? Don’t make me laugh – post-Maidan Ukraine was ranked the most corrupt nation in Europe by a British newspaper. If anything, piping Europe’s gas through the sea, which is neutral, should wash it clean. Assuming you could send corruption through a pipeline in the first place, which is a contender for the stupidest idea I’ve ever heard. I realize they don’t mean it literally, and are alluding to the extra influence potential – but how does the current situation represent a lesser opportunity for corruption? Instead of having both Russia and the most corrupt nation in Europe trying to corrupt fragile, innocent Europe, you would only have Russia. Jesus wept; is it something in the water in Lithuania?

Ditto the alleged ‘corruption scheme’ used as a reference. Although Russia’s penchant for corruption is said to be ‘well-documented’, the reference only says Russian individuals were mentioned by name in the investigation; they were ‘suspected’ of being involved. Several European companies definitely were, and the scheme moved something like €17 Billion – and perhaps as much as €68 Billion, which range makes me suspect nobody really has much of a clue what went on – out of Russia. How is that the kind of corruption that makes Europe turn pale and clutch its pearls?

Three: explosions or military accidents could disrupt Europe’s gas supplies. Uh huh; that’s perfectly true. And do you know a situation where a lot of explosions – some of which are military accidents – occur? War. I hope this doesn’t come as a nasty surprise, but there is a war going on in Ukraine, right now. Where a large part of Europe’s gas supplies transit, not to put too fine a point on it. Wars going on right now on the Baltic seabed? Zip, as far as I know. None. How many times have entire ammunition dumps exploded in Ukraine just in the last year? Here’s ‘yet another‘. Sent ‘huge apocalyptic fireballs’ into the sky for hours, they tell me. Imagine that took place within, say, a quarter-mile of a pumping station through which part of some 30% of Europe’s gas supply was flowing. Moreover, Ukrainian militias have threatened to blow up pipelines deliberately. Such an attack indeed took place, in 2014, immediately after Gazprom announced it was cutting off supplies to Ukraine following a ‘pricing dispute’ – a polite way of saying ‘Ukraine refused to pay’. Perhaps we should not be too surprised that the pipeline attacked supplied gas to Ukraine from Slovakia, given the evident low application threshold to get into a Ukrainian militia, and the high ratio of ideological simpletons which occur therein. I could have taken a nap through this whole paragraph, because The Atlantic Council’s authors are making my point for me.

They tell us the Baltic is a shallow sea, and is littered with ‘countless mines, unexploded bombs, and sunken vessels from the two world wars’. There is every possibility some of this lurking ordnance could drift towards the pipelines and cause an explosion, according to the Lithuanian analysts. Leaving aside for a moment the more or less unobserved rate of drift in sunken vessels once they reach the bottom, if that’s true…hadn’t someone better mention this eye-popping hazard to shipping authorities? A good place to start would be Lithuania, whose Baltic shipping is projected to increase 18% between 2010 and 2030. Good call, guys; let’s get that shut down, right now.  A threat to pipelines in such a shallow sea is definitely a threat to shipping, and realistically, nothing should be moving on a body of water so littered with explosive hazards – countless, didn’t you say? Have a look at the graphic of Ro-Ro Ferry routes in the reference document, nearly all of which pass over the current Nord Stream I route.  Continuing to put innocent people in danger like that, well…well, it just looks reckless to me.

Four: Nord Stream II increases exposure to cyber risks. Does it, really? Once again, we’re comparing the present situation – above-ground pipeline transit through Ukraine – with the projected seabed transit of the Baltic, coming ashore in Germany, where no wars are ongoing at the moment. Nord Stream II will replace the Brotherhood and Soyuz supplies, not be supplemental to them, so the choice to be made is whether the current Ukrainian pipelines are a greater or lesser cyber risk than a seabed pipeline. The authors cite, to bolster their case, an alleged cyber attack on Saudi Aramco’s infrastructure. How many of Saudi Arabia’s pipelines are on the seabed? Gee: none. How many cyber attacks have there been on Russian infrastructure since the Glorious Maidan in Ukraine? A few, none that seemed to have caused any major disruption. How many cyber attacks have there been on Ukrainian infrastructure? Oh, baby. Ukraine blames them all on Russia, naturally. Well, that should be reassuring for Europe; you would hardly expect Russia to carry out a cyber attack on its own pipeline network, would you?

We’re getting to the part of the post I like to think of as ‘keeping it real’. And not one of the ‘concerns’ the Atlantic Council blogheads cite above is real; not to the extent that continuing to transit gas through Ukraine would be an improvement for anyone except Ukraine, which wants to be able to continue levying lucrative transit fees for using its pipeline network. It’s old and decrepit, and has had next to no maintenance in the last 25 years; bringing it up to a reliable standard would cost a lot of money. Estimates vary, but it is a fact that Russia offered $4.5 Billion toward the cost, under conditions in which Ukraine would remain the main transit country. What happened? Well, you know, don’t you? The Glorious Maidan happened, and the new kangaroo government aborted all plans to create a gas consortium with Russia, offering instead to create one with the United States. Using its pipelines to Ukraine, I suppose. Well, do it – what are you waiting for?

Europe is under tremendous pressure from Washington to break off any plans with Russia to build Nord Stream II. Just because Washington does not want Europe to be dependent on Russian energy – but it has no reasonable alternative to propose. US LNG, shipped by tankers? Please – that’d be a more reliable source of supply? That would be even worse than continuing to take Russian gas through Ukraine, which at least has large underground gas storage facilities to respond to sudden increases in demand during peak periods. The trouble with a sudden increase in demand is that it’s…well…sudden. What’s the USA going to do in that instance? Sortie its huge LNG tanker fleet all at once, full speed ahead to Europe? Take a look at a map, and see the distance shipborne supplies have to travel. Then take a look at the size of the USA’s LNG-tanker fleet. Then run into the wall, headfirst, hard as you can – but only if buying US-supplied LNG still seemed like a good idea to you by that point.

Look; Europe is an adult – theoretically. It is perfectly capable of making decisions in its own interest. If it wants to make decisions that are in Washington’s interest, and suffers as a consequence because Washington does not have the wherewithal to protect it from calamity, isn’t that justice? Sure looks like it to me.

I see you holding a busted straight, Europe – how many cards do you want?