Washington Pretends it was Always the Manager of Nord Stream II

Uncle Volodya says, “All over, from the popular culture to the propaganda system, there is constant pressure to make people feel that they are helpless, that the only role they can have is to ratify decisions and to consume.”

“Narcissists are very retaliative if they believe another has achieved what they desire, exposed their insecurities, or refused to be under their control.”

-Lorraine Nilon

Well, it’s official: Washington has ‘decided’ to stop opposing the Nord Stream II pipeline from Russia to Germany, and has struck an agreement with the latter for the pipeline’s completion. Nord Stream II is a twin pipeline laid alongside the original, which has been operational since November 2011. Nord Stream already consists of two lines, the first opened in November 2011 and the second in October 2012. Nord Stream II will double that again, and increase pumping capacity to well over 100 BcM at maximum volume.

There’s a certain art – which Washington has perfected – of continuing to spin even when you failed to get your own way so that failure looks like a kind of success. A skill that allows you to pretend everything is unfolding exactly as you had planned it would, so that you even appear to believe it yourself. And few can surpass the arch-demoness of the US Department of State, Victoria Nuland, in that arena. Listen to her strut and swagger (translated by Moscow Exile).

“We imposed significant sanctions in May on an additional 19 organizations, and we also imposed sanctions on the [pipeline] operator and employees, but we suspended them in the interest of seeing if we could get Germany to work with us, the Ukraine and Poland on the issue of the consequences and vulnerabilities that this pipeline creates for the Ukraine,”, Nuland said.

“We have not taken any action to [force] the Ukraine to remain silent. The Ukraine is a sovereign country and speaks for itself”, the diplomat said, commenting on the Politico newspaper article about Washington’s alleged demand for Kiev to stop criticizing the pipeline.

“Today we will publish the agreement that we have reached with the German government. I can provide you with a number of details here”, she said.

According to Nuland, within the framework of agreements with the United States on the Nord Stream 2 project, Germany has undertaken to seek the development of pan-European sanctions against Moscow in the event of aggressive steps by Russia against the Ukraine.

“Among other things, Germany has pledged to take measures at the national level, as well as to seek the application of effective measures at the European level, including sanctions, to limit Russia’s export potential to Europe in the energy sector if Russia tries to use energy resources as a weapon or commits further aggressive acts against the Ukraine. This is one aspect of this agreement”, she said.

In addition, Nuland noted, Berlin, within the framework of the agreement with Washington on Nord Stream 2, had agreed to support the extension of the agreement on the transit of energy carriers between Russia and the Ukraine, which expires in 2024. The United States is seeking to extend this agreement for 10 years, said the deputy head of American diplomacy. “Another aspect of the agreement is support for the extension of the transit agreement between Russia and the Ukraine. As you know, it expires in 2024. We will seek with all the levers of influence for an additional 10 years for the Ukraine,”, Nuland said.

To shorten all that up for you, in case high-octane political bullshit makes your eyes glaze over, the United States ordered Russia not to complete the Nord Stream II pipeline, emboldened by its unqualified success in stopping its predecessor, South Stream. Russia kept plodding ahead. The United States gestured mystically, and international sanctions rained down upon Russia’s head. It turned up its collar, set its feet and resumed plodding ahead. When the pipeline was nearly completed, the United States ordered Russia’s Swiss pipelaying partner, Allseas, to abandon the project or face American sanctions, and the company immediately put its tail between its legs and scampered away. Russia brought its own pipelayers into service to finish the project. Increasingly frantic, the United States began probing and brainstorming how best to manage the catastrophe…and settled on the German marshmallow as the weak link.

Perhaps it’s unsubstantiated nostalgia on my part, but I remember the United States being a lot better at strategy. You’re never on your best game when you’re an habitual aggressor who is playing defense, but not even that accounts for the misplaced triumph of a fabricated win after a bunch of flailing around that has achieved more or less nothing. The USA’s aim, ostensibly, is to force Russia to continue transiting gas to Europe via Ukraine, and paying Ukraine a lucrative premium for the privilege. This, in turn, is so the United States can impose a measure of control both over Russia’s ability to transit gas, and over Europe’s ability to receive it, by stirring up trouble in Ukraine. It is fairly plain Washington intends to manipulate circumstances in Ukraine so as to create a situation in which Germany must keep its promise to petition for more sanctions if Russia is ‘acting aggressively’. However, as soon as Nord Stream II is complete, Ukraine will have lost nearly all its strategic value.

America’s – and Ukraine’s; Ukraine has become such a star turn at acting the blubbering victim that playing the role is almost typecasting – story is that Russia would never dare attack Ukraine so long as it is the transit country for Europe’s gas. It wants to; the barbaric red hordes are slavering in eagerness to smash and rape and kill…but so long as Ukraine is carrying Russia’s precious blue fuel to European customers, it dares not.

At the same time, the possibility of having its gas supply shut off is supposed to make Europe nervous of Russia as a partner, and motivate Europe to be most solicitous of Ukraine’s wants and needs in order to preserve its health as a transit country. The USA is clear that another ten years of transit (after the present contract runs out in 2024) is the best it can expect.

But Ukraine knows, and foreign experts have affirmed, that its transit role can only be profitable at annual volumes in excess of 60 BcM. In addition, the entire network is so decrepit that it is barely functional; simply patching holes would cost at least 3 Billion Euros.

It has long been no secret that the Ukrainian gas transmission system (GTS) is in a catastrophic condition: according to various assessments, the resources needed to repair and modernize it could exceed $10-12 billion. It is well known that figures can be confusing, but no one has yet come up with a better way of identifying pros and cons than simple arithmetic. Ukraine’s GTS is a prime example of where a few figures make everything clear. And so, if official statistics are to be believed, around 20 thousand kilometres of the country’s gas pipelines have already been in use for more than 30 years, and around 13 thousand kilometres for more than 15 years. 90% of compressor stations have been in service for more than 25 years, and these are currently less than 30% efficient…Mark Goichman, leading analyst at the TeleTrade company elucidates his fears by explaining that Ukrainian gas pipelines will remain profitable for the country only if at least 60 billion cubic metres (bcm) of gas flows through them each year. While transit to Europe is more than 90 bcm, the problem of preserving and modernizing the GTS is current. But if Russia completes construction of the Nord Stream 2 pipeline and brings it to its rated capacity, transit will fall significantly, to 10-15 bcm.

Merkel and her fellow German jellyfish have agreed with the United States that they will seek to renegotiate a further ten-year transit agreement for Ukraine when the current agreement runs out in 2024. But anyone who seeks to live in the real world would have to question why Russia would agree to transit more than 60 BcM of gas across Ukraine every year when the current contract specifies those volumes only for the first year – 65 BcM in 2020, followed by 40 BcM per year 2021-24. Show of hands, please – who thinks Russia is going to agree to transit volumes of 60 BcM+ per year for another ten years when it has a brand-new pipeline that will transit more than 100 Billion BcM on its own, reliably and cheaply, without any geopolitical drama? Further show of hands – who thinks Germany is going to pressure Russia to instead transit high volumes of gas through Ukraine’s leaky, creaky train wreck of a gas-transit system? Especially when wizard Ukrainian economist Zelensky is already holding out the possibility to his people that Ukraine will quadruple the transit fee. My, yes; that’ll make Ukraine’s initial negotiating position attractive. But any agreement which allows annual transit volumes of less than 60 BcM is a money-loser for Ukraine. Where money, if you don’t mind my pointing it out, is already a bit of a problem.

Let’s backtrack for a moment, to Nuland’s bellicose we-got-’em-on-the-run-now departure from reality. According to her, Washington had Russia on the ropes, but let it up for air just in time by agreeing to waive sanctions. Does that sound anything like reality to you? I didn’t think so. The sanctions have meant bupkes to the USA, which does little to no direct trade with Russia, but they have caused tremendous economic pain in Europe. The European market share in Russia is gone, baby, gone, and I don’t see it ever coming back, owing to a combination of solid market replacement and a tremendous renaissance in Russian domestic production. The sanctions never forced Russia to mend its ways to the USA’s demands, never even forced them to the negotiating table as Obama assured Americans they would. The sanctions wiped out European market share in Russia, but Europe had to keep on buying Russian gas, because it has no other supplier who can offer those volumes. In what way was that debacle a success? Unless you are Russia?

Germany promises to agitate for more sanctions if Russia so much as looks at Ukraine in an unfriendly way. Ummm….you mean more of the sanctions that have not had any success so far? Germany promises to press Russia for a new ten-year contract of Ukrainian gas transit, which will be signed around the 12th of never unless European gas consumption triples, because it would make zero economic sense to stop using a brand-new pipeline that will easily handle the required volumes in favour of transiting them over a hostile drama-queen country through a pipeline transit system that is more than 30 years old and has had no maintenance during that period, because the funds the country was given which might have been applied to that purpose vanished into greedy pockets and were never seen again.

Let’s stop kidding ourselves, what say? Ukraine is not going to get back Crimea, which is now Russian for whatever ‘forever’ means in modern times, and the Donbass/Lugansk republics are not going to run weeping back into Kiev’s forgiving arms. The United States is not going to gain control over what fuel passes through what pipelines when. Germany is not going to force Russia to continue transiting large volumes of gas through Ukraine just because that’s the only way they can think of to make Russia give the failed western project money. The Germans are willing to agree to anything just so Uncle Sam will stop threatening sanctions against German companies, and probably hope the Americans will not make a big scene in Ukraine which forces them to back up their words – if they are smart, which there is no evidence to assume, they will use the reprieve they have been ‘granted’ to minimize their exposure to deliberate American economic leverage.

Instead, Ukraine will become a testing ground for the west’s ‘green’ dreams as they try to come up with energy so cheap it’s almost free, but which does not cause any environmental damage. A worthy idea, indeed; but so far there has not been any discovery which comes close to ‘renewables’ or ‘green energy’ taking a dominant role in global consumption. Furthermore, this initiative is to be sold to Ukraine as the west ‘still having its back’, and while the politicians will affect to believe it, you can’t fool all of the people all of the time. Some suggest ‘peak energy’ has already passed, around 2018, and that competition will increase for what are now known to be finite resources. If that transpires to be the case, Russia remains in a strong position, and the United States’ decision to push Russia and China together into an economic, military and cooperative alliance continues to look like the miscalculation of the century.