The EU and the US are set for opposition over the Nord Stream 2 pipeline that will carry Russian natural gas to Germany. The project is due for completion by the end of 2019.

The project has strong political support in Germany, where it is perceived as boosting supply security. The pipeline is also supported by German businesses, who are believed to get a cheaper, more reliable supply of gas.

Customers throughout western Europe suffered when Russia cut off all gas supplies through Ukraine on three occasions between 2004 and 2013. They will also benefit from the new supply of gas. The move will be advantageous to Europe’s consumers, promising lower gas prices as the continent struggles to meet tougher environmental targets as dictated by the 2016 Paris Agreement on climate change.

Securing natural gas imports is increasingly important for the EU, as its domestic gas production is set to fall by 50% over the next 20 years while gas demand is expected to remain at current levels. The gas can come via two sources: via Liquefied Natural Gas (LNG) cargoes or via pipeline, which are mainly from Norway, Algeria and increasingly, Russia, which supplies around a third of Europe’s gas needs via two ageing transit pipelines: the Brotherhood via Ukraine, Slovakia and the Czech Republic, and the Yamal-Europe via Belarus and Poland.

Nord Stream 2 is being financed by blue chip European energy investors Gazprom, and a consortium of European investors in the form of ENGIE, OMV, Royal Dutch Shell, Uniper and Wintershall, with each company funding up to €950 million.

Russia wants to build Nord Stream 2 primarily because it is faster than pre-existing routes. The completiong of the project also means lower transit fees, and increases gas giant Gazprom’s bargaining clout over countries along transit routes.  For the same reason, Nord Stream 2 is strongly opposed by countries such as Ukraine and Poland, who currently benefit from transit fees but fear that Nord Stream 2 will make the region more dependent on Russian gas supplies.

Tom Tugendhat, chair of the UK’s influential Foreign Affairs Select Committee said: “What Nord Stream 2 does is salami-slice NATO, by cutting some of the Eastern European countries away from the Western ones, and particularly, Germany.”

US administrations going back to the 1980s have repeatedly expressed concern that Europe is overly dependent on Russian imports of pipeline gas.  What’s different this time is that the US wants to do something about it. The Trump administration is angry at Germany for partaking in a huge commercial deal with a geopolitical rival, whilst also not contributing sufficiently to NATO. The two allies are also increasingly at odds over numerous issues, including Iran, climate change, and trade.

Nord Stream 2 has direct commercial implications for the United States, which, due to the shale gas boom, has become a major exporter of LNG, a position that will only grow as the number of terminals along the eastern seaboard of the US increases.

When US LNG exports began in 2016, very few cargoes went to Europe. This, however, is starting to change, partly due to a decline in Asian demand and a global supply glut. Lower prices have made Europe a more attractive destination for gas, particularly as transit costs are lower than for shipments to Asia. The US-China trade war has also increased the number of Europe-bound cargoes shipping from Texas and Louisiana.

“The United States is again delivering a form of freedom to the European continent,” said US energy secretary Rick Perry during a recent trip to Brussels. “And rather than in the form of young American soldiers, it’s in the form of liquefied natural gas.” 

Donald Trump has also commented on Nord Stream 2, calling it a “horrible project…feeding billions of dollars from Germany and other countries into the coffers of Russia.”

The Trump administration is coming under strong pressure to help gas exporters in Texas and Louisiana by targeting Nord Stream 2. Texan Republican Senator Ted Cruz and New Hampshire Democrat Jeanne Shaheen, both members of the Senate Foreign Relations Committee, have sponsored a sanctions bill in the Senate, which would penalize companies involved in laying deep-sea pipelines for Russian energy projects.

This has not gone down well in Europe. Rainer Seele, the head of Austrian energy group OMV, which is helping to build the project, has accused the US of trying to dictate foreign policy to its allies. Seele claimed that Nord Stream 2 was being attacked as Washington wants to secure markets for its own gas supplies. Seele also claimed that the US was trying to portray Russia as an unreliable trade partner when the opposite was actually the case.

German Foreign Minister Heiko Maas has also strongly criticised the threats. “Questions of European energy policy must be decided in Europe, not in the US,” Maas said. “To impose unilateral sanctions against Nord Stream 2 is certainly not the way to go.”

If Nord Stream 2, which is currently around 50% complete, is delayed, or even cancelled, the short-term losers are likely to be European gas consumers, who could face higher gas prices this coming winter.

Moves to wean Europe off Russian gas will also hit consumers in the longer-term. Gazprom is already looking to diversify its export markets and is in the process of building another pipeline to China. Unless Brussels stands up to Washington, Russia may start to prioritise Asian sales over European ones. That could mean that European consumers end up paying more for their natural gas – or it might mean that they receive no gas at all.

L'articolo US/EU Clash Over Russian Pipeline proviene da InsideOver.

The noises from the Middle East are increasingly bellicose. Iranian President Hassan Rouhani says that his country could withdraw from parts of the 2015 nuclear agreement, known as the Joint Comprehensive Plan of Action (J-CPOA). US President Donald Trump has responded by ordering reinforcements to the region; reduced non-essential diplomatic personnel in Iraq; and is reportedly firming up attack plans.

In the four decades since the Iranian Revolution in 1979, the US has always tried to contain Iran rather than confront it directly through decisive military action.
But Trump has steadily ratcheted up US tensions with Tehran since withdrawing from the 2015 agreement that curbed Iran’s nuclear ambitions. This feels like the final end game.

Trump has an extremely hawkish team in place headed by national security advisor John Bolton and Secretary of State Mike Pompeo. Bolton has long-argued that the US should bomb Iran to stop the Islamic Republic from gaining a nuclear weapon while Pompeo also has the Tehran regime in his crosshairs despite his inability to find European allies who could help lend legitimacy to such a conflict. At the same time, the US is coming under sustained pressure to act on Iran from within the region. Its three key regional allies: Saudi Arabia, the United Arab Emirates and Israel have long championed strikes on Tehran.

Iran too is not afraid of war. Its leadership may even believe that war is in their best interests. More than anything, US economic pressure has pushed Iran to the brink of economic collapse. Trump’s decision last month to end exemptions from sanctions for countries still buying oil from Iran was the final turning of the screw. Not only does less oil revenue mean falling living standards at home it also severely limits the amount of largesse that the Tehran regime can distribute to regional allies like Assad in Syria, Hezbollah in Lebanon and proxies such as the Houthi insurgency in Yemen.

New sanctions have allowed the Iranian regime to blame the US for the current economic crisis. But Rouhani put his reputation on the line to negotiate the nuclear deal, and the US withdrawal has damaged its supporters in Iran. Moderate Iranian support for rapprochement with the US has dwindled. Now the hardliners in Tehran are calling the shots. All of this makes Iran more likely to seek conflict, not capitulation. It is still pushing the Europeans to do more to help its ailing economy and threatening if they do not then it will go ahead and withdraw from the nuclear deal.

Bolton would most likely advocate a military response to such a move. But Trump may well be more cautious. He would dearly love the Iranian regime to crumble on his watch, and he would probably be forced to respond if US forces or facilities were attacked. But Trump has shown in his dealings with North Korea that while he likes to win, deal-making rather than war is his preferred option.

Trump may also have decided that a war with Iran is one that’s just not worth fighting. After all, Iran is a very different proposition to Saddam Hussein’s Iraq. Crucially, it’s a key Russian ally, and as we have seen with Assad in Syria, Putin’s Russia is prepared to stand by its allies in the Middle East, whatever the cost in treasure and prestige.

Iran’s close military ties with Russia also make war less likely. Even the US’s military advantage in the air could not be taken completely for granted given that Tehran possesses a state-of-the-art S-300 missile defence system purchased from Moscow in 2016. Iran and Russia have also announced plans for a joint military exercise in the Persian Gulf this summer.

What this means is that a full-scale invasion of Iran is not going to be on the cards. If fighting does break out it would most likely be a series of asymmetrical air and sea battles while Iranian proxies in the region would seek to cause the US maximum casualties. That’s not the kind of war that results in a clear victory and it’s also not the kind of war that plays well with the US electorate – and with a second term up for grabs in 2020 it would likely cost Trump votes against Democratic Party challengers such as Joe Biden, Kamala Harris or Bernie Sanders.

Trump knows this. He has already said that he would talk to Iran’s current leadership, without advocating for a change in the government first. This view has been echoed by Pompeo. And it probably should be taken at face value. Trump could like nothing more than to emerge with a better Iran deal than his predecessor Barack Obama.

The downside to such a strategy is that it is high-risk and could lead to misjudgements on both sides. Trump’s base might not want war but it also wants Trump to show that the US won’t be pushed around. Senator Richard Durbin is already worried that it could result in a “Gulf of Tonkin moment” that could draw America into war, referring to the mysterious naval incident that led to the United States engaging more directly in the Vietnam War.

“America has lost a great deal of credibility in the Middle East with its recent wars where it has gone in with all guns blazing and lofty intentions only to leave a few years later under a cloud and with the job half done. The question is does the US really have the stomach for another war?” said Iranian-American filmmaker Tina Gharavi.

L'articolo Trump’s War Games with Iran proviene da InsideOver.