Even with the completion of the $11.5 billion Nord Stream 2 pipeline - built to transport natural gas from Russia to Germany - last September, gas pumping operations have been halted due to the tough US stance. The US believes this pipeline will increase Europe’s dependence on Russian gas. This explains the US’s hardened stance on the latest geopolitical flashpoints in Ukraine and Kazakhstan.
A question arises here as to the extent of US justifications on the Nord Stream 2? Or does this opposition have more to do with commercial purposes than anything else? The US’s position stems from economic and commercial foundations and to do with Europe’s increasing dependence on Russian gas. Let’s take, for example, the US position on another gas pipeline that has nothing to do with Russia and its alleged aspirations.
Early this week, the US expressed its concerns over the EastMed gas pipeline between Greece, Cyprus and Israel to supply natural gas to Europe. Some analysts even consider it as a competitive alternative to help relieve Europe’s dependence on Russian gas. This comes at a time when there is a gas supply crisis raging in Europe, which caused prices to soar ten times than that in the US.
No relief for EU consumers
Washington tried to alleviate this crisis by pumping more US gas exports to the EU, but this did not help mitigate the rise in gas prices, which reflected negatively on other commodities in the European markets.
By linking the US opposition to the Nord Stream 2 and EastMed lines, we can conclude this stems purely from commercial grounds. European markets have become most important for US gas exports, especially after production was doubled thanks to extensive shale gas availability. It remains difficult for Washington to increase exports to Asia, which is one of major consumers of natural gas, as it cannot compete with Qatari or Australian gas that enjoys competitive advantages in terms of production and transportation costs.
Despite the damages incurred by European countries, especially Germany, from ceasing the operation of the pipeline and although EU consumers are bearing additional burden due to the rise in gas prices, the EU cannot lift a finger due to American sanctions imposed on European companies working on this project and which have significant interests in the US.
US stance at odds with talk
On the other hand, this contradicts the US calls for global free trade, which is very similar to the US double-standards on human rights. This means that the global regime is facing a critical issue derived from political and military pressure to achieve economic gains and giving no thought to fair competition. It also contradicts the regulations put together by the World Trade Organization.
It goes without saying that Nord Stream 2 line will eventually be operational no matter what, as European interests and the energy needs of the EU countries will prevail, after the expected recovery post-pandemic.
Moreover, the US is also likely to ease its pressure if it achieves some commercial gains through long-term contracts for gas exports to Europe, in addition to achieving some geopolitical gains in the conflict over Ukraine. Until then, European companies that invested in this vital project will bear further losses, and it is unlikely they will get compensated.
-- The writer is a specialist in energy and Gulf economic affairs.