Joe Biden convenes the Summit for Democracy on 9-10 December. Meanwhile, Putin demonstrates the success of his gasocracy. The construction of Nord Stream 2, despite a two-year delay due to U.S. Congress sanctions, active opposition from Poland and Ukraine, and criticism from the European Parliament, has been completed. Russia is now stepping up pressure on Germany and the EU to put the pipeline into operation as soon as possible under the terms of Gazprom. The gas and political pressure is growing along with the simultaneous projection of a military threat to Europe. Russia has long been on the path of war, although Berlin prefers not to notice that.
Escalation for sake of de-escalation
The events unfolding in the European gas market, where Gazprom is the dominant supplier, need to be assessed not so much in the market coordinate system as in the system of military strategy and hybrid special operations of the Putin regime. Over the past seven years, after the beginning of the aggression against Ukraine, Russia has honed them to a new level of perfection.
Russia’s doctrine, known in the West as “escalation for sake of de-escalation” and which is tied to the limited use of tactical nuclear weapons, is now being demonstrated in Europe’s gas battle-ground in a hybrid way.
The price escalation gradually took place after Biden and Merkel had concluded in July an agreement on Nord Stream 2 beneficial for the Kremlin, reaching the peak values of gas spot price at $2,000 per 1,000 cubic metres in early October. At the end of October, Russia “suddenly” began to show “care” for Europe. An assertion that Russia wants to reduce gas prices in Europe by 60% was thrown into the Western media. The beginning of the stage of gas de-escalation took place on the air, in the form of a public order from Putin to the head of Gazprom to start pumping gas to the underground storage facilities in Europe after 8 November. Agree, it looks weird. But it was a show element of the de-escalation algorithm. In fact, the following days proved that was rather an imitation as objective data indicated that Gazprom does not reserve the available free capacities of Ukraine’s GTS and the Yamal–Europe route for supplies to the EU. This means that growing seasonal demand in the EU market is not met.
To meet European demand, Gazprom offers more than just price discounts. It proposes a return to the practice of long-term contracts with certain terms. In fact, it is about a mechanism for further market capture. This is done demonstratively, using the example of some Russian satellite countries in Europe – Hungary and Serbia. They have already received cheap gas under new contracts in exchange for refusing transit through Ukraine and switching to the use of TurkStream infrastructure. Russia once again helps Orbán and Vučić to win the upcoming election in exchange for their further services as Russia’s “Trojan horses” in Europe. And the Kremlin wants to get more such “Trojan horse
Therefore, Gazprom negotiates with major players in the EU market – Germany’s Verbundnetz Gas, Italy’s ENI, France’s ENGIE – on new, long-term contracts with attractive prices. Thus, by offering European majors cheaper gas than they would receive paying spot price, Gazprom will further expand its presence, which will deepen the EU’s dependence on Russia and not only in the energy sector. Russia’s share in gas imports to the EU has already hit a record 46.8% in the first half of 2021. After price de-escalation while imposing new long-term contracts with lower prices on European customers, it may turn out that Gazprom’s share in gas imports to the EU reaches well over 50%.
Moreover, Russia is rapidly increasing LNG production in the Arctic, which is accompanied by high methane emissions and runs counter to climate policy goals. Already now, Russia’s LNG exports exceed 30 million tonnes per year (42 bcma). Most of it goes to the EU market. By 2030, this figure will be over 100 bcma.
Given the natural decline in gas production in Europe, the lack of technical capacity of Norway and Algeria to significantly increase gas supplies to the EU in the next 10 years, and uncertainty with LNG supplies from the US, the EU will become extremely dependent on Russia’s supplies.
Geopolitical contours of gasocracy
Russia’s growing dependence on China and the kinship of authoritarian regimes in Moscow and Beijing, plans for geopolitical and geoeconomic expansion, lead to a synergy between Russia and China. The bare-bones geopolitical agenda is to get done with transatlantism through Europe’s energy separation from the United States and its final switch to Russia. This was greatly facilitated by Merkel-era Germany with her active support for and protection of Nord Stream 2. Even now, when the examples of Moldova and Ukraine make it clear to many in Europe and the United States that Russia uses gas as a weapon, Berlin keeps repeating the opposite and threatens the United States with cooling in relations if sanctions against Nord Stream 2 are renewed.
We should take note of Gazprom’s new megaproject Power of Siberia 2, which combines Russia’s eastern and western gas transmission systems. So far, Moscow does not have the technical capacity to reorient gas flows from Europe to China, although Russian propaganda assures from time to time that it is possible. But as soon as the Yamal and East Siberian gas fields are interconnected, such an opportunity will arise. And Russia will take full advantage of this.
Europe will become a target of Russia’s constant blackmail due to the threat of export flows to China. Given that China is the largest foreign investor in Russian LNG projects in the Arctic, a joint Russia–China gas dictatorship will actually emerge in Europe.
If Russia, with German assistance, succeeds in commissioning Nord Stream 2, it may resort to unexpected covert actions to make the EU stop resisting Russian gas expansion and, moreover, to make Europe believe that Russian gas is the only option. Russia could make a part of the North Sea offshore gas infrastructure, through which Norwegian gas is supplied to the EU, partly functional or dysfunctional through covert means (either cyber interference or sabotage by the Russian Ministry of Defence’s Main Directorate of Deep-Sea Research).
Ultimatum of gasocracy
The gas front is just one of the fronts of Russia’s multifrontal offensive against the West. There are several other fronts where Putin is moving quite successfully in the western direction. New fronts have been opened on the eastern flank of NATO and the EU from Belarus direction and in the soft underbelly in the south – the Balkans. The creeping Anschluss of Belarus, with the help of the Minsk proxy regime, the opening of a migrant front against the EU, and the turmoil in BiH with the help of Serbian proxies, all that destabilises Europe by changing the balance of power in favour of Russian gasocracy.
Already this winter, Russia will try to throw Europe into a dilemma. The essence is Russia’s maximum assistance in the settlement of Europe’s energy and climate problems along with the launch of a new policy of “relief,” revival of the “spirit of Helsinki” in exchange for agreeing to the Anschluss of Belarus, de-sovereignising Ukraine, recognising Crimea as Russian territory, terminating NATO and EU enlargement, and lifting sanctions.
This is what fits into Yalta 2, which the Kremlin wanted to implement quickly back in 2014. In fact, the Putin regime no longer conceals its intentions. The leading mastermind of Putinism, Vladislav Surkov, openly points out that “yet another division of spheres of influence is needed … And it will definitely take place (sooner or later, formally or informally, secretly or openly).”
The year 2022 is significant for Russia as it will mark the 100th anniversary of the creation of the USSR, the collapse of which was defined by Putin as the greatest geopolitical catastrophe of the 20th century. Obviously, he longs for the reincarnation of the USSR in a new form. Ukraine, with its revived statehood and albeit imperfect democracy, stands in the way. Ukraine’s transformation into a non-aligned (con) federal (quasi) state as part of the new Union State of Russia, Ukraine and Belarus – this is what the Putin regime wants to get in 2022. In practice, this means the destruction of Ukraine. First, they will try to do that through energy blackmail and blockade, forcing us to surrender. If this plan fails, then through separate agreements with the United States on the sale of Ukraine through “coercion to the Minsk agreements” with the tacit consent of gas-deficient Europe. If this fails, then through armed intervention, perhaps, disguised as a peacekeeping operation.
If to put Russia’s gas, military, and political preparations together, the message from the Kremlin to the West is deciphered as follows: “We intend to gather the lost territories of Russia. Ukraine is not Europe. Winter war is not your war. Just watch. You may express concern. Do not interfere, otherwise, you will end up without gas or there will be little and it will be expensive. You have already seen how we can do this. But we make sure that Europe feels warm and comfortable. We are ready for more after launching Nord Stream 2. Do not hinder us. Biden will not help you. Be pragmatic. Russian gas in the European house is better than American LNG with the summit for democracy.”
Termination of Nord Stream 2 through the toughest U.S. sanctions will not persuade Russia to abandon its aggressive policy, but it will slow down its further expansion by demonstrating transatlantic solidarity and U.S. leadership not only at the Summit for Democracy. Moreover, in addition to the summit, Transatlantic LNG-Bridge is needed this winter in the form of LNG supplies to Europe. Otherwise, the EU will not survive, Member States will surrender one-by-one to the Kremlin’s gasocracy. The fate of Europe and the transatlantic world is now again in the hands of the United States and the non-Schröderised part of European political class. The cold winter of 2022 has every reason to become hot and decisive in the struggle of Putin’s corruptogenic, aggressive gasocracy against the divided Western democracy. Solidarity with Ukraine is needed not only for the sake of Ukraine, it is first and foremost a test for the United States and Europe on whether they can defend their principles.