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Ronald Reagan was Right

Shoshana Bryen

Since the Russian invasion of Ukraine, America’s European allies would have you think they’re gearing up to make an energy split from Russia. Germany halted the final approval process for the Nord Stream 2 pipeline and announced it had reduced its imports of Russian gas from 55 percent to about 40 percent. The European Union (EU) announced it would phase out coal imports from Russia within three months.

They’re hedging. Three months has become four months and a German energy official said it would be the end of the year for oil and coal imports, but it would take at least until 2024 to cut its reliance on Russian gas.

This a good time to review my old files on the Yamal Pipeline and brilliance of President Ronald Reagan. If they’d listened to him then, they wouldn’t be in this position now – and neither would we.

Yamal Pipeline Redux, Part I

Shoshana Bryen (1/3/2006)

When Russia turned off the gas to Ukraine this week, Western Europe felt the chill – not the one you get from an abnormally cold winter, but the one you get when an old nightmare returns. In 1982, the Reagan administration halted the export of gas pipeline equipment to European companies, putting the brakes on Western Europe’s plan to tie its energy future to the USSR. The “allies” denounced the US in terms that easily match the current anti-Bush venom and declared that the Russians would NEVER hold up European energy for political purposes. Until now.

President Reagan hung tough, forcing a two-year delay in the first part of the pipeline and a ten-year delay in the second. In the meantime, world oil and gas prices fell, and the Europeans and Japanese curtailed their credit relations with the USSR based in part on changed gas revenue projections. The combination deepened the Soviet economic crisis and eventually the USSR collapsed and spun off its colonial holdings.

Western Europe and the US were happy then to treat Russia as if it has been one of the victims of communism rather than its architect. Today, Russia chairs the G-8 and Europe gets 25 percent of its energy from Russia – 80 percent of that goes through the Ukrainian pipeline. But now, Russia wants to own that pipeline and others that run through former Soviet states and is using the price of natural gas to the pipeline countries as leverage. The Guardian notes that Belarus caved last week, resulting in a Russian promise of “gas as $47 per 1,000 cubic meters, compared with the $230 Gazprom demands from Ukraine. Even Georgia, with its anti-Kremlin president…has been careful to avoid slamming the door on Russian participation. Its price this year is $110.”

Ukraine, on the other hand, refused Moscow’s “offer” to buy into the state-owned pipeline while it pursues an overtly and determinedly anti-Russian foreign policy. Hence Russia’s decision to quadruple the price of gas for Ukraine (and then to cut off the supply) before the Ukrainian elections. Insisting the cutoff is economic, Russia declared it would send the requisite amount through the pipeline to Europe. Any decline in European supply, Russia said, should be blamed on Ukraine siphoning it off.

As Ukraine and Russia entered new talks on gas prices today (with Russia turning up the tap a little bit), European media is hysterical about the idea that Russia would play politics with energy. Le Monde called it “the first declaration of war in the 21st Century” (huh?). London’s Independent declared, “Vladimir Putin intends to destabilize Russia’s western neighbor in the hope of unseating its leader.” Rome’s La Repubblica called the dispute a “threat to the entire region.” Berlingske Tidende of Copenhagen wrote, “The current demonstration of power over the Ukraine is insupportable because it so baldly demonstrates the iron fist of the Kremlin when it comes to foreign policy.”

Really? They were expecting, maybe, that Russia had – in the face of all available evidence – become a non-belligerent as regards the behavior of its former colonies? Expecting the Ukraine could have a cost-free anti-Russian foreign policy? Expecting that their energy supply could be untouched by the politics of the region? Why?


Yamal Pipeline Redux, Part II


In an attempt to control the gas pipeline running through Ukraine to Western Europe, and to guarantee a pro-Russian Ukrainian foreign policy, Russia threatened to quadruple the price of Siberian gas for Ukraine on 1 January. When Ukraine didn’t agree to pay, Russia cut off Ukraine’s gas supply, diminishing as well the amount running through Ukraine to Western Europe. The Europeans called it an act of hostility toward Europe and today the Russians and Ukrainians announced a rather convoluted new deal.

The European response sounded surprised and more than a little bit frightened. They should be the latter, but the former is inexcusable. This is 2006. It is inconceivable that the Europeans believe their energy supply is immune to the political forces that shape not only Russian policies, but those of the Middle East, China, India, and the US. One of the few things we are absolutely sure of is that energy availability, now and for the future, is a function of indivisible strands of politics, economics, and security. It was through great trauma that America learned that lesson. President Bush spoke for us when he said the West had been ‘willing to make a bargain, to tolerate oppression for the sake of stability. Longstanding ties often led us to overlook the faults of local elites. Yet this bargain did not bring stability of make us safe. It merely bought time, while the problems festered…

He was talking about the Middle East and the phony bargain of Arab “stability” for cheap energy, but European reliance on Russian gas is the same story. So, what do we do now?

We are indebted to Professor Derek Leebaert for reminding us of the coordinated policymaking apparatus that accompanied discussions of the first Yamal Pipeline crisis during the Reagan administration. He wrote:

For the first time in the Cold War, a US administration began looking at its opponent from the perspective of cash flow. Under (NSC Director William) Clark, a long overdue instrument had been created in 1982, the Senior Interdepartmental Group-International Economic Policy. Strange as it may sound, this was the only time during the Cold War that the heads of the CIA, NSC, and DOD met as a top policy-formulating organization tasked to integrate international economic and financial matters with national security. The group reported through Clark to the President.

If 1982 was the first time, this should be the second. Ukraine must be supported in its effort to ensure its economic and political independence from Russia and must be able to count on the US and the Europeans to stand behind it – despite the European mistake with Yamal and the Russians this time around. The US could do its part by assembling a similar group to “integrate economic and financial matters with national security,” including finding ways to keep the Europeans with us on this – instead of having our erstwhile allies making separate deals with unreliable partners (not only Russia, but also Iran) and expecting the US to guarantee their defense.