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Energy Independence is still key in the Fight Against Russia

Whilst we in Europe have been distracted in recent months, first with Brexit and then with the Coronavirus, Russia has been making small gains. The most notable of these was in early January when Russia managed to gain favourable terms in the renegotiation of the oil and gas lines that run through Ukraine to fuel Western Europe.

The negotiations ended in bad terms for Ukraine and for Europe, but what the EU is negotiating with Russia now under Nord Stream II is even worse. The establishment of Nord Stream II will undermine the security of Central and Eastern Europe. And It will only fuel the dependence of Germany on Russian gas.

Whilst many in Germany dismiss this claim, there is already considerable evidence that they have weakened their position on Russia in favour of Nord Stream II. Germany has been one of the most reluctant countries to impose increased sanctions on Russia in response to their expansionism in Ukraine. And why should they not soften their position? When in 2017 they were dependent on Russia for 37% of their oil imports with trends looking towards that percentage rising.

This kind of energy politics isn’t unique to Germany, in fact, it cuts both ways. Countries such as France which are energy independent don’t take a strong line against Russia as they have no reason to confront them despite having nothing to lose. However, for those of us in the Baltic, we need both our energy independence and our political one.

NATO has gladly stepped in to defend us of the latter part. The United Kingdom, the United States and Canada have all taken part in NATO’s forward presence to demonstrate to Russia that we are no the price to be paid for fuelling the western European economy. Especially when there are alternatives to keeping Europe fuelled.

Last year the United States, Poland and Ukraine signed a trilateral agreement on energy. American liquified natural gas (LNG) would be exported to Poland – at a low price – and pumped into refinement plants before being pumped through a new gas line across the border into storage in Ukraine. It will diversify the energy market in both countries and end dependence on hostile neighbours.

The expected capacity is to be up to 6 billion cubic metres of gas per year. According to US Energy Secretary Rick Perry, the signing of the memorandum is “an amazing ‘win’ for energy security, the economic security and the national security of all three countries”. In addition to the trilateral agreement, the United States has been working with other Baltic states, including Lithuania, to increase LNG import capacity.

In addition, the United States is also expected to become one of the main financial contributors to the Three Seas Initiative – a large scale infrastructure connection project amongst the Central and Eastern EU member states.

The Lithuanian government announced last year a plan to radically expand their existing LNG terminals to double their current capacity. The aim is to create a new pipeline connecting the Baltic states, Poland and Finland, putting an end to the dependence of the five countries on imports from Gazprom. In time this too will be connected to Ukraine, helping to diversify their energy markets further. It has to be emphasized that already now the connected pipeline between Estonia and Finland has proven to be an important and vibrant asset, especially during the last winter.

The United States has, of course, expressed its desire to keep exporting to Europe. The Americans in recent years have had a boom in the production of oil and gas, with LNG becoming a cheap by-product not needed for domestic use. Exporting to allies in Europe offers the Americans a chance to help alienate Russia on the world stage by cutting dependence from neighbouring states, whilst at the same time boosting American exports. It is also important to note that America’s shift towards becoming a net exporter of oil and gas, was one of the causes of the recent collapse in fuel prices. The Russians had long depended on America’s need for Middle Eastern oil to be able to fix prices high enough to make a profit and low enough to undermine their competitors.

As a result, ending our dependence on Russia has the added benefit of dealing an economic blow. Nearly 40% of the Russian economy is based on the oil and gas sector – the with largest state-run company in the country being Gazprom. Five out of the top ten companies in Russia are related to the energy sector – half of which are run directly or indirectly by the state. An energy-independent Europe would be able to starve the Russian economy – with most of the damage being felt by those at the top of society. For decades, the Russian mafia state has been fueled by oil and gas money with many of the country’s powerful oligarchs having stakes in the industry.

The profits from oil and gas in Russia are pumped directly into the Kremlin’s security state. In recent years, the security services, who have been acting in hostile ways towards Europe, have seen their budget increased to 35% of total state expenditure. The refitting of the Russian military in recent years has been tied to the growth in profits from the Russian oil and gas sector. By starving Russia of European money for energy, we are in effect starving the Russian military and it’s capabilities to act abroad.

Granted, instead of a one single silver bullet concept, the EU has to realize that there will be many steps to overcome in relations to Russia. But it should be clear that the only reliable first step towards tackling Russia is to end our dependence on them for energy. Only once that has happened Europe will we be able to act independently and face the threat from Russia head-on. So long as central Europe remains dependent on the East for fuel, they will never be able to take a robust stance against the true aggressor in the world. And because of that, we in the Baltic will never truly feel safe.