A very strange northern winter
Gas pipelines, the Olympics, imminent WW3, what's next?
Buried amongst all the drama in the news from Europe since the New Year was the pleasing reclassification of Covid-19 from ‘pandemic’ to ‘endemic’ by many Nordic nations. In Australia and the US, those on the notionally left and centre-left who normally valorise anything Scandinavian, particularly on healthcare, have been curiously quiet regarding these developments. Let’s take Denmark, a nation many regard as having handled the pandemic as well as possible (save for the Mink cull). They’ve decided, in the absolute middle of northern winter, to scrap most coronavirus restrictions, with vaccine passports (only ever two doses) no longer required. Not sure about you, but it does hit me rather peculiar that here we are about to gear up for a mandated third dose of a vaccine that isn’t performing anywhere near the effectiveness promised (google British Medical Journal BMJ Pfizer for another buried story). How many boosters will be required under this new vaccine regime? Does anyone have an answer? As usual, we lag well behind our friends on the other side of the world, and despite the incessant slavish devotion to ‘science’ practised by the mainstream media, maybe those protesting vaccine mandates are also reading the news? Just a thought to start the newsletter.
IN OTHER NEWS OUTTA EUROPE: As usual, there are far more consequential issues to be concerned about… the threat of nuclear war. Make no mistake, the sabre-rattling around Ukraine has amplified US-Russia tensions to a degree not felt since the Cuban Missile Crisis. This is a big call, but the posturing and aggression exhibited by both sides is indicative of the severity of the stakes in play. A lot of words have been written about the current crisis: Putin is a reckless psychotic bully intent on life-long rule (no doubt true to a degree), autocracy vs democracy (true to a far less degree), bad guys vs good guys (too much Tom Clancy). I’m going to avoid most of those discussions, because most people’s minds are already made up on those questions. The recent drumbeats of war work in stirring nationalism because of years and years of media and political propaganda disseminated previously, playing to base prejudice, and this is true in both the United States and Russia. What’s needed in this discussion is some historical perspective of other factors driving the conflict, factors that nearly have nothing to do with Ukraine, and everything to do with the global balance of power: energy pipelines, trade alliances, and the faltering global transition to renewable power sources. Let’s dive in.
The origin of this crisis lies in Germany’s decision to abandon nuclear power in 2002, which was hastened by Angela Merkel’s government after the Fukushima disaster in Japan in 2011. It chose to do so as part of its plan to meet its ambitious emissions reduction targets, with the needs of German citizens and industry met by a transition to renewable energy sources such as wind and solar. Whilst the share of renewable generation has grown significantly, these new renewable technologies are nowhere near capable of powering the German economy, especially with the high level of heating required in winter. Let’s label this an inconvenient truth. Merkel required a stop-gap fix for the coming energy crisis, and got in touch with big Vlad in the Kremlin. A gas pipeline, Nordstream 1 completed in 2011, was already providing much needed gas to Germany, but as the decade progressed and renewables faltered, it was becoming clear that far more gas would be needed to keep the lights on and the heaters warm. Those in the green movement argue that a more forceful investment effort in renewables by the German state would have avoided this requirement, which may be true, but with the nation abiding by its commitments to the Kyoto Protocol and other international climate agreements, industry would much prefer the cheaper alternative of gas. So, Merkel and Putin negotiated a deal to add another pipeline, Nordstream 2, which after 5 years of planning and construction is due to open very shortly.
This is the pivotal pawn in the current geopolitical crisis, a gas pipeline between two sovereign nations that runs across the Baltic Sea, a thousand miles from the flashpoint in the Donbas region of eastern Ukraine. The decision by the Germans and Russians to engage in this commercial arrangement infuriated the Americans, who rightly point out that it increases European dependency on Russia. The next question to logically ask is what is the issue with this dependency? For a long time now, the idea of ever-increasing trade networks have been credited with a decrease in war and conflict: the more countries are intertwined in exchange of goods, the more supply chains are interdependent, the more they rely on each other for energy and natural resources, the less likely they are to go to war. This is possibly the only rational justification for globalisation and the last 50 years of global economic policy, particularly in the wake of the Cold War. Markets have become so interconnected that to untangle the web of commercial arrangements would be so prohibitively expensive that war is no longer an economically feasible arrangement. The political ramifications of these policies, best exemplified by the re-assertion of nationalism and sovereignty of Trump and Brexit, are minor inconveniences to the global multilateral institutions such as the WTO, IMF, and World Bank which ostensibly set the ground rules for the global economic system.
The United States also has a few rather natural incentives to stir trouble in Europe. One is that in doing so, it can sell more arms. As NATO has increased by adding former Soviet bloc states, so has the market for the military industrial complex which mandates that US weapons systems are used across the alliance. Even when a country isn’t part of NATO, the US finds a way to reward the defence contractors. Much was made of the Biden commitment to $500 million in ‘Lethal Aid’ to Ukraine to help in its defence. It doesn’t take a deep understanding to realise that this means the US taxpayer is transferring $500 million directly to missile manufacturers such as Raytheon and Lockheed-Martin, with the resulting weapons landing in the Ukraine, further destabilising the area, begging for more weapons of mass destruction. Further, regarding the energy markets, the Americans would would like to increase their own gas sales to Europe. As seen above, the US also has high reserves of gas that it needs national markets to sell. The intense manufacturing economy of Germany, a member of NATO, would be a prime candidate for American gas supply ships to be docking.
However, the Germans, with an eye to the future, appear to have made a discrete decision to ignore the Americans in choosing the Russians. This is critical to the current crisis: Germany essentially chose its own energy security over the NATO alliance which had held since 1949. This situation is perfectly unacceptable to the Americans. NATO expansion through the 2000s and 2010s was always postured against the Russians, despite verbal agreement at the end of the Cold War that none of the former Warsaw Pact countries would be enticed to join NATO. Germany has betrayed the US, and this was on clear display the other day when German Chancellor Scholz was summoned to the White House to meet President Biden. Biden, in all his medicated glory, insisted that the US had the power to cancel Nordstream 2 if the sovereignty of Ukraine was further infringed upon. Reporters jumped on Scholz, asking if Germany would accept the US unilaterally acting as foreign Judge, Jury and Executioner of this critical piece of its infrastructure: Scholz refused to engage, clearly hoping to defuse the situation and not further offend the Americans. It would appear the strongest power in Europe is pulling away from the US, right at the time that the US is gearing up for Cold War 2.0.
The US is acutely aware of how precarious its current position is. The world has seen the disaster in Afghanistan, but like most bullies, the Americans take the victim narrative and say that it is Putin being the aggressor. Yes, Russia has backed separative forces in the countries bordering for years; anyone with Google can take 20 minutes to look up some basic history of Latin America and the CIA, with a particular focus on the Contra Affair, and realise how absurd and downright sadistic it is for anyone to label Putin a particularly nasty neighbour. And again, the US has no issues dealing with Saudi Arabia and its Crown Prince MBS, who memorably ordered the dismemberment of a Washington Post journalist in an embassy. Trump’s response is my personal favourite of his presidency, where the indefensible absurdity of US foreign policy is laid bare for all to see. This is why Trump was dangerous to the national security state and military, because in all his Sudafed glory he couldn’t keep to the script. Bad Deal!
Putin certainly has moved troops within his country and amassed a large force that could be ready for an invasion (this is hotly disputed by military analysts). There is a very real risk of war, but mostly in order to stop the pipeline coming into service. Russia is gradually psyching out the Americans by playing war games within its own borders. It is running down the clock until the pipeline is certified and the gas is flowing. The US desperately knows that if Germany begins to choose its own destiny, it may choose to rebalance away from the US and attempt friendlier relations with the new Russia/China bloc in the East. It has good reason to, as the booming middle class of China has developed an almost insatiable appetite for German luxury automobiles and consumer goods. To make those goods competitively, German industry requires cheap, reliable energy in the form of natural gas. Once again, globalisation offers a path through potential conflict, if only major powers would acknowledge that the alternative could lead to total nuclear destruction. Mutually assured destruction still remains, and its probably for the best that we are conscious of it at least some of the day.
The Biden administration continues to lie through its dentures, much to the delight of the liberal press. Back in September, after the catastrophe in Kabul, Biden had the temerity to stand at the United Nations and claim that the United States is not at war. A cursory glance shows US drones and special operations troops across much of north Africa and the Middle East, through to the Philippines, fighting various militant groups. After Obama, we should be used to Democrats lying about national security, following in the footsteps of Cheney and Rumsfeld in the Bush presidency. However, if the administration feels comfortable on the floor of the UN stating such blatant mistruths, one does wonder how sturdy the intelligence is regarding an imminent Russia invasion of Ukraine. We all remember WMD, do we not? And remember, Iraq became of startling little interest to the Americans at the exact moment US oil drilling from fracking technology came on line in the late 2000s/early 2010s. This withdrawal, after causing carnage and chaos estimated to cost 500,000 civilian lives, also led to the rise of the Islamic State. The US no longer needs to rely solely on Iraqi oil, mostly due to the decisions of Obama to allow almost unlimited fracking across the country. However, it’s pretty important to keep the Saudis on board, as seen below, so their theocratic regime of homophobia, slave labour and repression of women’s rights certainly doesn’t matter to an extent to actually attempt to change things. The Biden administration continues to supply arms to the Saudis for the war in Yemen, the largest humanitarian disaster on Earth.
Critics no less eminent than Noam Chomsky argued that Trump was an environmental vandal bar none, a criminal for withdrawing from the Paris Agreement and authorising fossil fuel extraction, and that the only moral choice in the 2020 election was to elect Biden. However, in another inconvenient truth, the Biden administration’s first year drilling permitting was 34% higher than Trump’s. Oops. In a similar fashion to how Germany is relying on Russian gas whilst still trying to achieve emissions reductions, the Biden administration claim these are short-term measures to address a coming energy crisis, and point to the President’s authority to end drilling (but not extraction) by 2035. It is this blatant hypocrisy and double dealing that breeds cynicism and despair in the electorate, while globally most countries couldn’t care less about being lectured by the US on any major issue, unless it impacts their respective core abilities to function. MBS and Putin high-fiving at the G20 summit in 2018 could not better display this reality, as both know they have massive amounts of leverage over energy markets in the coming years.
The next decade looms as a return to state-craft, the old fashioned way. Countries are going to be attempting to become more self-sufficient, less reliant on long ocean supply chains and overseas finance. These appear to be admirable goals, and they are, if we could also remove the spectre of mass conflict that continually hovers over humanity. Short of that, the economic connections between large power blocs are what will prevent the outbreak of a third world war. Specifically, fossil fuel generation and trade plays a crucial role in ensuring global markets and politics retain balance and stability. I don’t particularly like this reality, I too would love to see a future of self-dependent countries, with renewables powering the needs of society, and a return of local manufacturing, rather than the global race to the bottom. But this appears as much a pipe dream as expecting the powerful to move past conflict and war as a means of dispute resolution. In the meantime, the fact that oil is denominated in US dollars means that China is fully dependent on the US as a market for its cheap consumer goods. It cannot provide for its own people if it does not import oil, and to do that, it needs decent relations with the US. 80 years ago, the US cut the oil supply of a rising Pacific power in the East, and we all know how that fared for the people of Asia, Oceania and Australia. It is truly amazing, deep in the digital age, that it comes back to this, a real world Age of Empires. As a very good friend of mine likes to remark, ‘what happens when the lights go off?’