Sanctions against Nord Stream 2 de facto declaration of war on Europe
The Senate Foreign Relations Committee recently passed the Defending American Security from Kremlin Aggression Act (DAKSA), which co-sponsor Lindsey Graham describes as the "sanctions bill from hell." Here's what it means for Europe and Russia. DASKA is a proposed U.S. bill designed to sanction anyone doing business with Russia. Here's why it could backfire tremendously, ccn.com writes in the article U.S. “Sanctions Bill from Hell” is a Declaration of War on Europe as Well as Russia.
President Trump’s biggest problems coming from Congress may not be impeachment. Impeachment is a distraction while members of his own party stop him from settling grievances with Russia. This year’s National Defense Authorization Act contained a rider which placed immense economic sanctions on any European company working on Russian energy projects. Trump couldn’t veto it politically.
The Russian/German connection
We’re talking about the Nordstream 2 pipeline. Nordstream 2 is necessary to secure Germany’s energy future because of Washington’s policy to use Ukraine as a wedge against Russia. What Nordstream 2 really does is stop the U.S. from gaining market share in the European gas market. We want the political leverage to make Europe dance to our tune. The U.S. has long argued that Germany cannot have Nordstream 2 because it undermines European energy security. In fact, the message of these sanctions is Nordstream 2 is needed now more than ever. These sanctions target the subcontractors to Gazprom (NYSE:OGZPY), which owns the pipeline. This is legitimate, honest business. The initial effect has been to intimidate Swiss company, Allseas, from laying the final stretch of pipe. Germany is livid over this breach of international etiquette and law. It’s a direct threat to the economic well-being of countries we list as allies under NATO. This is the nuclear option in foreign policy and an act of utter and complete desperation. Actions like these underscore the imperial attitude in Washington that our European allies are vassals. Nothing good comes from this in the end. German politics is changing. Chancellor Angela Merkel is dying politically. Gazprom has the capability to finish Nordstream 2 without European help. The same goes for another sanctioned energy project, Turkstream, which will now supply gas to Serbia and likely Hungary.
The pipelines to be built
But Congress isn’t finished because it understands this. Nothing will slake the thirst of the neoconservatives in the U.S. Senate in their push for war with Russia. The Senate Foreign Relations Committee passed an even more insane bill, DASKA – Defending American Security from Kremlin Aggression Act – which co-sponsor Lindsey Graham (R-SC) describes as the “sanctions bill from hell.” DASKA is an abomination designed to sanction anyone buying Russian sovereign debt, anyone associated with Vladimir Putin, Russia’s energy and ‘cyber’ industries. This bill may force Gazprom’s financiers in Nordstream 2, Royal Dutch Shell, BASF, OMV, Engie and Uniper, to call in the loans made to Gazprom, around $5.5 billion.
But that won’t matter. It’s also a direct threat to Turkey, another NATO ally that is ready to jump ship into Russia and China’s orbit. There is no upside to these sanctions. The pipelines will be built. Russia has the money and the expertise. They make economic sense. This temper tantrum by Ted Cruz (R-TX), Lindsey Graham (R-SC) and President Trump will only alienate major allies in Europe politically and hasten the end of NATO. Thankfully Trump is opposing it and it will likely die on the vine.
Abusing your customers is never a winning business model. Senators like Cruz and Graham never learned this. Their bullying Germany will backfire on U.S. energy and defense interests they represent, now exposed as inefficient Ponzi schemes. U.S. shale oil has peaked, drillers are still bleeding tens of billions in free cash flow and flaring off record amount of gas in the Permian Basin. Boeing (NYSE:BA), a major defense contractor, has lost all credibility as challenges appear on the horizon in aviation from both Russia and China. Sanctions are message to Europe the U.S. is no longer a reliable partner. The political risk of major projects like Nordstream 2 used to be all on Russian companies. Now that they are free of the U.S. thanks to Russia’s building a parallel monetary system, that risk is all in Europe.
Merkel’s failure is complete
Chancellor Angela Merkel tried to appease Trump et. al. to get Nordstream 2 done and failed miserably. Putin will get Nordstream 2 over the finish line, not her. Her political power comes from German industrial interests who have been hurt tremendously by these sanctions. They are abandoning her. Germany’s flirting with recession has its roots in Merkel going along with U.S. sanctions stemming from its disastrous Ukraine policy, cutting off commerce with a resurgent Russia. Merkel knows how far the U.S. will go to keep Germany from turning East. And, it’s time she acted like it. The next chancellor of Germany will if she won’t.
Sanctions are acts of war. They are not an alternative to war but rather war by other means. Their intent is just as serious as any invasion. Embedded in DASKA is the real kicker. It would raise the requirement of the U.S. leaving NATO to a full super-majority of the Senate (67 votes), hobbling Trump’s ability to negotiate. But it’s not Trump they have to worry about, but Europe’s leadership itself who they have now fully alienated. Because now even uber-hawk, NATO Secretary General Jens Stoltenberg, is talking better relations with Russia.