For more than six years everyone who is anyone in a politically sensitive position in Europe and the U.S. has wrung their hands over the Nordstream 2 pipeline. From the moment it was announced the howls of pain could be heard all around the world.
Those screams were the screams of people who had grown fat and rich on the status quo realizing their gravy train was over.
Now the project is all but complete and the saga coming to an end we have a weak deal between all the major parties to keep some of that gravy train running. German Chancellor Angela Merkel and Joe Biden finally buried the hatchet over Nordstream 2.
But the reality was that Nordstream 2 was always going to get completed. I’ve never wavered in my assessment of this.
The reasons were myriad.
The Germans need the gas.
The Germans wanted another political cudgel to use over the recalcitrant Poland and the Baltics.
The Germans need the gas.
Former German Chancellor Gerhard Schroeder is a board member of the Nordstream 2 consortium who put the deal together.
Oh, and the Germans need the gas.
It wasn’t a tough set of equations to solve here. The major players are Russia, Ukraine, Germany, the U.S. Whose needs are fulfilled by Nordstream 2? Germany’s. Who controls the EU? The Davos Crowd through Germany. Who needs relatively cheap energy to keep popular revolts from overthrowing major governments? Davos.
In the end economics and the reality of positive incentives always force a resolution on people determined to hold back the tide through regulation and arm-twisting creating perverse incentives. Believe me, there’s a broader lesson for all concerned here than just Nordstream 2.
As to the pipeline itself, the main sticking point for many people in the U.S. was a combination of leftover Cold War policy of denying Russia any new pipelines into Europe and personal enrichment because of Ukrainian gas transit.
But the events of the past decade and the existence of Nordstream 1 saw the dynamic in that relationship shift dramatically.
The U.S clearly does not control the reins over European energy policy and hasn’t for a long time.
The Davos Crowd controls U.S. policy over Europe and damn near everything else at this point, especially with Biden sporifying in the White House and Obama pulling all the strings behind the scene.
That anti-pipeline policy was powerful when the U.S. called the shots in its relationship with Europe. Trump tried to reassert U.S. dominance over Europe and beginning to be successful. But Merkel and others simply waited for his term to end, hoping their incessant meddling in his presidency would weaken him.
Because of the times and Trump’s excellent media instincts and unwillingness to be publicly shamed, he only grew stronger. So they had to depose in the most nakedly brutal way imaginable. However, his opposition to Nordstream 2 forced a lot of people to expose themselves over their corruption in Ukraine. Davos called in nearly every marker they had to bury Hunter Biden’s corruption.
At the same time Hunter was nothing more than a distraction to keep people from looking deeper at Mitt Romney, Speaker Nancy Pelosi and Poppy Eyed Adam Schiff, all of whom have interests in Ukraine continuing to transit gas through the old leaky Soviet pipelines.
The reason Nordstream 2 got finished is because Davos finally acceded to reality that it lost in Ukraine.
That’s what the Biden/Putin summit was about (among other things).
In the past, when Davos had its sights set on Ukraine to take it away from Russia through a terrible offer of EU membership in 2013, new pipelines into Europe were actively blocked, e.g. Southstream. U.S. Cold War policy and their goals converged.
In the case of SouthStream, the U.S. was made out to be the bad guy putting the final pressure on Bulgaria to stop the project. The truth was the EU kept changing the rules on Gazprom in order to lock them into a long-term relationship which the EU would consistently hold the regulatory whip hand over and use to dictate prices once they had their monopsony in place.
At least that was the plan.
When that plan failed and Putin cancelled Southstream, disallowed Ukraine’s admittance into the EU — which former President Viktor Yanukovich was never serious about — and blocked the full takeover of the country by backing the independence of both the Donbass and Crimea, Nordstream 2 was put on offer.
This was a desperation move. Plain and simple.
Now Gazprom had all the leverage in new Ukraine gas transit talks. Putin froze the conflict in Ukraine. The current gas transit deal is all in Gazprom’s favor. It will be again in 2024 when it ends then.
This reality forced Davos to back Germany over the pipeline otherwise Germany would no longer be able to run its economy and leverage that to lord over the rest of Europe. Davos’ control over Europe rests on Germany’s economic and political strength within in the bloc. Period. Without that the EU splinters rapidly.
This is why Tump was such a real problem. Once he was removed and order restored from their perspective they made one last attempt to test Russia’s resolve in Ukraine. They got a firm, if not stern, Russian “Nyet,’ and then sent Biden over to Geneva to sue for peace after he made it kinda look like he wasn’t rolling over.
And that peace was a face-saving way out of the mess in Ukraine; the face-saving ‘deal’ that allows the U.S. to look like it forced Germany to recompense Ukraine for potential future revenue losses which was agreed to by a lame duck Merkel and Biden this week.
The deal is a joke. The boys at The Duran covered it beautifully last night. It’s nothing more than a slush fund to ensure a couple of billion dollars continues moving through the right people’s hands while it has the political veneer of ‘green’ energy investment in Ukraine to appease the locals.
It’s a typically cynical deal by Merkel as she throws Ukraine further under the bus, tries to threaten Russia with something Germany will never do — not buy gas from them — and ensure that the American politicians with the most to lose are insulated from further scrutiny.
The reality is, as Gazprom deputy chairman Alexander Medvedev said back in 2018, all the wrangling over Nordstream 2 is silly. Germany and Europe are going to need Nordstream 3. There’s plenty of gas demand in Europe to go around.
And in case anyone hasn’t been watching, natural gas prices are signaling that we’re in for a lot more than just a tranistory rise in energy prices.
Natural gas is looking to close July at more than $4.00 / mcf for the first time since the cold weather spike during the nasty 2018 winter which saw even the obnoxiously belligerent British buy tankers of Russian gas to keep people from freezing.
Natural gas prices haven’t been sustainably above $4.00 / mcf since 2014. And this price spike is happening during the summer, not the winter when gas demand is highest. This is yet another reason why Germany simply could not afford to lose Nordstream 2.
They’ll not only need Nordstream 2 and likely 3 but also those LNG terminals that Merkel promised Trump as a sop to get him to back off on the pipeline. Trump, for all of his faults, understood Merkel well enough to know she wasn’t offering anything she wasn’t already prepared to do alreaady.
Trump’s pressure on the project was existential for Europe given Merkel’s (and Davos’) disastrous decision to shutter all nuclear power in Germany. The EU going forward is a massive energy importer. The offshore gas fields of the Netherlands and Norway are drying up faster than anyone wanted to admit until recently.
And at the heart of Davos’ Great Reset is the imposition of their new more enlightened communism than that of the brutal Slavs and the sub-human Chinese. It is this Euro-centric arrogance and, frankly, racism that drives them.
The fact is most of Europe is going to have to face the reality that their great social welfare systems which so many younger Americans have been propagandized into thinking are sustainable are actually on life support. They’ve always been on a ventilator.
And that ventilator has been cheap, locally produced oil and gas, which is ending.
Why do you think Davos is so hostile to oil and gas? It has absolutely zero to do with Climate Change and saving humanity from itself. They hate what they no longer have. The hard lesson for a lot of Millennials and frankly stupid Greens who can’t think beyond first order effects is the same one the Soviet Union had to face.
Communism doesn’t work even if you subsidize the bejeesus out of it through energy exports and hand out ‘free stuff’ from the profits to everyone to mask the costs. In short, incentives matter. Perverse incentives just hollow out the productive class, in Marxist terms, the bourgeoisie, and ensure the collapse of the economy through the inability to rationally calculate costs. Some guy named Mises worked this out in 1922, here we are a century later having to explain the basics of human action over and over again.
And Davos can’t run their new technocratic dystopia if they don’t have control over the input price of energy in their home turf, Europe. The Soviet Union lasted as long as it did because of Russia’s vast oil and gas reserves. Europe is trying to implement a more perfect Soviet Union while simultaneously sending real energy costs skyrocketing.
This is truly a case of people thinking they are so clever they sell themselves the dumbest ideas imaginable.
Nordstream 2 will likely see Gazprom undercut the global price for gas, helping to offset the EU’s disastrous regulatory scheme which creates a structural disadvantage for German companies. Moreover, since they are trapped at negative nominal yields and are desperate to maintain the façade of a strong euro to keep sovereign debt yields low, there is no hope or help from what should be the natural ebb and flow of exchange rates.
So, rock meet hard place. Something had to give and in this case the U.S. gave up on Nordstream 2 and Davos is going to find out really soon that no matter how many palms you grease, how much Kompromat you generate on important people, perverse incentives are the root cause of all human organizational failure.
That’s likely the hardest lesson of all here. Davos blew up the world economy by vandalizing the middle classes of the first (and second) world, in the process mangling the capital investment cycle into energy which is now coming back to haunt them as prices rise alongside public unrest.
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My friends in Poland call it “Yalta 2.”
It wouldn’t be even an issue if the Poles weren’t so recalcitrant and egotistical.
On the up side Eastern Europe, EU members and non members states have a pool of talent (STEM) that allows for their survival. They have the best machinist and most highly educated and motivated youth in Europe. They are extremely tech savvy, hard workers.
Western EU education standards like the US are dropping, albeit not nearly as quickly, as well as the work ethic. Germany and western EU bet on banking and manufacturing and paid lip service to technological advancement, that chicken is coming home to roost.
Right on about education, as well a other symptoms of still-extant cultural sanity that seems to have disappeared in Western Europe. But explain about the “recalcitrant” and “egotistical.”
The Poles sit between two powers, that they can’t possibly defeat militarily , history has shown. They sit on a very valuable piece of land which as a transit route and from a productive standpoint is highly prized. They just can’t let go of their animosity and would cut off their noses to spite their faces if only to show the the Russians. They repeatedly look to others to fight their battles that they choose or pick, the British/French, now US. Worse yet, they look to Germans who have never been their allies. Their hate of the Russians is irrational when you look at history, I’m not saying they should love them either. They just need to leverage their position.
Agreed MGS. And every day their position becomes more precarious while Putin keeps trying to offer them a hand and they keep slapping it away out of pride.
I wonder who you are that you understand it so well. I am a Pole by birth, one of my granddads died on the front a day after the Soviet invasion in Sept. 1939; other relatives were exiled by the KGB to deep Asia and Siberia never to be heard from again, my mom was in a KGB prison and one of her cousins was murdered in Katyn. Yet I am a constant critic of Poland’s belligerent stance versus Russia, offending Putin, getting involved in the Ukrainian morass on the side of the worshippers of Nazi allies and Poles’-murdering Bandera and Shukevych, and so on. And then becoming slaves of the woke US State Dept, US Senators running errands for Jewish interests claiming “restituton” from Poland for crimes committed by Germans — all out of fear of losing the token support of “Fort Trump” and promises, promises — as if the Bidenesque US really rescued Poland if the Russkis decided to move on it. Totally irrational. How much wiser it would have been to navigate between Scylla and Charybdis, the way Orban does.
Max , the mistake I see, is that people conflate “Communist” with Russians (being the largest population at the time to embrace/foisted upon). They came in all ethnicities, ironically Stalin was a failed Georgian monastic. Post WW I, they had probably 30% popular support or higher across Europe. To heap more irony on this, a failed German ideology was foisted on the Russians.
It’s my contention that the ills of Europe over the last 200 years stems from Germany. That is, by no means a condemnation of the German people, it’s necessary to separate the people from the politics and ideologies. For instance Fascism wasn’t a German invention, it’s origins were in Italy, at least the first modern European implementation.
Again, an astute reading of the situation. In my book I show that Germany is destroying Europe for the third time in the past 100+ years — and this time it may destroy Western Civilization itself too. Of course other western nations are complicit this time around and the US prominently so since Biden/Harris, but none as assiduously at Germany. ,
Now that Crimea is secured and the nordstream annuity is in place, I am certain gazprom’s focus will shift to China — a slightly younger demographic mess than Europe, so a good future annuity.
Gazprom will also try to expand into India and Southeast Asia. SE Asia can also get gas from Australia and the Middle East, so gazprom faces more competition there.
Europe no longer matters.
This is why the UK wants to permanently station major naval assets in the pacific. They are talking about three aircraft carrriers (HMS queen Elizabeth the first of three), rotating so one of them will always be on station in the pacific. Singapore or Japan. England will increase participation in Southeast Asia or England will stop being relevant.
The USA has been discussing a military shift to Asia for years. the wind down in Iraq, syria, Saudi, and Qatar are really about freeing assets (and mind space) for Southeast Asia and Africa.
Angela Merkel and merkel-lite (Laschet) have both focused on increasing trade to Asia. When asked about supporting US trade sanctions, Laschet says he doesn’t want to antagonize China. Of course, Laschet is a crowd pleaser who doesn’t want to stand up to anyone. Perhaps he’s more like a discarded plastic bag blowing in the wind. German industry will blow the empty bag toward China.
And monsieur Macron? While he was telling France to mask up and stay in lockdown, macron was attending the Tokyo Olympic opening ceremonies in a near empty stadium. A handful of politicians, the emperor, and some silly looking wooden circles. You should stay in lockdown, macron is going to party.
Europe no longer matters.
Many years ago I found myself working in that ‘jewel of the crown company’ of the EU. In a particularly bad exchange of correspondence a German signed off his email in disgust, saying ‘this is not my play ground’. He was a balanced fellow and mature and experienced, I respected him. His words bought a smile to my face. Not long after that exchange a film called Der Untergang was released, I thought it was incredible and remember the critical review in the UK’s daily Telegraph, they were ‘madder than a bucket full of snakes’.
Yes that described very accurately, those I found myself surrounded by and my god did they fool themselves, not only that but they fed off each other’s egos and non of them realised their madness. Proving once again that you cannot argue with stupidity and there is no one more dangerous than someone who thinks they can think.
To the end days of hydro-carbons we go and god help us all.
I happen to have written a book about EU’s perfidy and stupidity that has five chapters about Germany’s suicide too. The other half of the book is about the hope that still exists for Central and Eastern Europe, and why. The title, “The Camp of the Sane and the Camp of the Saints” should give you a clue to the guiding idea.
The czechs just passed a 2nd amendment like law. There’s hope yet
Exactly. And the Poles and Hungarians stand strong under the LGBT tsunami, resist inundation by “refugees,” and Hungary even KO’d Soros; an unprecedented feat.
I can see Europe’s future now…
John Kerry, Bono and Leonardo DiCaprio will fly to a green gathering in separate private jets. The final leg to the event will be in SUVs (plural) big enough to hold their security entourages (plural) — because social justice warriors are dangerous and unpredictable. They will step in front of fossil fuel powered lights, and scream about justice into fossil fuel powered microphones and speaker systems.
A crowd of social justice warriors, dressed in clothing made in China and basketball sneakers made from petrochemical polymers, will demand that someone who majored in a STEM subject “do something” to the social justice warriors’ liking … for free. The STEM folks have jobs so they won’t hear the request.
Then Bono will do an awareness concert, powered by fossil fuels. Kerry and DiCaprio will wait air conditioned green rooms. EU bureaucrats will appear via skype because social justice is important to getting votes, and votes are what gets you a lucrative career and pensions and benefits at the public’ expense.
Petty crimes will be rampant throughout the event. Then someone will tell a bad yo-momma joke, and the recipient will start shooting. The defunded police won’t be around, and Kerry/Bono/DiCaprio security details have more important people to guard — for pay, not for free.
Finally, its back to the private jets for the socially aware speakers. Fly back to giant mansions with central air conditioning, bright landscape lighting, and a heated 20 car garage.
There is a hard lesson in reality in all these woke gatherings…. but since I went to college in the USA the lesson kinda eludes me. My professor, Comrade Marx, tells me to make sure I apply for more subsidized loans ’cause his tenure is important.
It’s actually good for America that the Nordstream 2 is completed. Our leaders want to sell our precious resource to Europe for political purposes. We don’t have the quantities that our government thinks we have. When you’re paying $600 to $1000 a month or way more in the hard winters to come, you will grow to love the Nordstream 2 as much as I do.
The gas pipeline has the merit of being a stable, future-friendly project. Once complete, it will remain in motion for many years to come, funneling fuel to Germany’s thirsty homes. It will be in the best interests of both Russia and Germany to maintain this vital link between the two countries, and will enhance the prospects of peace between them as well.
— Catxman
http://www.catxman.wordpress.com
Yes, pipelines stitch the world together and ultimately prevent future conflict
/ pipelines stitch the world together and ultimately prevent future conflict/
That is one aspect of what they do (positive). They also keep the globalist structure in place because a government can’t decide to “nationalize its auto industry” (old school style) if the electronics are made in Taiwan. All that will do is produce an idle automobile plant and unemployed workers. So, if you are an anti-globalist this would be a negative.
Furthermore, while it does prevent future conflict the trade-off is that it increases “fragility”. What happens if the Taiwanese semi-conductor industry disappears? That could produce a global catastrophe in the information age we live in.
An example of dependent “fragility” is the Bronze Age Collapse. Where every high civilization then in existence was dependent on a bronze based technology, for wears and weapons. The copper was easy enough to find (Cyprus), but the tin was sourced almost exclusively from Afghanistan. And when that was cut off, that was the end of high civilization in the Bronze Age… and it took the discovery of iron working technology (with no need of advanced supply chains) to revive it.
Hi Tom,
I just recently found you and am grateful for your analysis of Davos and the EU, it all fits together. As a student of history, it is amazing to see the same themes and parallels in European history. Europe is an energy poor region, so finding alternate sources of energy has always been one of the main drivers. Hitler was obsessed with economic autarky (2nd Four Year Plan, 1936) and especially the production of synthetic fuels. So, it makes sense that climate change and the search for alternative sources of energy is an EU priority, but it won’t work if such sources are more expensive and the rest of the world is still using cheaper fossil fuels, as they won’t be able to compete. Thus, the need to have the United States and Canada restrict fossil fuels to weaken themselves and allow the EU to achieve parity.
I am not trying to make anything more about this observation than the observation itself, but have you ever looked at a map of the current extent of the EU and the extent of Nazi controlled Europe (~1942). Not to compare the two, as the Nazis were pure evil, but the similarities are there. Spain, under Franco, just after the civil war was ostensibly neutral, but was an axis supporter. England was out then, and is out now with Brexit. And as they were contesting then in 1942 militarily, the current fight economically is over Ukraine, Belarus, and the Baltic States verses Russia. The EU parliament is not democratic and thus the organization is an “administrative state”. And the most important politician was/is the Chancellor of Germany, as well as Germany being the most important economy. Thus, the end product of the 1940s effort and the current effort seems eerily similar. Possibly I am hallucinating in seeing that similarity (it seems way too conspiracy theory like), but maybe there is something to it if you consider the macro-economic forces at work?
Anyway, thanks for all of your efforts and work!!!
After finding Gold Goats n Guns by chance, I’ve scrapped many other distracting voices of information in favor of the more follow the money and power struggles I read here. Loved hearing a podcast comment on framing a house entirely out of green board in Florida.
Thank you Pete. My approach is simple. Assume everyone is lying 😷
“Poppy eyed Adam Schi++”. He has Graves Disease and since he has been so quiet since the Inauguration, he must be on treatment.