Nikolas Gvosdev
History does not repeat itself, as Mark Twain remarked, but it does rhyme. And when it comes to its policies on Russia, climate and energy, the Biden team is dealing with Obama-era echoes.
Seven years ago, in my then-weekly column for WPR, I called attention to the internal tensions in the Obama administration’s climate, energy and geopolitical priorities. Back then, the United States was trying to square several irreconcilable circles. One had to do with reducing Russia’s global influence by constraining its sales of energy. Another was putting the brakes on domestic U.S. energy projects that would both increase hydrocarbon usage and despoil the environment. Still another was making sure Americans weren’t paying the price for these two policies at the pump.
On top of all this, the Obama administration’s overriding foreign policy priority at the time was to put significant economic pressure on the Iranian regime in order to secure the nuclear deal formally known as the Joint Comprehensive Plan of Action, or JCPOA. That meant that the U.S., in asking allies and partners to significantly reduce their energy purchases from Iran, could not easily object to them substituting Russian sources of supply. At the same time, Washington could also not afford to alienate Moscow, which played a key role in the multilateral negotiations for the nuclear deal.
Ultimately, the Obama administration reluctantly acknowledged that, in order to meet its other environmental, energy and geopolitical objectives, it would have to accept that Russia would remain a leading energy supplier. The revenues from those energy sales, in turn, helped to shield Moscow from the full force of Western sanctions designed to pressure it to cease its interference in Ukraine.
As the Obama team entered its final two years in office, a new development complicated matters: In 2015, Russia announced it would seek to construct a second natural gas pipeline under the Baltic Sea to complement its Nord Stream line. Nord Stream 2 would double Russia’s capacity to send natural gas directly to Germany, bypassing all of the Central and Eastern European transit states, most notably Ukraine itself. Yet, at the time, the consensus in Washington was that Nord Stream 2 would never get off the drawing board.
Six years later, President Joe Biden has returned to the White House to find that this pipe dream is now almost entirely finished and ready to become operational. And U.S.-Russia relations have only worsened since his time as vice president, with Russian President Vladimir Putin feeling more empowered to challenge U.S. interests and preferences around the world. Reducing Russian influence by constraining Moscow’s ability to fund and sustain its “revisionist” and “malign” activities continues to be, at least on paper, a major U.S. foreign policy objective. And yet, a similar set of competing and clashing interests prevents a straightforward U.S. response to pressuring the Russian energy complex.
Accepting that Russia may continue to be a major energy supplier is a price the Biden administration may have to pay to get buy-in for its higher-priority agenda items.
The Trump administration attempted, in its own fashion, to solve the Gordian knot of the challenge Russian energy poses to U.S. foreign policy interests by largely dispensing with the energy and climate considerations that had limited the options available to Obama. Exploitation of both conventional and nonconventional sources of hydrocarbons expanded during the years of Donald Trump’s presidency, and there was little interest in either prioritizing environmental concerns or encouraging a longer-term shift to green energy.
The rebound in U.S. energy production even meant that when the United States withdrew from the JCPOA and reimposed sanctions on Tehran, it could fill in some of the supply gaps that sanctioning Iran’s energy exports created for friends and allies with U.S.-sourced energy. Trump even attempted to pressure European allies to replace Russian energy imports with higher-priced U.S.-supplied energy as a way of compensating the U.S. for its continued membership in NATO.
The Biden team, however, wants to begin weaning the U.S. economy off of its energy dependence on hydrocarbons. It has blocked environmentally risky energy projects, including pipelines, and reprioritized environmental concerns over energy production. Those steps, along with market forces engendered by the OPEC Plus efforts to influence energy prices and supplies, have reduced U.S. domestic energy production. However, hopes that the collapse in energy usage over the past year due to the economic fallout of the coronavirus pandemic might pave the way for a more rapid shift to greener forms of energy have not quite been realized. As their economies begin to rebound, the U.S. and the West will not be able to depend on newer and cleaner forms of energy replacing oil and gas anytime soon.
At the same time, the U.S. is pushing for countries around the world to reduce greenhouse gas emissions, with the reduction of coal-generated electricity a major priority for Biden’s special envoy for climate diplomacy, John Kerry. Given the importance of stable, plentiful and reasonably inexpensive sources of electricity for modern economies to remain productive and competitive, countries now face a quandary. Many green technologies are either financially out of reach or not yet competitive with hydrocarbon-based power generation. That leaves nuclear power or natural gas as options for electricity generation. And despite Biden’s recent comments that Russia doesn’t produce any goods the world really wants, Russia is in fact well-positioned to supply both.
In the case of Germany, which is seeking to phase out nuclear power, Russian gas, particularly via new export lines like Nord Stream 2, can be supplied in large quantities at lower prices than alternatives, especially U.S.-sourced gas. In addition, given the new focus on environmentally responsible sourcing and transport, Nord Stream 2 is actually more efficient and environmentally friendly than the ageing Soviet-era infrastructure used to transit gas through Ukraine.
Looming above all these concerns is the challenge of a rising China, for which the U.S. needs help from Germany as well as other major importers of Russian energy, including Japan and India. Creating additional problems in key U.S. bilateral relationships over Russian energy would undermine that effort. To the extent that the Biden administration’s overall foreign policy objectives can be summed up as creating partnerships on climate and China, accepting that Russia may continue to be a major energy supplier—and continue to bank those revenues—is a price that Washington may have to pay to get buy-in for those other higher-priority agenda items.
Finally, there is a quiet recognition that preventing Russia from falling fully into the Chinese orbit—a point officials in Berlin, Tokyo and New Delhi consistently make—means giving Russia some economic room to be more equidistant in its relations with China and the West. If increased European purchases of Russian energy help Moscow put some limits on its entente with Beijing, that makes strategic sense, even if it gives Russia some ability to push back on U.S. preferences.
But while U.S. politicians routinely criticize Germany for its willingness to “sell out” for cheaper Russian energy, a quiet trend over the past year shows that the United States is not immune to the economic logic of Russian supplies either. The crippling sanctions the U.S. has imposed on the Venezuelan oil industry as part of its campaign of maximum pressure against the government of Nicolas Maduro, combined with Middle Eastern producers redirecting supplies from the U.S. to more profitable buyers in Asia, have left the U.S. scrambling to replace Venezuelan crude amid a much tighter global oil supply.
As a result, Russia has become America’s third-largest oil provider, especially for particular varieties of crude and semirefined oil that is used for U.S. gasoline production. Given the political impact of gasoline price increases, that may be a lesser evil than dealing with the domestic fallout from additional major spikes in fuel prices. It will take years, if not decades, for electric vehicles to become the dominant form of vehicular transportation in the United States. Until they do, gas prices at the pump will remain an important political metric for any U.S. president.
Green energy is not yet ready. The Biden administration is not prepared to reverse its environmental policies to rapidly boost U.S. hydrocarbon output or invest in a massive expansion of the U.S. oil and gas export infrastructure. Sanctions against Venezuela are not going to be lifted as long as Maduro remains in power, and while the U.S. seeks to restore a nuclear deal with Iran, it has not moved to lift many of the Trump-era energy sanctions that have limited how much energy Iran can send into global markets. And Germany seems to have conditioned its support for U.S. efforts to counter China on Washington’s acceptance that Russia’s role as a supplier of natural gas is vital to Germany’s economic success.
So despite harsh rhetoric on the part of U.S. officials, including Biden himself, about Russian behavior and Putin himself, the administration has quietly accepted the reality of Nord Stream 2, which will help to cement Russian energy influence in Europe, and increased American purchases of Russian oil, which will put revenues into the Kremlin’s treasury. This was the unpleasant tradeoff the Obama administration confronted seven years ago, and it seems to be déjà vu all over again for Biden today.
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