Background
Despite a large-scale effort to transition Europe’s energy output to more environmentally friendly sources, the ties between capitalist economies and natural gas have proved too strong to cut entirely at this time. The ongoing necessity of natural gas has tied Europe and Russia together. Russia, the world’s largest exporter of petroleum, has long benefited from being the EU (the third largest economy in the world)’s greatest supplier of crude oil due to its geographic proximity and political ties. This was made more efficient through the construction of Nord Stream, an underwater pipeline completed in 2012 to carry oil from western Russia to northeastern Germany under the Baltic Sea. A second pipeline under construction, which was expected to double Russia’s supply of oil to the EU, has been suspended due to the ongoing conflict between Russia and Ukraine. The Biden administration was staunchly opposed to the second pipeline due to concerns over the EU’s reliance on Russian energy, and this position has strengthened due to the Russian invasion of Ukraine.
Importance of Oil to Russia
Prior to Nord Stream, Russian oil companies paid billions of dollars in transit taxis annually to transport petroleum through neighboring Ukraine and Belarus. Nord Stream allowed Russian companies to eliminate the middleman, so to speak, and transport petroleum without paying transit taxes. This reduced the importance of friendly relations between Russia and its former Soviet satellites in the eyes of the Russian government, and impacted Ukraine’s economy. The first pipeline was key in strengthening Russia’s economy while allowing the state to avoid international cooperation.
The original Nord Stream pipeline also created an important bond between Europe and Russia, especially between Russia and Germany, where the European side of the pipeline ended. In 2020, Europe was Russia’s top trading partner, importing over €150 billion worth of goods (mainly oil) from Russia.
Relation to Ukraine Crisis
This relationship became strained in 2014 when Russia annexed the Crimean Peninsula from Ukraine, marking the beginning of its Westward expansion into neighboring countries. This aggression made EU member states question Russia’s intentions in eastern Europe, and created conflict between two powers aiming to maintain influence in the region. Since the annexation, Russia has continued to encroach on its neighbors’ autonomy, culminating in the invasion of Ukraine. The EU paused construction of Nord Stream 2 and enacted damaging sanctions in an effort to curb Russian aggression.
US Position
Russia is not the main supplier of oil for the US. For that reason, among others, the US does not have a similar relationship of economic interdependence with its former Cold War rival. However, the US has a strong and lasting partnership with the EU spanning a host of economic, social, and international interests. For this reason, the EU’s reliance on Russia and EU energy security have an impact on US interest. The EU’s economy depends on energy generated through oil and gas, so Russia has the ability to destabilize the European economy. For the US, Nord Stream 1 and 2 represent a threat because they give Russia, an adversary in many areas of the foreign policy, influence over the US’s strongest diplomatic and economic partners.
US Secretary of State Anthony Blinken represented the Biden administration’s stance on the project, stating, “this pipeline is a Russian geopolitical project intended to divide Europe and weaken European energy security.” He concluded, “Nord Stream 2 is a bad deal—for Germany, for Ukraine, and for our Central and Eastern European allies and partners.”
Suspending Nord Stream 2 and Impact on the US
The suspension of Nord Stream 2 is a victory for the US in some ways, as it reduces further cooperation between the EU and Russia. The EU is in the process of rethinking its energy economy, which involves reducing reliance on oil and natural gas in favor of greener energy sources like wind and solar power. However, this transition is expensive and will happen over the course of decades. In the meantime, moving away from Russian energy puts increased importance on oil and gas producing states like Saudi Arabia. The US and the EU have taken a stronger stance against human rights violations by the Saudi government in recent years, and may now be forced to backtrack.
The US has felt the effects of suspending progress on the pipeline through soaring gas prices and inflation. While Russia is not the US’ main supplier of oil, the suspension of Nord Stream 2, along with other moves to punish and deter Russian aggression, has thrown off the balance of supply and demand in the domestic and global energy market, forcing the US to cooperate with other oil producing states, like Saudi Arabia, while also ramping up domestic energy production. Many domestic energy sources, like fracking and offshore drilling, have a significant environmental cost.
