AMAC Exclusive – By Ben Solis
On Tuesday, after much hesitation, the Biden administration finally banned imports of Russian oil, natural gas and coal. But while this latest development is a positive first step, the White House still hasn’t fully exercised all of its options when it comes to hitting Putin where it really hurts – Russia’s energy infrastructure.
The last decade of the Cold War provides a useful historical parallel on how the West could go beyond Russian energy import bans to break the backbone of the Russian economy and bring Putin to heel. . Then, as it is now, many European countries relied on energy exports from Russia. However, US President Ronald Reagan boldly attacked the Kremlin by targeting energy production in the USSR while increasing US production.
President Reagan’s policy focused on targeting the new Trans-Siberian Gas Pipeline which was to transport natural gas from the Urengoi-6 gas fields in Siberia through Kazakhstan, Russia and Eastern Europe, to markets strong Western currencies. Reagan’s special task force correctly identified the strategic value of the project, which a Soviet magazine described as “the Soviet Union’s landmark in world economic events”.
The goal of President Reagan’s policy was to cut off the Soviet Union from hard currency and deny it new technologies—two key factors that would ultimately lead to the downfall of the Soviet Union itself.
The 253 compressor stations connected by 3,600 miles of pipeline made up of 4 to 5 million tons of steel pipes were a trap set by the Soviet Union for Western Europe, making it dangerously dependent on Soviet supplies. If they were over, the Soviets would have suddenly taken over the western economy. Gaz de France analysts estimated in 1983 that in 1990 Russian deliveries would reach 40% of Western Europe’s total natural gas needs.
Soviet foreign exchange earnings from natural gas sales were projected to be between $10 billion and $15 billion per year. These revenues, within a few years, could give the Soviets substantial financial leeway to completely reorganize the $80 billion in debt owed by Eastern Bloc countries to Western banks, thereby restoring the Union’s economy. Soviet.
Leonid Brezhnev, in discussions with top Soviet-Polish communist Wojciech Jaruzelski, said the pipeline would be “the greatest project in history”, and that the communist world would be able to reshape Europe and the world.
The United States quickly targeted the pipeline heavily with sanctions. In addition, information acquired from the French was used by an American agent to sabotage the project, in what has become one of the most incredible untold stories of the Cold War.
By shutting down the pipeline, the Reagan administration destroyed Soviet dreams of gaining supremacy in the European energy market and restoring the shattered Soviet economy, paving the way to freedom for the nations behind the Iron Curtain. .
Today, the West has suddenly discovered that, unlike the last century, it has fallen into Putin’s energy trap. Fearful and worried, Europeans deliberately exempted Russian energy exports from sanctions. No one was more complicit in this surrender than the Germans, who set out to build a direct undersea gas link to Russia via Nord Stream 2.
According to the Organization for Economic Co-operation and Development, in November 2019, exports to Europe accounted for more than 40% of Russia’s total crude and refined oil trade. China, with its 19.8% share, cannot replace it. Trade in crude and refined oil accounts for 43% of the Russian economy.
However, there may still be a way out for Europe and the United States – and this time it will not be a clandestine operation. Russia is tied to economically inefficient long-term oil and gas contracts with China. These contracts will cause Russia to suffer huge losses, not only because the Chinese negotiated a fixed price on the day of signing, but also because they did not agree to buy the resources transferred via Mongolia.
Now Russian companies must build 12 modern compressor stations and connect existing pipelines through Siberia and the Arctic to China.
The only serious source of cash for these investments and the modernization of old Soviet infrastructure is Europe, giving the West a glimmer of hope to leverage Putin. Moreover, without trade with Europe, Russia would struggle to extract gas and oil from the Arctic.
However, the only way for the West to capitalize on these gains is to reduce its dependence on Russian energy – a task that will be neither easy nor painless. But the return of the Trump administration’s US energy policy would lower the price of US crude oil, deprive Putin of hard currency, divest its infrastructure in the energy sector and replace Russian gas and oil supplies in Europe with US exports. .
As in the days of Reagan, when the Urengoi-6 pipeline changed the course of the Cold War, today projects like the Keystone pipeline could radically reorient the current war in Ukraine and deter future Russian aggression. Moreover, a combined Western effort to hamper Putin’s ability to replace his aging energy infrastructure would be an even more effective pressure campaign than simply banning Russian imports. As things stand, the West will likely start importing Russian oil again as soon as the media frenzy over Ukraine subsides.
Every day the Biden administration fails to unleash the mighty economic weapon of the US energy sector, which in turn will unleash the West to target the Russian energy economy, is another day Putin maintains a stranglehold on Europe. and undermines the West’s response to Russia. invasion of Ukraine. For the West to prevail against the resurgent threat of an expansionist Russia, the United States and its allies must be determined to hit Russia where it hurts – not just with sanctions, but with an enduring commitment to end their dependence on Russian energy.
Ben Solis is the pseudonym of an international affairs journalist, historian, theologian and researcher.
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