EU must monitor good and bad flows: the latest US sanctions bill an excellent case in point #EUglobalstrategy
July 30, 2017
One can only welcome the ambition stated in the EU global strategy: “European security hinges on better and shared assessments of internal and external threats and challenges. Europeans must improve the monitoring and control of flows which have security implications.”
It is indeed extremely important to try to bring order into European strategic thinking on energy policy and its relationship to security.
It is easy to demonstrate that public diplomacy on energy has many layers and many complications. Often what different actors, notably the American President, are saying tends to confuse rather than clarify.A topical case in point is when President Trump late July tweets that he wants a strong military and low oil prices – what does this mean? Or more precisely – what message is he sending on the latter issue? Is he consistent with his earlier statements?
As often is the case with the American President: when it comes to consistency and clarity one has to look somewhere else.
His choice of Secretary of State was clearly related to the need to signal to the American energy industry that he wanted a person who could help the industry survive. For that one needs higher oil prices, not lower. In his capacity as CEO of Exxon Tillerson was on record in March 2016 saying that with very low oil prices there would be no drilling for (shale) oil. And of course, the current American Secretary of State has in his earlier capacity made significant investments in Russia seeking to capitalize on an earlier much higher oil price.
One of the strategic objectives of the new American administration is also argued to be resetting relations with Saudi Arabia that deteriorated during the Obama administration. Low oil prices hardly fit that policy objective either.
Then, on the other hand, low oil prices hit Iranian interests to recuperate from many years of sanctions.
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But the reality is that the geopolitical energy equation is far more complex than can be seen in a 140 character tweet from the American President.
This is why Europeans need to look not just at one parameter in terms of flows but a wider spectrum of positive and negative flows and their interconnections.
As regards Russia and the Russian military budget it is noteworthy that there is an important link between the long-term capabilities of Russia to implement its ambitions to increase its military expenditures. The budget deficit in 2016 was very high requiring Russia to dip into reserve funds slashing social services and pension benefits. The oil prices are now for some time below $50 which often is described as the breakeven point for Russia in terms of oil prices. It’s difficult to believe that this does not hamper Russian ambitions when it comes to military expenditure for the coming years. This is one of the reasons why also gas is important for Europe from a security policy perspective.
For Russia, the development of gas exports has been an important objective in the last years as illustrated by the Nordstream 2 project. This project which would increase gas consumption in Europe and in particular in central Europe, in Germany and Austria, divides the EU security policy establishment. It circumvents Ukrainian territory.
The American sanctions bill does not just hit Russian industry but also the European interests in the Nordstream 2 project. There are American industrial energy interests involved in this which Trump does not refer to at all when talking about oil rather than gas.
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Energy interests is one aspect of the global battle over scarce resources. that are too important only to be discussed by those in charge of economy and energy.
In fact, it can be argued that little can be understood as regards conflicts in the Middle East, Africa and elsewhere if one does not take into account the battle over resources. This goes for oil in Libya and it goes for uranium in Mali. In the battle against Isis, it clearly has a relationship to oil in the northern part of Iraq – fighting for the spoils after the fall of Mosul.
Against this background, it is not surprising that over the last decade patterns of increasing and decreasing military spending has a link to rising and falling oil prices as reported by SIPRI.
So in order to get the European act together in terms of energy policy, we need an overarching and at the same time facts-based debate about flows – good and bad.
Achieving European unity on these matters, of course, becomes more difficult as the level of abstraction decreases and different interests become clearer. But the discussion must take place.Author : Lars-Erik Lundin