The End of Cheap Russian Gas: Turning the Lights Out in Europe

Even though Putin had warned that the Nord Stream 1 gas pipeline had another sick turbine that needed repair, had offered Europe supply through Nord Stream 2, and had also said that Russia would need to test the Canadian-vacationing part when it returned (it still is not back in Russian hands), EU leaders instead obsessed about the one thing Russia repeatedly insisted was not happening: Russia keeping Nord Stream 1 turned off after its long-scheduled annual maintenance in July.

Interfax provided a bland update of what is an attention-focusing event for Europe, that Russia is cutting the Nord Stream 1 gas flow further, to roughly 20% of capacity, because the other sick part is too sick and the globe-trotting part isn’t back in St. Petersburg, much the less put through tests so it can be restored to service. Presumably after that happens, the shipments over Nord Stream 1 can go back to the 40% level. But that is up in the ari.

From Interfax:

The spot price of gas in Europe has topped $2,000/1,000 cubic meter on expectations that another gas compressor unit at Nord Stream will go out of service….

On the previous day, trading closed at $1,852, while the average price since the beginning of the month stands at $1,713.

Gazprom said on Monday that it was shutting down another Siemens gas turbine engine at the Portovaya compressor station as it was reaching the end of its operating period before overhaul (in accordance with Rostekhnadzor regulations and taking into account the technical condition of the engine).

As a result, the daily capacity of the Portovaya station from 07:00 Moscow time on July 27 will be up to 33 million cubic meters per day compared to the current 67 million cubic meters per day (40% of the capacity).

The underlying problem is the unrealistic thinking of the West, and particularly the EU. Whether you think Russia’s response was justified or not, the West had set out to destabilize Russia by turning Ukraine into NATO-lite. If the US reacted badly to the prospect of nuclear missiles in Cuba, just imagine how it would have reacted if Mexico joined a military alliance with Russia and accepted Russian training, funding, and armaments, and funded a civil war on its border, killing 14,000 English-speakers and creating over 1 million refugees.

Despite the aggressive Western sanctions, including seizing hundreds of billions of central bank assets, seizing Gazprom infrastructure, and explicitly trying to break the Russian banking system and even breaking up Russia itself, Russia has been very restrained as far as counter-measures are concerned. So after loudly saying that the EU wants nothing to do with Russian energy or Russian pipelines, the EU should hardly be upset if Russia is tried of laboring not to give them what they asked for, an economic divorce. The problem is Europe is now upset that it’s getting what it acted like it wanted.

Putin complained in at least two speeches about another turbine having a crumbling lining, confirmed by Siemens. He seemed pretty exasperated. Recall that Germany put Nord Stream 2 on hold when Russia recognized the breakaway republics. As you will see, this is proving to be yet another “Punish ourselves to hurt Russia” move. Per Bloomberg in May, Gazrpom indicates that it would start using the pipeline domestically.

From Putin’s Q&A with the press in Iran on July 19. Note I have yet to see anywhere else an unpacking of the various ways Russian gas once got to Europe:

What is happening? I have spoken about this on numerous occasions, and I do not know if we should go into detail regarding the energy policies of European countries, which underrate the importance of traditional sources of energy and have put money on non-traditional energy sources. They are big experts on non-traditional relations, and they have also decided to make a bid for non-traditional energy sources like the sun and wind.

Last winter was long, there wasno wind, and that did it. Investment in the fixed assets of traditional energy producers has decreased because of previous political decisions: banks do not finance them, insurance companies do not insure them, local governments do not allocate land plots for new projects, and pipeline and other forms of transportation are not developing. This is a result of many years, probably a decade of this policy. This is the root cause of price hikes rather than any actions by Russia or Gazprom.

What is going on today? Until recently, we supplied gas to Europe without Turkiye: we supplied around 30 billion cubic metres a year to Turkiye, and 170 billion to Europe, 55 billion via Nord Stream 1, and, if memory serves me, 33 billion were supplied via Yamal-Europe, via the two strings that run through Ukraine. About 12 billion were delivered to Europe through Turkiye via TurkStream.

Ukraine suddenly announced that it was going to close one of the two routes on its territory. Allegedly because the gas pumping station is not under its control but on the territory of the Lugansk People’s Republic. But it found itself under the control of the Lugansk People’s Republic several months before, and they closed it just recently without any grounds. Everything was functioning normally there, no one interfered. In my opinion, they closed it simply for political reasons.

What happened next? Poland imposed sanctions on Yamal-Europe, which supplied 33 billion cubic metres of gas. They used to take 34, I think, 33–34 million cubic metres a day from us. They shut it down completely. But then we saw that they turned on the Yamal-Europe pipeline in reverse mode, and they started taking about 32 million a day from Germany. Where is the gas from Germany coming from? It is our Russian gas. Why from Germany? Because it turned out to be cheaper for the Poles. They used to get it from us at a very high price, closer to the market price, whereas Germany gets it from us 3–4 times cheaper than the market price under long-term contracts.

It is profitable for German companies to sell it to the Poles at a small premium. It is profitable for the Poles to buy it because it is cheaper than to buy it directly from us. But the volume of gas in the European market has decreased, and the total market price has gone up. Who has won? All Europeans only lost. This is the second point: Yamal-Europe.

So, first one of the routes in Ukraine was shut down, then Yamal-Europe was shut down, now Nord Stream 1, which is one of the main routes – we pump 55 billion cubic metres a year through it. There are five Siemens gas compressor stations working there, and one is on standby. One compressor had to be sent out for repairs. A repaired compressor was supposed to come from Canada, from the Siemens plant in Canada, to replace it. But it ended up under sanctions in Canada. So, one pumping station, just one piece of equipment was out of order because of scheduled maintenance work and it has not been returned from Canada.

Now we are being told that the unit will be delivered from Canada soon, but Gazprom does not have any official documents yet. We must certainly obtain them, because this is our property, it is the property of Gazprom. Gazprom should receive not only the hardware, not only the gas pumping unit, but also the accompanying documents, both legal and technical documentation. We must be able to see what Gazprom is taking – the turbine’s current condition as well as its legal status, whether it is under sanctions or not, what we can do with it, or maybe they are taking it back tomorrow. But that is not all.

The problem is that at the end of July, on July 26, I think – we can ask Gazprom – another turbine should be sent for routine maintenance, for repairs. And where will we get a replacement from? We do not know.

One more turbine is actually out of order because of some crumbling of its internal liner. Siemens has confirmed this. That leaves two operational units, which are pumping 60 million per day. So, if one more is delivered, fine, we will have two in operation. But if it is not, only one will be left, and it will pump only 30 million cubic meters per day. You can count how much time it will take to pump the rest. How is this Gazprom’s responsibility? What does Gazprom even have to do with this? They have cut off one route, then another, and sanctioned this gas pumping equipment. Gazprom is ready to pump as much gas as necessary. But they have shut everything down….

As for gas, there is another route we are ready to open, which is Nord Stream 2. It is ready to be launched, but they are not launching it. There are problems here as well, I discussed them with the Chancellor about six or maybe eight weeks ago. I raised this issue; I said that Gazprom had reserved the capacity, and that this capacity needed to be used, and it cannot be suspended in mid-air indefinitely.

The answer was that there were other issues on the agenda, more important things, so it is difficult for them to deal with this right now. But I had to warn them that then we would have to redirect half of the volume intended for Nord Stream for domestic consumption and processing. I raised this issue at the request of Gazprom, and Gazprom has actually already done it. Therefore, even if we launch Nord Stream 2 tomorrow, it will not pump 55 billion cubic meters, but exactly half that amount. And given that we are already halfway through this year, it would be just a quarter. Such is the supply situation.

Putin was basically saying “What are we do to?” Even though Siemens is theoretically on the hook, it appears that all significant repairs are made outside Russia, evoking the specter of yet more parts stranded outside Russia. And after the doubts about when if ever Gazprom would get its peripatetic turbine back, if I were them, I wouldn’t let the other in-need-of-fixing part leave Russia until I had at least gotten the other one back.

RT has a tidbit that is not pretty:

Gazprom said earlier on Monday that the paperwork it had received from Canada and Siemens regarding the shipment of the turbine did not clear up sanctions-related questions.

This is what Gazprom had sought, per Reuters:

Gazprom said on Friday that it still had not obtained necessary documentation from Siemens Energy confirming the exemption from European Union and Canadian sanctions for a key turbine for the pipeline to be returned to Nord Stream’s Portovaya compressor station.

Canada and the EU can’t gin up a short note on official stationery? Without some documentation of a sanctions waiver (after having gone on noisily about how because sanctions the part was held hostage in Canada), what assurance does Russia have that 1. there won’t be some punishment vis a vis the part delivery and 2. it won’t be subject to the same run-around if the second busted Nord Stream 1 part has to go to the EU or Canada, which seems likely?

I also wonder if Russia either chose or was persuaded to choose Siemens to handle maintenance and servicing to make nice to Germany…..and now that’s proven to be a big problem because sanctions.

And as Putin made clear, before you accuse Russia of seeking to choke the EU, recall that Ukraine and Poland effectively cut off the Yamal-Europe pipeline (Ukraine overtly, Poland by refusing to pay under the new gas for roubles scheme). Putin offered to Scholz >8 weeks ago to turn on Nord Stream 2 to assure supply. Scholz didn’t accept.

The Europeans could still get 50% of Nord Stream 2 capacity now if they’d get over themselves. But no, they’d rather suffer and be right about Russia.

Mind you, Germany’s national strategy depends on being a low-cost industrial producer. Germany has strong tenant protections and has kept renting affordable to help keep labor costs down. Cheap energy has also been important to German competitiveness as well as to the well-being of its citizens.

There is simply no way LNG will come even close to making up for the shortfall in Russian gas, assuming the EU does not break down and ask Russia to turn on the Nord Stream 2 tap. And even if over time (and it will be a moderately long time), Europe is able to get enough in the way of LNG supply contracts and terminals and tankers lined up, LNG will never be as cheap as the Russian gas it is giving up.

Europe is about to throw away everything it worked so hard to achieve since the end or World War II out of ego. It scuppered the peace talks between Ukraine and Russia that had made important progress at the end of March because Russia had to suffer. It can’t admit that its shock and awe sanctions failed to prostrate Russia and that the costs to the West keep rising as they become more manageable for Russia. And worse, many will go cold and hungry this winter and some will die unnecessarily. And the Europeans hold themselves out as civilized people. Since when it is civilized to not just inflict unwarranted punishment on the weak and poor, but tear down your own society? Russia is not doing wrecking. The West is doing this to itself over its inability to admit error and cope with the fact that it has failed to crush Russia.

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83 comments

  1. fairleft

    EU was right about Russia in their bubble, where painful facts are excluded, but not right in the real world. Russia had to put a stop to de facto and then real NATO membership for Ukraine, which (not including the US) would make at least six rabidly anti-Russian states in that organization. The US rejected Minsk 2 and ridiculed Putin for continuing to push it. The only option was war.

  2. DorothyT

    This reminds me of attending the 1984 Winter Olympics in Sarajevo, as a member of the US press. This was, of course, before the war in Bosnia and Herzegovina and the siege of Sarajevo (1992-95). I formed a friendship with the Sarajevo press officer who told me that the Soviets were so incensed at the positive worldwide attention given to Sarajevo that they cut back on the power sent to the region during the games. A reminder to Sarajevo not to get “too big for its boots,” she said.

  3. DJG, Reality Czar

    “Europe is about to throw away everything it worked so hard to achieve since the end or World War II out of ego. It scuppered the peace talks between Ukraine and Russia that had made important progress at the end of March because Russia had to suffer.”

    I think that these two sentences are central to understanding where we are politically and to understanding the spirit of these baroque times.

    For weeks, I have been trying to ferret out an underlying cause of the current mass insanity. This post details how Germany is on the verge of committing national suicide at the behest of the Yanks and how simple it would be to pull back from the brink. Rather than ego, I would substitute “death cult.” The oh-so-rational Germans have decided to worship the wrong thing, I guess.

    The second sentence turns on two issues, the first of which is the importance to the deluded powerful in the West to see others suffering. Would that the entrenched powerful had met up with Dr. Guillotine’s clever device.

    The second sentence also turns on the issue of belief. The mass insanity now consists of many people who think that their beliefs matter. I’m seeing endless psychobabble in U.S. media about Trump’s narcissism, which people firmly believe exists, not noticing that the U.S. is the world’s font of narcissism. And this insanity is so far gone, so rotten, that it no longer sees peace as a good, as something indispensable to human beings. We now “believe” in the curative powers of war.

    What is to be done? At one time, we could expect certain statesmen and women of influence to arise and demand a peace conference. Now, because the death cult reigns, it is too profitable to the elites to continue the war there in Ukraine endlessly–Ukraine, so faraway, so filled with photographers posting gruesome photos as baroque entertainment–because of their belief that the suffering of others teaches the rest of us groundlings how to behave.

    And the malign, avaricious, and overripe Pelosi flies off to Taiwan like one of the Harpies.

    1. Mike

      I don’t mean to be sarcastic, but, after all, World War Two did relieve us of a bitingly bad Depression that did not want to end just because FDR waved a few magic wands. The mentality that saw war as the cure to Depression and took peoples minds off its effects, brought full employment, and (due to rationing) saved a bundle of money ready to be released after the war, fueling recovery, plus gave us a financial system for the rebuilding of Europe, is the ruling mentality now, ignoring nuclear weaponry, changing political alignments, and even the possibility of good relations with “bad” regimes being more influential than sanctions and color revolutions (a spoonful of sugar…). Such dormant thinking has captured the political, media, and corporate mindset, percolating down to the population as a whole. Europe and the US have “hubrised” themselves.

      1. Mark Sanders

        Could be that the U.S. temporarily becoming a socialist state during WWII had such a positive effect on our economy that after the war and reverting to normal capitalism, the largest and wealthiest middle class in this country’s history was created.

        People seem to think that socialism and capitalism are opposites, that governments can only be one or the other, when in reality every (non-communist) country with a functioning government is a blend of socialism and capitalism. I’m only an economics dilettante, so don’t slam me too hard if you disagree.

  4. Louis Fyne

    it’s rather hair-pulling that the EU will have no other choice but to burn unseasoned wood/seasoned wood, peat, coal, diesel to keep the heat and lights on. the absolute worst sources of heat-electricity.

    unbelievable.

    Wind and solar are not magic bullets at current levels of technology. Like it or not, one needs natural gas and fission. Or radical conservation (via price and shortages) will solve the problem for you.

    1. The Rev Kev

      Don’t forget trees. They are already cutting down trees in Europe for firewood. I bet that the Greens did not see that coming.

        1. michael hudson

          By all means, pay special attention to firewood.
          When I visit my publisher in a small town south of Dresden, many houses have woodpiles in their yard, piled high with cut trees being seasoned.
          I have gone to local sales displays of home wood furnaces. they are very very large, and also very attractive, and cost about $20,000.
          there is a small forest near by to supply wood for most small German villages and towns. You can be sure that they are all being filled up right now. Driving along a German highway by a forest, you can see trees that have been cut down, carefully thinning out the forest. This is not for hardwood, but or burning.
          German lignite has been getting attention, but the main fuel of the future is coal, from Poland and other central European countries.
          The irony here: The Greens are leading the rejection of the Paris Climate agreement. The topper, of course, is the global warming and carbon footprint of waging war in Ukraine.

          1. The Rev Kev

            That’s very interesting that. I use to see wood stacked up high against the sides of homes in the country when I was in Europe. But from what you say, by this winter in Europe you will start to see images taken from satellites or high-flying aircraft showing all the smoke from all those homes drifting across the landscape.

          2. Mikel

            I’m reminded of this from about 2019:

            https://www.dw.com/en/jair-bolsonaro-to-merkel-reforest-germany-not-amazon/a-50032213/

            “Jair Bolsonaro has delivered a forceful response to the announcement by Germany over the weekend that the Environment Ministry would freeze funding for protection projects in the Amazon while he is president of Brazil. Deforestation has spiked under the novice president’s nationalist regime.

            “I would like to give a message to the beloved Angela Merkel,” Bolsonaro, who has a well-documented history of misogynist statements, told Brazilian media late Wednesday. “Take your dough and reforest Germany, OK? It’s much more needed there than here…..”

          3. ThePodBayDoorsAreClosed

            A logger in N. America fells trees, spews CO2 to drive them to a plant that pelletizes them, then loads of CO2 spewed shipping them to the UK, where more CO2 is created trucking them to UK power plants, which burn them. Maybe instead the UK power plant operator should step outside his plant, kick the ground, and notice the hard, highly energy dense black rock under his feet. But that would not serve the super new new thing, T.G.W.O.T.W. (The Great War On The Weather). They had the War On Terra, trillions spent killing goat herders on the other side of the planet. Then they had The War On One Virus. But T.G.W.O.T.W. is far superior because it’s unmeasurable, no pesky battlefield casualty numbers to explain away, no irksome case counts or vax injuries to try to justify. Hey it’s 75 and sunny today, that means we are winning! Our standard of living has halved, but (just like with the vax) It_Could_Have_Been_So_Much_Worse!

          4. monosynapsis

            Many houses in rural areas in Germany use a traditional wood stove or open fireplace as a secondary heating source during the intermediary time in autumn/spring when the usage of the central heating system isn’t justified. Also as an extra cosy complementary heater when it really gets cold.

            Obviously, the more wooded the area the more you see this (for instance pretty uncommon in the flat, treeless north of the country). During my hikes this spring in the Palatinate Forest I witnessed many a wail and whine coming from bespoke ovenowners buying their stock for the winter to come. Not a beer could be had in any village without extensive conversations about heating costs and systems.

            Also: many companies installing heat pumps were fully booked far into 2023, should be 2024 by now.

            Oh, and a forest guard told me that they just caught someone illegally cutting wood in the night, which was exceedingly rare in the past according to her.

        2. dermotmoconnor

          If you’d told me in the mid 00s how awful Greens are as a political force I’d not have believed you. Then they got into coalition (in Ireland) in 2007, and ouch. Green my anus. And it doesn’t seem to matter what country they’re in, just a horror show, as now in Germany.

          In Ireland the 1930s fascists were called “blueshirts”, hence the moniker “blueshirts on bikes” to describe the Irish Green party. Bike lanes in leafy middle class suburbs is #1 on their agenda…and passing on the cost of their policies onto the working class a very close second. Awful party.

      1. hk

        To credit the Greens, I imagine a global nuclear war would go far to slow global warming. (Not sure if this is sarcasm any more)

        1. Soredemos

          On the one hand, all the forests catch fire. On the other, the resulting megaclouds block a bunch of solar heat.

      2. mikesmith

        Solar and wind have not been able to supply all of Germany’s renewable power without causing blackouts, only about 25% of it. The rest of Germany’s renewable energy comes mainly from burning trees in power plants. Most of those trees, I have read, are imported from Poland. So the Greens are used to felling trees for renewable energy. They seem to prefer chopping down and burning trees to burning natural gas, coal, or even uranium.

  5. The Rev Kev

    There is another aspect of this whole saga that should be mentioned and it is this. Even if the EU raised a white flag tomorrow and agreed to come to the negotiating table with Russia, it is too late as far as energy supplies are concerned. Those energy sources (gas, coal & oil) are now being directed east to China, India and the other Asian nations. Well, maybe not Japan. The transport lines are being set up and commercial negotiations and preparations are being made. And that process cannot be reversed any more and in fact I do not believe that the Russians have any desire to bother doing major deals with Europe. Even before the war, the EU had virtually cut off every single contact point with the Russians and it was really only the commercial ones left. But the past four months have convinced them that they can no longer work with the EU. There is no trust there. None. Nations like China and India may be hard negotiators but the Russians probably respect that as they know that agreements will be kept. But if there is one thing that this whole turbine saga has taught the Russians is that they can’t work with the EU as there is no trust. So all that energy is heading east now and will not be coming back. And as it was access to cheap Russian energy that underpinned the European economies, they will become de-industrialized and the whole region will become an irrelevant peninsular. Damn.

    1. .Tom

      This aspect is presumed in my comment below. Russia can sell its hydrocarbons south and east. It’s no problem to Russia that countries to the west have to buy those good through intermediaries (albeit within the supply constraints of their infrastructure).

    2. Ignacio

      I don’t think so. Russia has capacity and willingness to deliver enough NG for the next winter and almost certainly for the following winter even if Russia is diverting some deliveries to Asia. But as we see in the post the hardest anti-Russians in the EU are prevailing so far. As a matter of fact current NG reserves are not far from historical records though stock refilling must (or should) proceed until October and then, if NS1 or 2 are functioning next winter there wouldn’t be shortages next winter. Some are playing with fire but at some point, when the danger gets more and more real, I hope that some get to their senses.

    3. Tom Stone

      The USA has transitioned from a “High Trust” society to a “Low Trust” society in half a Century.
      And Western Europe is following our lead.
      The complete lack of integrity of Western Governments is a breathtaking example of where Neoliberalism’s monetization of everything has taken us.
      It’s showing up in Foreign policy, Covid response, you name it.
      It is systemic corruption.
      And madness, objectively insane behavior on the part of Western “Leaders”
      With climate change an imminent and existential threat to all Human life this is the best we can do…
      Homo Sapiens is a misnomer.

      1. spud

        Bill Clinton broke Bushs promise immeditley not to run Nato up to Russias border, and attacked Yugoslavia over trump up charges.

        this was all to beat into submission, anyone who had ideas about their own sovereignty and democratic control.

        what you are watching right now in real time is a massive temper tantrum out of the free traders who viewed from 1993 on wards, whats mine is mine, whats yours is mine to, and their will be no discussions about this period, know your place!

        they thought world control had finally been attained, now it was onto crushing whats left of the worlds civil society, Russia and China threw a wrench into their plans.

        they will not stop, its not that they are illogical, its that they are psychopaths.

        1. Soredemos

          The charges against the Serbs were not remotely trumped up. That doesn’t automatically justify NATO actions, buthe Serbs actually were bastards in the disintegration of Yugoslavia. They weren’t the only ones, but bastards they were all the same.

      2. drumlin woodchuckles

        Homo Sapiens is only a misnomer for the Modern Industrial Civilization Man which is doing all the damage.

        Indigenous Man was Sapient enough to up-terraform huge amounts of Amazon Basin land, for example.

      3. mikesmith

        You can’t blame Neoliberalism for everything. Neoliberalism strongly supports reliable contracts, the unimpeded flow of goods and capital (and even labor) across borders, and the peace and stability necessary for those free flows to happen. And the hardest line supporters of these sanctions? Not Neoliberals, but the Greens who are incessantly critical of “Neoliberalism.” You must look for villains elsewhere in this case.

    4. Karl

      What might Russia be getting from China in return for its energy exports….Spare parts?

      According to this tidbit from an interview up on Jacobin with Boris Kagarlitsky (Moscow sociologist and host of a popular Russian YouTube show Rabkor):

      The Russian car industry is on hold, for example. It’s just not producing anymore, because it’s so dependent on German, Japanese, and South Korean parts. The military-industrial complex is also suffering because they’re not getting enough spare parts. The same is true in aviation: many domestic companies are already bankrupt and now being cannibalized by the larger carriers like Aeroflot and S7.

      I wonder if this problem is exaggerated. Can’t Russia get all of the spare parts it needs from countries not complying with U.S. sanctions (e.g. China)? This would include spare parts made in Germany and elsewhere in the EU, right? Germany-BMW (for example) sells to China, and China re-sells to Russia (plus the usual mark-up)? I would imagine China has a sort of special purpose Alibaba whereby Russian auto mechanic orders parts from BMW-China online and gets the parts efficiently and promptly. Thoughts?

      1. Karl

        All of these hypothetical online transactions are in bilateral currencies and banking systems– no dollars involved!

      2. Polar Socialist

        We already know that the city of Moscow took control of the Renault factory, and also that it will soon start building Chinese JAC cross-overs. Initially all parts will come from China and only assembled in Moscow, but the plan is gradually replace the part with Russian manufactured parts.

        There’s also an agreement with KAMAZ that the factory will design a completely Russian electric car family in 2-3 years and this will revive the Moskvitch brand. We’ll see how that turns out.

        There also was news about the gray, or “parallel” (as in not from the manufacturer, or not even with blessings of the manufacturer), imports being only allowed until February 2023, when the European auto manufacturers are expected to return to Russia.

        All in all what Kremlin wants, according to Putin in St. Petersburg International Economic Forum in June, is to re-create car industry that is not too dependent on foreign IP or parts.

        As for defense industry having problems, I’m not sure, but 1 do assume that story originally was about Uralvagonzavod having to stop some civilian production (railcars, trams etc), but not the tank assembly lines.

      3. mikesmith

        I think there is probably substantial exaggeration. First, consider the medium: Jacobin? With a name like that, isn’t it likely that it interviewed only people who are mindlessly hostile to Russia/friendly to the West? It is probably still mad at the Russians for abandoning Communism. Second, the interview is with a SOCIOLOGIST, an academic whose field is not known for having members who understand or take much interest in logistics or manufacturing or technology.

  6. .Tom

    At this stage all Europe can do is consider what Russia wants so much that it will trade it for gas. Russia is dealing with shortages of certain embargoed goods, and that causes problems. But I think what Russia wants most is to be seen by leaders in the rest of the world as a reliable, predictable partner on trade, diplomacy and security that operates under international law.

    Meanwhile the EU’s leaders behave like movie stars, the elite of a charismatic media aristocracy, who are incompetent at administration and disinterested in objectivity because they built their careers on expertise in reciting pieties of a theology that’s actually in conflict with reality. They are like the preachers in churches that generate belief in the righteousness of American trade/military supremacy.

    So it looks to me like the current EU leaders are doing everything right to give Russia what it most wants.

  7. Steve H.

    > Since when it is civilized to not just inflict unwarranted punishment on the weak and poor, but tear down your own society?

    The Grande Dame of Neoliberalism:

    [W]ho is society? There is no such thing! There are individual men and women and there are families and no government can do anything except through people and people look to themselves first.

    [When people tell you who they are, believe them.]

      1. chris

        The results will also be disastrous if we swing back to bigger government with this current coven of Democrats.

        Pelosi especially. She is so thoroughly corrupt that she can’t conceive of a reason to not abuse her public position for private gain.

  8. Thuto

    The ambient emotional temperature in elite political circles in Europe is so high, and as people are wont to do when irrationally emotional, bad decisions are the order of the day. Europe is in full self-cannibalizing mode now, and simultaneously marching headlong into a full blown energy emergency, and no one among the current “leadership” crop will “break the glass” and pull the continent back from the brink of ruin. With another frothing-at-the-mouth, Russia-hating firebrand like Liz Truss possibly about the snap off the leash and enter the arena as PM, things are likely about to get a whole lot worse. Me thinks sociopathy is the one undisputed personality trait that sets one on a fast track towards joining the ranks of the political elite, and we are seeing that demonstrated in this horror movie.

    1. Synoia

      The sociopathy appears to be a condition common to nearly all humans on positions of power in all parts of human activity.

      Does a well paid humble CEO of a medium to large enterprise exist?

      Does Liz Truss acknowledge that Great Britain lost its power and influence in the 1950s (Suez), and Thatcher crushed it’s industry in the ’70s with neoliberalism, leaving the British Government with only a soap box as a pulpit on the international stage?

      1. Grebo

        A soap box, nuclear weapons and a permanent seat on the UNSC. That’s a fair bit of troublemaking potential.

      2. spud

        to watch the mental midgets in the Biden administration who were all for the policies that stripped America of its wealth and power threaten Russia and China, must look comical to the leaderships of Russia and China.

  9. Stephen

    Definitely a very cosmopolitan turbine. It must be the first one in history that world leaders such as President Putin are tracking the movements of and following updates on its repair, vacation and travel itinerary.

    The comment about Siemens makes sense to me. I do wonder how many risk assessments the Germans have had carried out on their energy security, probably with outside consulting support. Am sure we can all agree that dependency on Russia may have been a top of mind item. Bet that dependency on a German company and what is technically a NATO ally for repairs was either not on the list at all or buried as minuscule probability, although maybe scored highly on impact.

    The issues over letters and so forth with respect to sanctions waivers and the possibility of punishment does underline the points made yesterday with respect to the grain deal. When will the west come to its senses again and start behaving like rational adults, prioritizing substance over form rather than the reverse?

    I saw elsewhere (maybe on this site but not sure) western ambassadors now asking various non western foreign leaders or representatives not to be photographed with Lavrov. So, of course, photos of him shaking hands with members of the Arab League now seem to be everywhere. The various representatives even seemed to relish shaking his hand!

    This “send people to Coventry so we can signal our virtue” western behaviour is just so counter productive at all levels. It is the foreign policy corollary of students thinking they should deplatform people they disagree with. It is not the way to achieve constructive problem resolution. Especially in such a tragic situation and when so much is at stake. As no doubt everyone contributing to this site understands.

    1. chuck roast

      Whatever the internal thinking about Siemens, Nordstream II coming online was on the immediate horizon. With Nordstream I passing through two hostile states (one of whom was actively tampering with it and stealing gas) I suspect that Gazprom began thinking that O&M on Nordstream I could due with a bit of corner cutting. In any case, I’m failing to see how that is a head ache for Gazprom since Gazprom Germania now seems to be in control. Perhaps they should use part of their 5B euro bailout to upgrade their newly liberated property.

      1. JohnA

        No, Nord Stream 1 runs sort of parallel with Nord Stream II under the Baltic. You are thinking of the pipeline that runs through Ukraine.

  10. LAS

    I don’t know. We may be over-thinking the Nato/energy aspect of this war and under-thinking the Crimean / Black Sea / Turkish straight aspect of it. Maybe this is more like the 1853 Crimean War than a NATO war; the Crimean War pre-dated NATO by nearly a century. Both wars are about an aggressive imperialistic reach by Russia angling for more control into the Middle East, the Mediterannean, and even into Africa. We must not think about this as having an influence only on Germany’s local cheap energy economy. Maybe it is not purely “ego”. Maybe, too, that’s why Russia is conducting a global propaganda campaign to convince the world that all the grain shipment interruptions are other people’s fault. In a way, this may be WWIII being played lite. And let’s hope I am wrong or that it stays lite.

    1. britzklieg

      you got it backwards fella, the propaganda here is the West trying to convince that world that the grain shipment interruptions are Russia’s fault.

      1. IMOR

        Not the only thing he has backwards, about either war.
        Attitude like today’s NHL: officials won’t penalize even 20% of cheap shots, but if you take care of it yourself, you’re ‘aggressive.’ A student gets sick of the bullying and pops the bully? Guilty of ‘assault.’

    2. The Rev Kev

      ‘Both wars are about an aggressive imperialistic reach by Russia angling for more control’

      You mean like on the Russian-Ukrainian border? I have no idea why Russia was not wiling to tolerate a NATO-trained army on their borders that was killing a thousand or more Russian-speakers annually. Nor a regime that is controlled by literal Nazis and who were thinking of cobbling a nuke together from the multiple nuclear power plants in the countries. And that ‘global propaganda campaign’ is what once upon a time was called ‘diplomacy.’ It used to work really great in its day. We really should start it up again.

    3. Polar Socialist

      Crimean war was more about a collision of British, French and Russian imperialistic control in Balkans and Ottoman Empire. With the minor distinction that the Balkan people actually kept asking help from Russia to deal with ottoman oppression and that it was on Russia’s border.

      Nicholas I kept saying, throughout his reign, that he did not want an inch of Turkish soil, which in London and Paris was interpreted as “I claim Constantinople!”. Even is since 1833 treaty between Moscow and Constatinople Russia was actually acting on preserving the Ottoman rule – albeit with Russian influence – and not expanding towards Levant.

      For some reason that agreement turned British into Russophobes and ever since they’ve been certain that Russia is ogling at the regions that by God’s right are for the British to dominate. Even when they are Russia’s neighbors and Russia kinda has at least some sort of legitimate interest in the developments there.

      It’s hard to imagine that already in the 1850’s Russia was this gloomy, backward autocracy hellbent to spoil the advance of western civilization on it’s borders. /s

      1. Stephen

        That’s my take on the Crimean War too.

        There were various bouts of epidemic anti Russian feeling in Britain during the nineteenth century. The very term “jingoism” was coined as a result of Macdermott’s War Song of 1877 which was in response to the Russo-Turkish War and the Battle of Plevna:

        We don’t want to fight but by Jingo if we do,
        We’ve got the ships, we’ve got the men, we’ve got the money too,
        We’ve fought the Bear before, and while we’re Britons true,
        The Russians shall not have Constantinople.

        It is sad that history seems to rhyme. We now claim to oppose such sentiments. But we have not changed so much.

        1. Revenant

          Somewhere recently (NC?), I read a very interesting account that the first use of the word “atrocity” in an international conflict sense was of the “Turkish atrocities” that were propagandised to whip up the Crimean War in Britain….

  11. Tom Stone

    It always comes down to people.
    If the selection process for your elites encourages sociopathy and corruption for long enough you get what we have in the West.
    And it is about Ego.
    And madness, their egos are so fragile they would rather destroy the economy of Western Europe,cause the death of Millions by starvation and risk WW3 rather than admit they were wrong about something important.
    Which would be embarassing.
    I recall reading long ago about a British officer in WW1 who recognised the smell of the Poison gas being used in the first German gas attack and who realized that urine would neutralize it to a large degree.
    So he pissed on his handkerchief and breathed through it, advising those near him to do the same.
    Some did and lived,many did not.

    1. Lex

      This moment that they created is far, far too big for our leaders. They haven’t tried anything and they’re all out of ideas. You are correct that their egos will not allow them to back down; everything they have is the result of their egos. They know nothing else. They are not serious people.

  12. Boomheist

    So today in the New York Times, just below the top headline, is this: E.U. Agrees to Sweeping Curbs on Energy Use to Counter Moscow’s Leverage (https://www.nytimes.com/live/2022/07/26/world/ukraine-russia-war) which is a dramatic demonstration that it seems nobody has learned anything since late February. This agreement seems to be, perhaps, the powers that be seeing they are f**cked and hoping such an agreement (really a response to a stark reality) might hold off the rage of the masses until some sort of miracle cure arises, from somewhere, somehow. What this article really shows, to me, is that Europe is in for a hard hard winter, even if the winter is relatively mild; it shows that worldwide inflation will continue for months; and that NOWHERE, yet, is anyone calling for peace, or a cease fire, or anything. It is amazing, actually. But neither is there any kind of anti-war movement rising. Remember before Iraq in 2003 – I think it was 2003, that was almost 20 years ago, now – millions and millions all over the world, especially in Europe and the US, went into the streets to stop a stupid war? So far, today, nothing, anywhere, at least as far as media coverage. Scary.

    1. Grebo

      With Iraq it was obvious to everyone what was going on. With Ukraine most people have no clue what is really going on.

    2. Starry Gordon

      With regard to Iraq, the massive demonstrations against the war — half a million people in the streets of New York City — had no effect. For the time being, there is nothing to be done. We just have to ride it out.

  13. Socal Rhino

    As I recall, at the outset Professor Hudson stated that the US had declared war on Western Europe with the intent of ensuring persistent European dependence on the US. I think that remains the best way to understand what’s driving events.

    1. Cristobal

      Yes, and the years of militar y occupation have given the European countries a base case of Stockholm syndrome

    2. Tom Pfotzer

      Rhino: How does your theory explain the fact that Germany is going along with this war against itself?

      Are you saying that Germany is totally under remote control?

      I just can’t believe that. The control would have to extend throughout E.U. also, not just Germany.

      I am wonder if Germany’s leaders – not just the politicos, but the people that run the politicos, I wonder if they didn’t sign on to the plan to dismember Russia. That would solve a lot of Germany’s problems if it succeeded. Regime change in Russia might well provide access to materials and markets, and slow down China a little bit. China will likely dominate markets and technologies that Germany wants for itself.

      And that theory would also explain why Germany appears to be doubling-down on their bet against Russia. It would explain the willingness to endure great pain – obvious, widespread, durable pain.

      What my theory doesn’t explain is the apparent lack of dissent among Germany’s industrialists. The break-Russia strategy, if it fails, marks the end of their families’ affluence. That’s got to be worrying some people.

      And of course, that same principle applies here in the U.S.

      If the NeoCons (as spear-point) continue to fail, they’re going to ruin a lot of oligarchs’ future revenue streams. Every few months the NeoCons remain in control is another country’s resources (rent extraction taps) and sales-market (the other rent-extraction taps) lost, possibly for good.

      1. Socal Rhino

        Tom,

        My reminder of Professor Hudson’s earlier point spoke to US motives, not why Europe went along. That’s a different question.

        Why do any countries become US clients? Pat Lang, during the Russian military intervention in Syria I believe, cited his experience in Vietnam in saying that trusting the US won’t end well for you. I think he was referring to the Kurds.

        As you speculate, the elite probably thought it would work to their benefit. Maybe they thought Russia would collapse, only they know.

        Calculations among at least some EU countries appear to be getting revisited as events unfold.

        1. Tom Pfotzer

          Rhino:

          You said that why Germany/EU acquiesces to its ruination “is a different question”.

          I think it’s the central question and thesis of the article, as evidenced by this quote from the article’s concluding remarks:

          “Europe is about to throw away everything it worked so hard to achieve since the end or World War II ”

          So, the U.S.’ intentions are not relevant. The U.S. can “intend” anything it wants, but in order to cat’s-paw Ukraine .vs. Russia, it has had to garner support and major buy-in from every NATO player, especially Germany, and every one of those NATO participants is losing now, and has a great deal more to lose before this situation wraps up.

          And those losses – of global market share, of access to resources – those losses may be permanent.

          Therefore I don’t currently believe Dr. Hudson’s theory that Germany’s self-destructive behavior is the result of the U.S.’ intention to destroy Germany. The U.S.’ plan wouldn’t have made it out of the gate without massive buy-in from NATO and Germany in particular.

          It looks to me like Germany is in on the dismantle-Russia game.

          1. Socal Rhino

            Fair enough. You may be right. I think if Germany had a Degaulle they might have made different choices.

            1. Tom Pfotzer

              Rhino: Yes, indeed. Germany really could use a Degaulle now. And we could sure use one here in the U.S. Germany and U.S. have a lot of the same problems.

              What is it about a culture that enables it to have a Degaulle?

              That’s the question I find most fruitful, and ponder constantly. “What do you have to do, Tom, to contribute to the formation of a culture that would value, that would _insist_ on having a Degaulle type leadership?”.

  14. hk

    ‘The lamps are going out all over Europe, we shall not see them lit again in our lifetime’

    Sir Edward Grey, FM of Great Britain, on August 3, 1914. One hopes that we are not seeing a (more literal) repeat this year

  15. jo6pac

    Well this makes think that Make Amerika Great Again and Build Back Better programs are working really well. It’s helping Russia, China, and the Brics. Amerika and EU not so much.

    Everything is on scheduled on the race down hill. Good job neo-conns

    1. mikesmith

      The Neocons are uniformly anti-Trump and anti-MAGA, not pro-MAGA. I’m not sure where they stand on Build Back Better. You seem to have your political factions confused. The MAGA movement is generally non-interventionist.

      1. Kilgore Trout

        I think many in the MAGA movement are more strongly anti-Chinese than anti-Russian, and will support continuing and then escalating involvement in China-Taiwan affairs. “Saving Taiwan” from the clutches of communist China has always been a tenet of the Right, dating back to “Who lost China?” and the McCarthy era. The Chinese are still “Red” to most on the Right, and therefore to be hated and feared, and readily blamed for “stealing American jobs and industry”. The financial ties between Chinese companies and (for example) the Bidens, lend just enough credence to this to make it plausible. The fact it’s mostly deflection from the major role of Neoliberalism in selling off our industrial base illustrates the power of our disinformation industry to cloud any issue and keep most USians fat, ignorant, unhealthy. And pacified with the modern equivalent of bread and circuses: junkfood and football/ video games.

  16. Leroy R

    I would think, that in the long game, the more the Russians manage to leave in the ground the better off they will be.

    1. Louis Fyne

      yes, as a practical matter, natural gas is too useful of a thing (transport fuel, heating fuel, fertilizer, plastics, maybe fuel cells one day) to burn at 40 cents per therm (USA price pre-Covid).

      Russia would actually be better off to hold onto its reserves as long as possible, consuming-selling only that which is absolutely needed.

  17. Robert Hahl

    “Since when it is civilized to not just inflict unwarranted punishment on the weak and poor, but tear down your own society?”

    Didn’t the peace of Versailles lead to this same kind of behavior? If Europe doesn’t watch out, the Germans are going to elect a Chancellor who can make the turbines run on time.

  18. NN Cassandra

    I think with the NS2 offer Putin is just trolling EU. Western elites invested huge amount of capital to paint that pipeline as devil’s device and were ecstatic when Germany finally axed it in February, so allowing even one pint of gas to arrive from Russia thorough that pipe can happen only over their dead bodies. Which I’m sure Putin is well aware of.

    1. Yves Smith Post author

      As Scott Ritter said, “Putin don’t bluff.” It’s now Europe’s only good option. As I said, EU leaders can get over themselves. The alternative will be that you’ll see current governments turfed out and replaced by right wing authoritarian nationalists like Orban who do understand their survival depends on prioritizing the material needs of their citizens.

      1. Harry

        Yes, as a Russian friend of mine pointed out “which Russian ‘redline’ turned out to be a bluff?”

  19. dcouzin

    One night a clever student switched the red lenses and the green lenses on the stoplights at a corner by the campus. Now green was on top, red on the bottom, but drivers continued to obey by color, and since the stoplight timing had been set to favor the larger street there were traffic jams the next morning. Supposedly the city traffic technicians also didn’t notice the up-down reversal while struggling to find a fault in the circuitry.
    Now we have a good solution for German gas needs and its Economy Minister’s horror of waving a white flag before Russia. On Nord Stream 1 fixtures, remove the numeral ‘1’ and replace it with ‘2’. Close those fixtures down. On Nord Stream 2 fixtures, remove the numeral ‘2’ and replace it with ‘1’. Open those fixtures.

  20. fringe element

    I read earlier this morning that when Putin spoke with Iran he said that some European leaders told him they never wanted NATO pushing up to the Russian border, but the Americans insisted on it.

    I’m also under the impression that Putin’s responsible, restrained response to provocations from the West is actually something he is doing to make a good impression on governments outside of the West.

    1. hk

      It has seemed for several months that Putin looks at Western and Central Europe, especially Germany, to be the big prize to win, not an enemy to be destroyed. Putin may not like German politicians, but I suspect that Putin is not looking to inflict irreparable harm to Germany, especially it’s economy: as the saying goes, Scholzes come and go, but the German people (presumably including corporations) go on forever. So the kind of outcome Putin might be looking to engineer would be to destroy the credibility of German Atlanticists before certain key audiences in Germany, such as its key economic actors (corporations, trade unions, etc). If so, this is a fascinating trick: I am normally skeptical of external actors decisively influencing domestic politics of any country (CIA is a very overrated institution, IMHO), and, I suppose, if governments in Western Europe collapse under economic pressure, it wouldn’t be so much Russian influence, in the end, as much as the European politicians bringing it upon themselves. Ironically, Putin not only needs to ensure that Western Europe suffers enough woes and its leaders are appropriately blamed, but that the long term economic damage is limited.

      1. mikesmith

        The problem with your thesis is that Putin himself says that Russia is done with the West. Both he and Russia have been lied to and double crossed so many times that zero trust remains, so he is burning Russia’s bridges with widespread internal support. I think it would be a mistake to assume that he is bluffing, because he does not have a history of bluffing. Furthermore, he is not considered a hardliner among the Russian political elite. He has always been one of Russia’s most moderate figures on foreign policy, so I would not expect any change of course by his successor. After all, he grew up in St. Petersburg, Russia’s most European city, is fluent in German, and was an expert in international law (not a spymaster) at the KGB before going into politics, so we are not likely to see a more Euro-friendly Russian head of state than Vladimir Putin.

        That the West has screwed over Mother Russia one time too many seems to be a consensus view in Russia now, and the widely reported (at least in Russia) instances of naked Russophobia and bigotry against Russians abroad just because they are Russian has alienated Russian society from the West at all levels. We have proven to the Russians that our hostility is not just political but also personal. It will be at least a generation before there is any softening. And I am sure they are also aware by now of Western schemes to break Russia up into multiple weak statelets that can be easily pushed around. It is hard to see any kind of reconciliation happening unless there is some kind of political revolution in the West that brings in completely new faces and perhaps new political parties as well. Thus, Russia will look to Asia for its allies for the indefinite future, because Russians feel they have no choice. They feel the Western leaders do not bargain in good faith, cannot be trusted to honor their agreements, and even if the Western leaders buckle in desperation, that their hearts will not be in it and they will continue to scheme against the Russians in private. You reap what you sow.

    1. Yves Smith Post author

      I was working out an extended analogy with “What if this had happened in Mexico” so yes, I did mean English speakers. There are a LOT of American retirees in Mexico.

      1. Robert Gray

        Your analogy is well-wrought; the Exceptional Nation #1 simply cannot abide any threats, or even challenges (e.g., ‘freedom of navigation’ exercises), to its amour-propre, such like it routinely dishes out to lesser peoples. However, we should keep in mind that, according to the OSCE, of those 14,000 war-related deaths in the Donbas (from 2014 to Feb. 23, 2022), over 10,000 of them were fighters, from both sides.

  21. Spikeyboy

    It may be that the hoped for miracle is supposed to be Israeli supplied gas stolen from Palestine and Lebanon.
    Hezbollah have drawn a line in the sand that becomes hot at the end of August. If the Lebanese govt lacks the necessaries to stand up to Israel’s theft then Hezbollah has assured everyone that they have what it takes and have already sent a message via three unarmed drones to the potentially thieving extraction platform. The drones were shot down with a degree of difficulty that ensured that the message was recieved loud and clear.
    It is also hoped that if the thieving does occur, and a further incursion by drones is required that the Palestinian resitance will also take the opportunity to express it’s displeasure at the thieving of their gas off the coast of Gaza.
    Europe of course is fine with these types of arrangements.
    Add into this the apparent state of disrepair of the Israeli land forces, the extreme current displeasure of Russia with the actions of Israel and it may be that the escalation of Russia’s fight with the West is set to occur over wide fronts that are not in Ukraine and that Israel/Nato will struggle to control.
    And thats to say nothing of Pelosi’s scheduled trip to Taiwan!

  22. Quigley

    The Globalist’s fear that Europe will team up with its natural next door ally Russia, has once again led Europe into doing the opposite under the globalists’ influence; to team up with Britain and the financial powers that brought us wars in the XIX Century, WWI, WWII, Bosnia and now this charade.

    Go ahead Europe, commit suicide, destroy yourself as an economic competitor to the U.S. and try and live off only U.S. exports of LNG, Cargill grain and Hollywood productions.

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