My live interview (22 July 2021) on the Nord Stream 2 deal between Germany and USA. with CGTN (London office of Chinese state broadcaster. This was not edited, or I would not post it here.)
I explain the bind which Berlin had put the Biden administration in for agreeing to waive sanctions on Nord Stream 2 (NS2) in return for this bad deal. The German side was playing hardball. Berlin had made clear to Washington (well before Biden arrived in office) that the pipeline would be finished regardless of sanctions.
The German (and the Danish) side had already allowed Gazprom-owned North Stream 2 AG to continue construction in their territorial waters even when reputable insurance companies and the reputable construction-commissioning firms had abandoned the project due to the threat of US sanctions; and Berlin had made it clear to the US side that it would be completed regardless of any further sanctions. Sanctions on German firms could be circumvented by Berlin continuing to allow Russian firms to do any work that German firms were prevented from performing. And, sanctioning German firms, or NS2 AG, would cause outrage in every German political party except for the Greens, the only German party clearly opposed to the project. However, the Greens had made clear they did not think US sanctions on German firms was an appropriate measure for an ally to take.
I was very happy to be interviewed for the Latin American “Energy Analytics Institute” (EAI), a Houston-based consultancy and news service. I’ve followed its work for years.
With Biden in and Trump out, everyone is debating how to deal with Maduro and his chavista regime that’s brought such misery and ruin in Venezuela. It’s not only the USA’s new LatAm team of Biden, Blinken and Nichols, but the EU, Norway, the OAS, the Lima Group, who are all looking for a new strategy. And so has the Venezuelan opposition, plus an increasingly important actor: the growing and doggedly persistent civil society organizations. Increasingly suffering forced-isolation from abroad, this array of social, cultural, media, medical, educational, nutrition, economic and political resistance groups do largely self-sufficient work to replace basic necessities and social-services, which the chavista government and ruined private sector can no longer provide.
However, in this brief Q&A what was addressed was not strategy per se; but a key underlying issue to understand in framing a strategy: the interests of both Moscow and Beijing as key obstacles to removal of the chavista regime. Read at EAI site (free) or Read below – Tom O’D.
China, Russia, Venezuela: Q&A With Thomas O’Donnell
(Energy Analytics Institute, 13.Feb.2021) — China and Russia continue to push around their might in Venezuela. Thomas O’Donnell with the Hertie School of Governance & Freie Universität-Berlin weighs in briefly here.
Energy Analytics Institute: What might China and Russia be willing to do this year to assist Venezuela’s President Nicolas Maduro?
Thomas O’Donnell, PhD: Beijing’s original (and perhaps still) plan for Venezuela was deep vertical integration mirroring PDVSA-Citgo Petroleum: new Faja upgraders, a pipeline to Colombia’s Pacific coast, dedicated ships, dedicated domestic Chinese refineries, etc. All very rational and lucrative for both sides. China became alarmed with Hugo Chavez’ unreliability and incompetence within a few years and with Maduro’s incapacity to reform within a year or so. The entire “oil-for-loans” history was a fallback strategy for Beijing – at least secure an oil stream with minimized risk. I have no doubt the Chinese Communist Party wants a new Caracas regime it can work with.
My analysis of the US-German crisis over Nord Stream 2 and policy towards Russia, published in Washington by the American Institute for Contemporary German Studies (AICGS), 8 October 2020. Read it at AICGS website\. Or, continue here. Comments & Critiques welcomed (below or via email)
Nord Stream 2: Allies’ Crisis
Two decades of Washington-Berlin collisions over the Nord Stream 1 and now the Nord Stream 2 pipelines have come to crisis.
The U.S. Congress stopped Nord Stream 2 construction in December 2019 by enacting sanctions under the Protecting Europe’s Energy Security Act (PEESA), and is poised to enact a much harsher “Clarification” of PEESA, sanctioning any entity that resumes or aids in resuming construction in the Baltic Sea. German officials insist the project will, nonetheless, be completed, denouncing U.S. sanctions as “extraterritorial” interference in “European sovereignty.”
In reality, the project appears dead. Statements by businesses interests, as opposed to political actors, support this. To resume construction, companies, ports, officials, and insurers would require guarantees against ruin, including being personally sanctioned, which is difficult to imagine the German state providing. And there is no evidence of preparations to do so. Nevertheless, Russia’s Gazprom continues preparations to resume work.
Complicating matters, the U.S. Congress, having mandated sanctions against the pipeline, would have to approve any compromise. On the other side, the German Bundestag roundly “savaged” a motion by the Green Party to abandon Nord Stream 2 in response to Navalny’s poisoning, unprecedentedly uniting the CDU/CSU of Chancellor Merkel and her SPD coalition partners with both the far-left Die Linke and far-right Alternative for Deutschland.
Aquí abajo se puedan ver la grabación de la tortulia del 15 de agosto entre dos expertos y yo en el programa “El Fondo” de la red alemana de Deutschewelle (DE.de TV) sobre “la lucha entre aliados” de los EE. UU. y Alemania en la que Washington ha amenazado con fuertes sanciones contra su aliado de la OTAN, Berlín, por su participación en el proyecto del gasoducto ¨Nord Stream 2¨ con Rusia. Gracias a DW y su moderadora venezolana Silvia Cabrera.
Tenga en cuenta que estas no son sanciones del presidente Trump, sino sanciones impuestas por el Congreso en contra de los deseos de Trump y con el amplio apoyo de ambos partidos. Hay mucha ira en el Congreso contra Rusia por sus malas actividades en Europa en materia de suministro de gas natural al continente por parte de Moscú de forma geoestratégica, pero también por su invasión de Ucrania en 2014, y sus extensas actividades contra las democracias del Oeste.
Para Estados Unidos, este proyecto es una peligrosa colaboración de Alemania con Rusia contra los intereses y la independencia energética de la UE y especialmente de Ucrania, un país con partes de su territorio ocupadas por Rusia desde 2014.
De la propaganda del programa El Fondo de DW.de:
“¡Extorsión!” “¡Guerra comercial!” que traería gas de Rusia a Alemania. ¿Se dañará la relación entre Alemania y Estados Unidos? ¿Definirá Estados Unidos la política energética alemana?
Soldiers deployed in Poland are a kind of warning to the Kremlin. – Source: GazetaPrawna.pl
My interview on Trump’s announced US troop draw downs from Germany and partial reassignment to Poland appeared in the Polish economic press Gazeta Prawna on 25 June 2020 by the Polish journalist Artur Ciechanowicz. You can read it (a) in ENGLISH below (via Google Translate, with minor fixes) or (b) in the POLISH original at this link.
O’Donnell: Soldiers at the borders of Russia are a signal to the Kremlin [INTERVIEW]
From a military point of view, deploying too many troops too close to the border with a potential enemy is dangerous because there is a risk that they can be overrun rapidly – says Dr. Thomas O’Donnell, energy and international affairs analyst, and adjunct faculty at Hertie School of Governance in Berlin.
Question: US President Donald Trump has decided to increase the US military presence in Poland, while also reducing the contingent in Germany. Where do these decisions come from?
On the one hand, they logically result from the American National Security Strategy (NSS) of December 2017. Work on it began during Barack Obama’s term of office and was completed by the Donald Trump administration. According to the NSS, the US priority is no longer the war on terror and the situation in the Middle East, but competition with China and Russia. It is therefore quite natural that the United States moves its troops and increases its military presence in countries closer to Russia – the Baltic States, Poland and Romania. The second factor that led to these decisions was the personal involvement of Donald Trump, who is running his election campaign.
Poland’s security will increase?
As a rule, increasing the US military presence in Poland is of course good news. The Pentagon’s activities have been moving in this direction for some time, although the US military is of the opinion that this should be done a little slower and not at the expense of Germany. From a military point of view, deploying too much of the army too close to the border with a potential enemy is dangerous because there is a risk that it will be overrun too soon. There is therefore a tactical reason to keep some of the army a little further from the Russian border. Therefore, the rapid relocation of a significant number of soldiers to Poland is viewed skeptically by some American commanders. Remember, soldiers deployed in Poland are a kind of warning against the Kremlin. There are enough of them for Vladimir Putin to think twice before doing anything. However, not enough – even after increasing the quota – to stop the first strike. The rule is simple here: if Russia decided to attack Poland and American soldiers would die, it would mean a war with all the power of the US. Neither any president nor Congress would hesitate a single moment.
Some American commanders are opposed to the permanent presence of US troops in Poland. Why? Continue reading →
What are US experts’ and officials’ views on the increasingly conflictive energy and geostrategic relations between Russia, Germany, Poland and Ukraine?
Greetings. I’m in Washington as a “Title VIII” fellow of the Kennan Institute in the Woodrow Wilson Center, interviewing people in think tanks and government (legislative and executive) on these topics. I’ll also give a public talk on this at Wilson on 12 June, at 2 PM (more info soon).
I’m interested to hear anything readers think should be asked and of whom. Don’t hesitate to write me at twod(at)umich.edu or my (temp) Wilson email: thomas.odonnell(at) wilsoncenter.org.
A central issue: why is Germany so adamantly for Nordstream 2 despite the negative security consequences for Ukraine and despite the tremendous hit this project is causing to German soft-power not only with Poland, but with most Central and Eastern European (CEE) and Nordic states? (Here’s my own analysis.) How do US experts see this? Continue reading →
Last week, Gillian Rich at Investor’s Business Daily (Washington), asked me (Berlin) and others about the OPEC’s 20-21 June meeting. Below here, I give my views in more detail, including the tie-in to the Trump project to isolate Iran and my comment about Putin likely betraying the Iranians again. The IBD piece is here: Trump Could Make OPEC’s Next Meeting As Dysfunctional As G-7 Summit. 15 June ’18.
We spoke about market and geopolitical aspects. On the latter, I emphasized both the Trump Administration’s evolving plan to sanction and isolate Iran, and Russia’s new role as a central player with OPEC ever since the 2016 joint Russian-OPEC decision to raise production.
That’s when Putin played a new role for any Russian leader. Not only did he coordinate Russian oil policy with OPEC’s, he got personally involved in heated discussions, getting on the phone late in the last night with Iranian and Saudi leaders to get the deal sealed. Continue reading →
The US Senate’s decision to expand sanctions against Russia triggered indignation in Berlin, throwing Germany’s geopolitical ambitions over the Nord Stream 2 project into sharp relief. Read below or get the App. My other articles at Berlin Policy Journal
“Neue Neue Ostpolitik”
Berlin – July 21, 2017 By: Thomas O’Donnell — On June 15, the US Senate approved an act to sharply expand sanctions imposed on Russia in retaliation for its intervention in eastern Ukraine and annexation of Crimea in 2014. The broadly bi-partisan move that enshrined Barack Obama’s earlier executive orders – intended as a response to Moscow’s alleged cyber interference in US elections – was a stunning rebuke to US President Donald Trump’s Russia policy, essentially taking a broad swath of foreign policy out of his hands. Continue reading →
Contrary to his campaign hype (see article below), Trump-as-president will not do anything to interfere with the free flow of oil or gas to or from the USA. As I pointed out in the Investors Business Daily interview (Gillian Rich’s story is below), people central to Trump’s administration – such as Rex Tillerson, his designated secretary of state and former CEO of Exxon, and Harold Hamm, Trump’s fracking billionaire friend he wanted for secretary of energy – are global-market-oriented businessmen who would never agree to disconnect the USA from global energy markets.
The free flow of petroleum through the unified global market traded in US dollars – what I call the “Global Barrel” – is central to the business model of every private as well as every national oil company. Today there is essentially one, global oil price. If you break up the global market by limiting imports or exports, you get national markets with national prices. Then what?
If the US price went higher than the global price due to keeping out cheap foreign oil, Trump’s popular approval would dive. And, if the U.S. price went lower due to a domestic production glut of fracked oil, then his support among business would tank.
Moreover, the unified global market serves as the key element in the world’s collective energy-security system by guaranteeing equal access and prices to all suppliers and consumers. Continue reading →
I was interviewed by Matt Egan of CNNMoney. Three points, if I may:
This story echoes my message in Berlin Policy Journal earlier this week and my RTRadio interview: OPEC now has to live with a new oil-market paradigm where shale won’t disappear (for now its in the US, but soon elsewhere too). It is a technology more akin to manufacturing than traditional oil extraction and so more amenable to technological and operating innovation in a low-price regime (or in a price war such as the Saudis et al have just given up on waging against it). And, being much smaller-in-scale means it can ramp up at much lower initial costs and more rapidly than traditional oil fields. The CNNMoney story is below here, or here’s the CNN ink .
Another totally new phenomena seen in this OPEC deal was that a Russian leader was deeply involved in the tense OPEC negotiations, specifically between Iran and Saudi Arabia. Russia has never done this before. Historically, it has also never carried through on previous promises to support an OPEC cut, instead free-riding on higher prices effected by OPEC/Saudi cuts. In this case, Putin was instrumental in getting the Saudi’s to agree, as they always have before, to swallow most of the cuts. But, Putin has agreed to cut too (in ambiguous language, but repeatedly). We shall now see if he and Igor Sechin (CEO of Rosneft, that produces 40% of Russian oil, and who is, by the way, a great friend of Venezuela’s miserably failing chavista leadership, where his company is now the biggest foreign oil producer) … do as they have promised OPEC and the Saudis. If they do not, the fallout with Saudis and their allies will be significant.
Now, also, we shall see how US shale responds. Of course, IEA head, Fatih Birol, has understandably predicted that US shale and other producers, will likely hike production if oil reaches $60/barrel and simply eat up the present OPEC cuts in about nine months or so. (Aside: of course, the present output cuts, even if they ‘fail’ in the long run to sustain higher prices, would still have had been a significant cash-boosting relief to all OPEC states and to Russia while they lasted.) However, take a look at the Bloomberg video link at the end of my Berlin Policy Journal piece – an interview with Howard Hamm, Trump’s billionaire fracking close-ally (who has just turned down an offer to run the Department of Energy). He had told Bloomberg he expects OPEC to make a deal because “it makes sense” and, further, that he expects/hopes his US fracking colleagues will show ‘discipline’ after the price rise, i.e., not expanding too fast so as to keep prices up. An interesting, de facto recognition that price wars, in the end (in the long run), do not benefit either side, and goes on to approvingly say that the Saudi’s want to once again maintain prices “in a band” as they used to do. It is clear from Hamm that this would all be very welcomed from the US side. (Note, Hamm’s Continental Energy company made $3 billion in just three hours after the OPEC deal boosted prices! ) Indeed, in light of such everlasting market realities, it is difficult to imagine Trump’s attitude to the Saudi’s will be much different than other US president’s over the years. Which has geopolitical implications for Iran, of course, as the Saudi-Iranian geopolitical competition for regional influence and their parallel oil-market competition both continue to heat up.
Here’s the CNNMoney piece by M. Egan of 1 December 2016 (with my quote highlighted): Continue reading →
The oil market’s oversupply – and the low prices that followed – was supposed to drive shale producers out of business. Instead, the economies of several large national producers have been upended, and the next act could prove even more destabilizing.
OPEC’s 171st meeting in Vienna on November 30 reflects the new paradigm of the global oil market. After two years, the Saudi-led price war to drive American shale and other “high cost” producers from the market has ended. However, to the surprise of many – not least the Saudis – shale has survived. What now?
The United States Energy Information Agency (EIA) expects persistent market oversupply to have been quenched by the second half of 2017. The Saudis view the diminishing oversupply as an opportunity to cut production by 600,000 or more barrels per day – although about twice this amount would be optimal – boosting prices from under $50 per barrel to $60 or more. The Saudis have worked intensely to reach an agreement at the OPEC summit to coordinate this production cut with Russia; any failure to achieve this highly anticipated deal would sink market confidence, pushing prices into the $30s.
The key obstacle to the Saudi plan is that Iran has refused to participate in any cut, insisting it should first be allowed to re-establish production it lost under years of sanctions. In response, the Saudis have threatened to boost their own production, punishing Iran by collapsing prices and by denying them market share. The Financial Times’ Nick Butler correctly characterizes this as “playing with fire,” and not only because of the severe pain this would impose on weaker OPEC states, but also for the geopolitical retaliation it might provoke from the new US administration as the Saudis would also bankrupt numerous shale producers in the US.
However, even if Russia, Iran, and the rest of OPEC agree to the Saudis’ cuts, US shale is widely expected to expand into the void, re-depressing prices by later next year. In all these scenarios, the future remains extremely difficult for OPEC, for Russia, and for other oil-dependent states.
A Price War Backfires
The prolonged high price of oil, starting to rise in 2002 and then dipping during the financial crisis before rising again till mid-2014, encouraged the emergence of new unconventional shale production. Driven by technical innovations in hydraulic fracturing plus abundant venture capital, by 2014 the US had added more new oil to the global market than what was lost in the Arab Spring and subsequent wars in Libya, Iraq, and Syria. By mid-2014, some two million excess barrels-per-day (bpd) were flowing into storage, and the price collapsed. Continue reading →
Much of the USA – and most of the world – were stunned by Donald J. Trump’s victory over Hillary R. Clinton last night. His campaign was filled with bombastic claims, but gave little detail on foreign policy. However, now “the Donald” will be President and Commander-in-Chief of the superpower at the center of the global security system since WWII. It is time to look at Trump’s foreign policy program and what it means. Below is an initial reading list I am giving to my students today.
An interesting study of Trump’s foreign policy ideas has been done by Thomas Wright at Brookings Insitute in Washington in recent months. And, this is the first important point to see: that Trump indeed has serious and deeply held ideas on foreign policy. Wright identifies three main tenants, as he explained in an interview in the Atlantic:
Trump’s isolationist ideology has three components, according to Wright: 1) opposition to U.S. alliances; 2) opposition to free trade; and 3) support for authoritarianism. In Wright’s view, these three beliefs, if translated into policy in a Trump administration, could do away with the liberal international order that the United States helped design after World War II and has led ever since.
Taken together, Wright argues these portend a change to the world order of a magnitude not seen since the pre-War 1930’s, when the Nazi party won elections in Germany and Continue reading →