After Russia annexed Crimea from Ukraine in 2014, the United States unleashed its go-to foreign policy weapon: targeted sanctions. Employing measures like asset freezes, travel bans, and restricting Russian oil imports to the West, the U.S. aimed to hit Russia where it hurts. Unfortunately, these not-so-smart sanctions failed to deliver the intended blow.
Not content with merely sanctioning Russia, the U.S. strong-armed the entire European Union into joining the fray, citing the noble cause of satisfying Europe’s energy needs. To meet the EU’s demands, the U.S. initially revved up its oil drilling, transforming from scrappy wildcatters into oil magnates, ultimately claiming the title of the world’s largest producer. However, it seems their success is now hitting a snag.
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The same U.S. that persuaded Europe to sanction Russia, inadvertently plunging the continent into an energy crisis, is now doing a U-turn on its commitments. Let’s delve into this intriguing turn of events.
The Biden administration’s move to temporarily halt the construction of new liquefied natural gas (LNG) export terminals is sparking optimism in Russia regarding the potential to increase its global LNG exports and exploit internal divisions within the United States. Some Russian experts foresee opportunities arising from the potential decrease in U.S. exports to the European Union, while others play down any immediate impact.
Russian propagandists and their proxies are actively leveraging Washington’s decision, accusing the United States of shortsightedness and encouraging European countries to reassess their foreign economic policy. The Biden administration’s announcement on January 26, stating a “temporary pause on pending decisions on exports of liquefied natural gas [LNG] to non-FTA [free-trade agreement] countries,” has triggered discontent among Republicans, the oil-and-gas lobby, and intellectuals.
The repercussions of this decision extend beyond the United States and its strategic allies, resonating particularly positively in Russia. Experts and public figures in Russia applaud the decision as potentially detrimental to the European Union and as a step that could create additional domestic problems in the United States. The Russian government appears pleased at the prospect of oil-and-gas extracting states, like Texas, potentially facing difficulties, leading to additional discord within American society. Russian officials, including Deputy Prime Minister Alexander Novak, have initiated discussions on Moscow’s willingness to negotiate with Brussels on reinstating trade routes for natural gas via various paths, including through Ukraine.
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Russia has threefold reasons to celebrate the Biden administration’s decision. Firstly, Russia aims to enhance its global LNG exports. Secondly, Russia seeks to foster another divide between the European Union and the United States. Thirdly, Russia anticipates an increase in internal problems and divisions within the United States.
In 2023, the United States claimed the title of the world’s largest LNG exporter, surpassing Australia and Qatar with exports totaling 116 billion cubic meters. As of November 2023, the primary export destinations for the United States were France, the United Kingdom, the Netherlands, Turkey, and South Korea, in descending order. Notably, around 50 percent of the European Union’s natural gas imports in 2023 originated from the United States, enabling the EU to take a significant step toward diversifying its energy supplies. This situation has also empowered Europe to reduce its longstanding strategic dependence on Russian natural gas, a vulnerability exposed during the war in 2022.
Some Russian mainstream experts and propagandists are in agreement that Washington’s action will “jeopardize the energy security of the European Union.” However, there are divergent opinions within this spectrum. For example, Sergey Kaufman, an analyst at the “Finam” company, argued that, based on publicly available information, the United States is currently facing a noticeable surplus of LNG projects. Consequently, he believes this decision should not significantly impact the US LNG sector or its external commitments. Vladislav Antonov, a financial analyst at the “BitRiver” company, echoed Kaufman’s sentiments, stating that the US decision will bring about minimal changes for Russia. Antonov suggested this is the case because the European market has diminished in importance for Moscow. Meanwhile, Europe’s interest in Russian LNG has only surged when the natural gas in EU storage has declined.
Other experts and public figures express a more optimistic view regarding the implications of the US decision for Russia. Novak sees the Biden administration’s move as creating new opportunities for Russian businesses in the LNG market, particularly referencing the disruptive potential of the Arctic LNG-2 megaproject on the global LNG industry. Alexander Bakhtin, an investment strategist at the “BKS Mir investitsii” company, anticipates a ten to fifteen percent expansion in Russia’s LNG sales in 2024, primarily from the Yamal LNG and Sakhalin-2 projects.
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Natalia Pyreva, an analyst from the “Tsifra brokera” investment company, suggests that a potential reduction in US LNG exports could positively impact the development of Russia’s LNG export capabilities. She posits that if US exports to the European Union decrease, it would make more economic sense for Europe to import LNG from Russia rather than from Australia or Qatar, both of which are less favorable partners due to their relative geographic distance and Middle East instability. Pyreva acknowledges the potential interference of “political nuances,” which could alter the unfolding situation.
Meanwhile, the US decision has stirred reactions within the European Union. On one hand, approximately 60 members of the EU Parliament collaborated on a joint letter expressing “concern” to President Biden regarding the decision. Concurrently, Biden’s move appears to have galvanized pro-Russian forces within the EU political landscape to voice their opinions. One notable figure in this context is Alexander Rahr, a Germany-based pro-Kremlin political scientist, who accused Germany’s political leadership of betraying the European Union and its aspirations for the United States to serve as a dependable long-term provider of essential energy resources. Additionally, he accused the United States of demonstrating shortsightedness by refusing “Putin, who was ready to continue supply gas.” He concluded by urging Germany to “remedy its foreign economic policy in such a way that [Germany] no longer ignores severe geopolitical realities,” hinting that the United States may not be a reliable LNG supplier.
Simultaneously, Russian media outlets intensified their rhetoric to align with Rahr’s views. According to these outlets, Germany ought to be guided by a politician like Sahra Wagenknecht, a representative of The Left, who has consistently advocated for strengthening ties with Russia and supports dissolving the North Atlantic Treaty Organization. Wagenknecht has explicitly opposed imposing economic sanctions on Russia following the war, arguing that Russia is too crucial as an energy supplier for the European Union.
Read More: EU finally realizes that in the Sanctions game, EU loses and the US wins
As analysts foresee the end of the US-EU strategic energy partnership due to the recent decision, concerns rise about its catastrophic impact on EU energy security. In the current crisis on the European continent, coupled with the aftermath of thewar, there has been a substantial reduction in gas imports from Russia, the primary supplier. This deliberate move by Russia has significantly influenced gas prices, resulting in elevated bills for households and businesses. The financial strain has the potential to contribute to inflation, and energy-intensive industries are grappling with production cuts or closures due to heightened costs, thereby affecting jobs and economic output.
European nations aggressively pursued alternative gas suppliers, ramping up LNG imports and investing in renewable energy sources to diversify away from reliance on Russia. The U.S. swiftly stepped in to fill the emerging gap. However, with the recent decision by the U.S. to exit the stage, Europe finds itself in a predicament, left with no viable options. This development is poised to ignite a wave of frustration across the European continent, potentially prompting a reconsideration of turning back to Russia.