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Germany Is Nobody’s ‘Captive,’ Mr. Trump: Leonid Bershidsky


July 11, 2018, by Leonid Bershidsky

(Bloomberg Opinion)

President Donald Trump sees a clear link between U.S. security guarantees under the North Atlantic Treaty and American trade with the alliance’s member states, in particular when it comes to liquefied natural gas sales to Germany. But he isn’t likely to change the reality of Germany’s energy needs and plans.

At the NATO summit in Brussels on Wednesday, Trump said Germany was “totally controlled” by Russia, which supplies some of the U.S. ally’s energy. “So we’re supposed to protect you against Russia but they’re paying billions of dollars to Russia and I think that’s very inappropriate,” Trump said. “Germany is a captive of Russia because they got rid of their coal plants, they got rid of their nuclear plants. They’re getting so much of the oil and gas from Russia. I think it’s something NATO has to look at.”

Like many of Trump’s statements, this is factually shaky. Today’s Germany is not existentially dependent on natural gas or on imports from Russia in particular. Nor has it been become more of a “captive.” Instead it has quickly increased the share of renewable sources in its energy balance.

And Germany isn’t any more dependent on Russian gas than it was during the Cold War, when no one doubted its loyalty to U.S. interests or the U.S. commitment to its protection. Russia accounts for as much as 40 percent of Germany’s imports of gas, but the share was even higher in the 1980s.

It’s true that Germany is trying to phase out nuclear energy and coal. But there is no way for Russian gas imports alone to cover the enormous shortfall — about half of Germany’s overall energy consumption — that total elimination would cause. Russia doesn’t have enough capacity to export that much, and it won’t even with Nord Stream 2, the planned gas pipeline that Trump harshly criticized. The pipeline can potentially add 55 billion cubic meters to Russian exports; last year, Russia supplied 53.4 billion cubic meters to Germany. That would be a large increase, but it still wouldn’t make Germany “captive” to Russia: The country would need about four times as much gas as it uses today to completely replace coal and nuclear.

The German government is well aware that it needs other sources of gas, from Russia and elsewhere. LNG from the Persian Gulf and the U.S. is one source. The Dutch company Gasunie is planning to build the country’s first LNG terminal in Brunsbuettel on the Elbe by late 2022. Germany can also import LNG through terminals in Poland and Belgium, which are close to its borders. But at this point, U.S. LNG is about 20 percent more expensive than Russian pipeline gas. It’s a buyer’s market in which Germany will be able to diversify as much as it wants.

Even if the price difference doesn’t disappear as the U.S. increases LNG exports, and despite the planned increase in imports from Russia, Germany will likely need to buy U.S. LNG because there will be no other way to completely displace coal. But the purchases from America wouldn’t be any kind of payment for U.S. protection. Chancellor Angela Merkel repeated on Wednesday that Germany was doing enough as a NATO ally. It participates in U.S.-led military operations, such as the one in Afghanistan, where it makes a substantial contribution. Germany also bears a much higher economic cost than the U.S. as a result of Western sanctions on Russia. Germany’s exports to Russia are down some 40 percent from their 2012 peak.

Add to this the almost unanimous mistrust of Trump among Germans, and it’ll be clear why Germany is highly unlikely to bend to his pressure. If anything, his angry remarks have made it harder for Merkel’s government to make concessions such as a promise to increase military spending. It is even less likely the chancellor would go back on earlier decisions and stop Nord Stream 2.

“We’re not captive, neither to Russia nor to the USA,” German Foreign Minister Heiko Maas told reporters in Brussels. “We’re one of the guarantors of the free world, and that will remain the case.”

This stance is guaranteed to further incense Trump, and he can be expected to hit out at Germany with more punitive import tariffs. He also might seek to sanction European companies — France’s Engie, Austria’s OMV, Dutch-British Shell and Germany’s Uniper and Wintershall — that fund Nord Stream 2. That’s unlikely to get him anywhere, either: Giving in now would be politically suicide for the German government and damaging to European unity. If sanctions are imposed, German exporters can absorb the damage, and Russia’s natural gas exporter, Gazprom, has already promised to take over the funding of the pipeline.

Today’s Germany may not be a particularly assertive power, but it’s prepared to pay for the ability to make its own decisions. Trump is about to find out that browbeating is counterproductive, even if he doesn’t care about preserving the U.S.’s long-term alliances.



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