Fallout from the Biden-Merkel Nord Stream 2 Deal.

By Edward Lozansky

Back in 1989 a large group of Americans, composed mostly of Republican conservatives, went to Moscow to help Russians understand the “Values of Western Civilization.”  The delegation included Senators Phil Gramm of Texas and Bob Kasten of Wisconsin, Ambassadors Faith Whittlesey and Frank Shakespeare, journalists, and even exiled Soviet dissidents.

At that time America was at the peak of its popularity in the USSR with a 90% approval rating. The conference hall was packed to full capacity, with many people left standing. Everyone listened attentively to each word enunciated by the visitors. 

Besides the sessions on freedom and democracy, an entire session was specifically dedicated to the advantages of free markets, in which honest and fair competition was supposed to provide consumers with the best quality product for the lowest price possible.

Two years later, the Soviet Union collapsed and an army of American advisors rushed into a country liberated from its communist yoke and absurd economic planning to help Russia adopt the same precious Western Values that had been discussed at that conference. 

The results are well known and a summary can be found in the  January 1, 2000 Congressional Report commissioned by the Speaker of the House titled ”Russia’s Road to Corruption: How the Clinton Administration Exported Government Instead of Free Enterprise and Failed the Russian People.”

It is a long read but the title speaks for itself. The NYT Sunday Magazine wrote in August 1999 that “by allowing the oligarchs — in the name of free market — to grab Russia’s resources and siphon anything of value into their own offshore bank accounts, the United States poisoned Russia’s transition from communism. In the minds of ordinary Russians capitalism became equated with theft.”

Fast forward to our times. Germany needed more gas for its economy and the best deal it could get was from Russia.  As a result a group of investors started to build the Nord Stream 2 gas pipeline from Russia to Germany under the Baltic Sea.     

It was a classic example of what Gramm, Kasten and the rest of the U.S. delegation back in 1989 preached to their naïve Russian audience. Little did they know how a “real” free market works.  This time in a rare by-partisan mode, Washington said “no way”. 

Germany should freeze the pipeline and buy more expensive American-produced LNG, or else painful sanctions would follow. Some investors got scared and ran away but the Russians and Germans continued to build the pipeline, which is now 98% ready. 

Faced with the inevitability of its completion, Biden decided to make a deal that would have a three-fold purpose: 1) keep Germany in Washington’s orbit, 2) threaten Russia with cancelling the deal if Moscow misbehaves (whatever that means), and 3) throw some cookies to Ukraine, which is horrified by the threat of losing transit fees though its pipeline.  

The details of the deal are well known, so there is no point in repeating them here. In the end, it appeared that more pragmatic heads won the day when it became apparent that any further attempts to stop construction of Nord Stream 2 would alienate an important ally Germany and do greater harm than good to America’s strategic objectives.

As was to be expected, the response from Ukraine stems from feelings of anger and betrayal. The gnashing of teeth continued in the U.S. as well, with the Biden administration facing bipartisan backlash to the deal. 

Senator Jeanne Shaheen (D-NH), who co-authored the sanctions regime, said she was “skeptical that [the agreement] will be sufficient when the key player at the table — Russia — refuses to play by the rules.”

Senator Ted Cruz (R-Texas) simultaneously attacked Putin and Biden for a “generational geopolitical mistake” that would allow “Russian dictators decades from now reaping billions of dollars every year from Joe Biden’s gift.”  Foreign Policy magazine named Cruz “Nominee-Obstructer-in-Chief” for holding up dozens of diplomatic appointments over the pipeline.

Arkansas Attorney General Leslie Rutledge argued that the Biden administration’s deal with Germany over the Russian pipeline “threatens America’s energy independence,”  

In addition to money matters, many in Washington want to make sure that Ukraine is not abandoned since they consider it as an important anti-Russia strategic beachhead.  Billions of U.S. taxpayers’ funds, military personal, and equipment have been poured into Ukraine exactly for this purpose. Moreover, in a supposedly “free market” strategic outlook, Washington wants Russia to pay for this policy with transit fees through the Ukrainian pipeline. 

Looking at the vast economic devastation in Ukraine as well as the rise of its radical nationalism and even an influential neo-Nazi movement, the current U.S. policy in this part of the world looks more and more like its failed policy in Afghanistan, where America under Zbigniew Brzezinski’s guidance helped create the Taliban as a geopolitical tool to fight the Soviets but who later came back to bite their creator. However, in the case of Ukraine the blowback could be much worse.

Zelensky who won elections in Ukraine as a peacemaker is coming to Washington where he will try to play a “wag the dog” game to drag America into a conflict with Russia, even at the risk of starting WWIII.  Regrettably, he is likely to find plenty of enthusiastic supporters on both sides of the aisle and perhaps for this reason, Biden invited Zelensky to come on August 30 when Congress is not in session.  

One shouldn’t be surprised if Members return to Washington on that day and even invite him to address both chambers, like they did with his predecessor Poroshenko.For Zelensky, it would be the best moment in his career as a comic actor who used to make people laugh by telling off-color jokes. No doubt he is bringing a few good ones for this trip but if things go his way it wouldn’t be a laughable matter at all.