Europe’s energy agenda in the Trump-Putin era

The shockwaves created by President Trump’s trip to Europe are still reverberating. Only now are the substantive impacts of his visit starting to be diagnosed. One critical area where analysis is needed is energy, where it is clear that Europe needs to speed up the hard work of protecting its energy interests.

Despite a decade’s work strengthening its energy security, Europe faces hard choices. It must decide how far-reaching its vaunted Energy Union will be. It must navigate energy relations with Vladimir Putin’s Russia, which relishes any chance to practice divide-and-conquer neighborhood policy. And meanwhile, Europe’s trans-Atlantic partner has lost the ability to distinguish friend from foe despite treaty alliances in place since World War Two.

{mosads}Few would have expected energy to play such a prominent part in President Trump’s European trip. Fewer still would have thought it possible for an American president to insult more friends (treaty allies), impugn his own government’s intelligence and law enforcement agencies, and so overtly embrace a key adversary in such a compressed time.

In a Brussels breakfast with the NATO secretary general, Trump pilloried Angela Merkel’s German government for having approved controversial Nord Stream 2 natural gas pipeline from Russia. He then ridiculed Alliance partners for failing to budget enough for defense, only then to demand twice the long-discussed 2 percent benchmark. 

In Britain, he savaged Theresa May’s policy on the third-rail Brexit talks in a press interview, and then claimed that he had not done so, despite audio evidence to the contrary. In his Helsinki press conference with Putin he undercut U.S. intelligence and law enforcement and blamed predecessors for the “foolishness and stupidity” of past U.S. policy toward Russia.

The very same pipeline that had been a cause celebre when Trump visited NATO was passed off with a shrug — “competition” — thus reinforcing Europe’s unease that U.S. concerns about Nord Stream 2 are merely a mercantilist ploy. 

European partners could not be faulted for wondering where they stand in the wake of Trump’s blitzkrieg. Instead of spending too much time debating this question, they would be well-advised to attend to their homework with renewed dedication. In the energy area, this means more work to strengthen the reliability and resilience of natural gas and electricity networks.

Europe has made serious progress in this vital area in the last decade. In 2006 and 2009, disputes between Russia and Ukraine resulted in partial shutdowns of gas shipments from Russia to Central and Western Europe. In 2014, after Russia’s invasion of Ukraine and saber-rattling by Putin, the European Union again feared a gas shutoff and undertook “stress tests” to evaluate their ability to survive for a time without gas shipments. 

By passing new laws setting strict rules for companies’ participation in European energy market, strengthening its regulatory watchdog, and building interconnecting pipelines to allow gas to flow where it is in short supply, Europe has significantly improved its ability to ward off predatory behavior by Russia’s Gazprom.

Moreover, after investigating Gazprom’s anti-competitive behavior in the European gas market, the EU secured critical concessions: Russia agreed it will no longer choke off competition by insisting that gas purchased by one buyer not be sold onward if market circumstances dictate.

Nor can Gazprom use gas supply to take pipeline systems hostage; last, natural gas prices throughout the EU are to be based on transparent European benchmarks. If Gazprom fails to deliver on these understandings, the EU can impose crippling penalties.

Despite this progress, Europe cannot rest on its laurels. In a time when rightwing political movements in a number of EU member states are trying to undercut the European Union, Brussels and the EU member states need to make hard decisions.

Will they make real the goal of a functioning energy market — the Energy Union? Will reluctant countries be coaxed or compelled to deliver real market reform? In a time when European gas production is declining rapidly, will Europe still feel secure if it purchases more than 40 percent of its gas from Russia? Will the EU be able to help Russia and Ukraine to forge a new gas transit contract before the current agreement ends at the end of next year?

In the past, these tough topics were matters on which the United States and European partners consulted in private. Today, despite longstanding trans-Atlantic goodwill, Europe now gets treated to a stream of angry presidential tweets and declamations. The White House seems to have lost interest to engage Europe calmly and constructively. Europe, even if acting alone, needs to continue focusing on its energy security. 

Jonathan Elkind and Tim Boersma are senior research scholars at the Center on Global Energy Policy at Columbia University. Elkind served previously as assistant secretary for International Affairs at the U.S. Department of Energy. Boersma directs the Center’s natural gas program and worked previously in the European energy industry.