Saturday, April 15, 2023

041 - Brexit as a root-cause of UK instabilities

PREFACE/ISSUE

Brexit has caused tectonic shift for the whole European region

The divorce did not go smooth, the UK lost political and economical power, its influence on European affairs has diminished

The attack on Nordstream pipeline gas delivery route was done by a state actor. This means it was studied from many perspectives.



I. Could attack on Nordstream be a wider policy issue?
Is the destruction of EU-Russia economic ties an objective?  

15 Oct 2022 - The priority must be stability and a strong focus on 

...reducing energy costs and financial stewardship. Liz Truss made a tough call today but the duty of a PM has to be security - both economic and national.

26 April 2022 - Liz Truss is ready to try and beat global aggressors at their own game

[M: This is highly interesting news, in light of future NS destruction, the hit on NS and consolidation of EU foreign policy, etc, it all looks like part of strategy] 

"The Foreign Secretary believes there needs to be a much greater economic underpinning to foreign policy

When Liz Truss addresses diplomats this evening with the annual Mansion House speech, it will be the first time since her appointment as Foreign Secretary that she has set out her plan to reconfigure the UK’s foreign policy.

Since Truss’s promotion to the great office of state in the autumn reshuffle, she has seen a wider geopolitical shift than many foreign secretaries have encountered in the bulk of their tenure.

Berlin has cancelled the Nord Stream 2 gas pipeline and increased its defence spending – rewriting 30 years of German foreign policy which has been underpinned by a belief in change through trade.

[M: It was not cancelled at this point, just legal issues but the project continued, just frozen through administrative "bundling issue"] 

On the UK side, much of what has happened confirmed the Government assessment on the threats the West faces. The 2021 integrated review (into foreign, security and defence policy) correctly identified Russia as the greatest threat – while naming China as “a systemic challenge”.

Yet with events moving as quickly as they are, the view in the Foreign Office is that the UK must now go further still. Key to this is to fix what has long been a weak flank of UK foreign policy: moving to strengthen economic ties – both with long-standing allies and those countries the UK wishes to bring into its orbit.

While the West has rallied in the wake of war in Ukraine, the fact that Russia invaded in the first place was a failure of deterrence. The view of the Foreign Secretary is that in order to avoid repeating the same mistakes, a new approach is required – one in which there needs to be a much greater economic underpinning to foreign policy.

Part of the reason Russian strength got to the point it did was that the world let its guard down – both in terms of defence spending and economic ties. In that period, other governments viewed as aggressors have expanded their reach – just look at how the Chinese government has expanded its influence in the Indo-Pacific through economic ties.

Now the UK wants to beat these aggressors at their own game. It’s not just about boosting defence spending – something Truss has previously suggested would be necessary – though the Chancellor Rishi Sunak may want to look away when she gets up to speak on Wednesday.

Instead, it’s engaging with other countries. Liz wants the free world to use economics as a hard-edged tool of security and foreign policy because we’ve neglected it since the Cold War and aggressors have been bolder,” says an ally of the Foreign Secretary. “She wants to use economics to constrain rivals and also build closer trade and investment links with a wider group of countries.

Another supporter of Truss puts it this way: “We need an economic Nato.”

This shift can also be summarised as a “carrot and stick” approach. The stick can be seen in the power of the sanctions levied against Russia by the G7 and its allies. The economic damage they are inflicting is leading to pain for Putin and his people. They could go further still – with a ban on imports of oil and gas; hydrocarbons make up a third of the Russian economy.

As for the carrot, during the Cold War the US did two things – establish Nato and then a general agreement on tariffs and trade. This time around a wider reach would be required – taking into account those countries in the Indo-Pacific who see what’s happening in Ukraine and worry for their own security." 

28 July 2022 - The Integrated Review, Defence in a Competitive Age and the Defence and Security Industrial Strategy

The MoD argues that the Integrated Review identified Russia as a threat and that the conclusions drawn have been reviewed but seem to be enduring. However, we have concerns that the MOD have not managed to assuage.

In oral evidence in June 2021, the Secretary of State set out what he perceived to be the most significant threats: Russia, China, terrorism and Iran. In November 2021, the National Security Adviser also highlighted the threats posed by Russia, China and terrorism as significant, and added CBRN proliferation and the development of advanced military weaponry to that list.

The Government has also pointed to the description in the Integrated Review documents of Russia as “the greatest nuclear, conventional military and sub-threshold threat to European security” (25 HL Deb,7 April 2022, col 2184) 

II. Political implications of Nordstream on UK

22 May 2018 - Boris Johnson joins US in criticising Russia to Germany gas pipeline / Foreign secretary says Nord Stream 2 could leave Europe reliant on ‘malign’ Russia

The UK foreign secretary, Boris Johnson, has joined the US in condemning “divisive” German plans...
Commentators in Russian newspapers such as Pravda this week confidently claimed that UK energy needs would become the anvil on which British opposition to Russia collapses. Reliant on the evaporating reserves of the Norwegians and Dutch for liquid gas, the UK will be forced to turn to Russian gas, and “beg Russia for forgiveness, Pravda claimed.

In a letter released to pro-Polish British MPs, Johnson says it is right to highlight the “divisiveness of this pipeline across Europe”, adding that “Euro-Atlantic unity remains our strongest tool in standing up to malign Russian activity”. 

Daniel Kawczynski, the chair of the all-party parliamentary group on Poland, said: “The letter is not as forthright as it could be, and in some way obfuscates, but importantly it accepts there are implications to the pipeline that extend well beyond what is in Germany’s economic self-interest.” 

III. Nordstream as a Security threat 

2018 - Atlantic Council - The Damage That Will Flow From Nord Stream 2
         Creating a Straits of Hormuz Risk for Europe

The security threat here is not about Russian cutoffs, but the less politically dramatic—though still very serious—risk of putting all energy supply-security eggs in one basket. Risks could include: a collision at sea near the pipelines; munitions being set off by local fishing vessels (Nord Stream 1 does, and Nord Stream 2 will, run through two munitions dumps from World War II); or a terrorist attack.

...once Nord Stream 2 becomes operational, these interconnectors will be utilized by Gazprom on such a scale that it will be much more difficult for competing gas supplies to reach CEE customers...

...One alternative to actually blocking Nord Stream 2 entirely would be to insist that it at least take a different route from Nord Stream 1...

29 July 2021 - Chairpersons of foreign affairs committees issue statement voicing concern over Nord Stream 2

We, the chairs of foreign affairs committees of our respective national parliaments, are deeply disturbed by the decision of the United States and Germany on Nord Stream 2, which entails resuming completion of works on the Nord Stream 2 gas pipeline.

We consider Nord Stream 2 a geopolitical project geared towards expanding Russia’s geostrategic influence on Europe by dominating the energy market. The completion of the pipeline will strengthen the impact of Russian gas in the European energy mix, endanger the national security of the EU and the United States, and threaten the already precarious security and sovereignty of Ukraine. Moreover, the completion of NS2 will give Russia yet another tool to pressure and blackmail Ukraine. It continues to face Russia’s brutal aggression and military occupation of its territories because of its pro-European choice. As a result, over 14,000 Ukrainians have died, and every week, more Ukrainian soldiers give their lives to protect their homeland and entire Europe.

The likely repercussion of the completion and operation of Nord Stream 2 is to undermine the development of a single, liberalized and open European market by consolidating sources of supply in the Nord Stream 2 system and deterring investment in alternatives.

8 Oct 2021 - Boris is right about Putin’s gas-powered games — but is the EU listening?

Now completed, Nord Stream 2 awaits approval, first by German and then by EU regulators. The British intervention is bound to irritate both Berlin and Brussels, but as Downing Street warns, the security implications are “serious” for this country, too. 

Last week, a much-noted article in The Times by Peter Tiede, lead columnist for the tabloid Bild, suggested that Germans were revelling in “schadenfreude” at Britain’s fuel shortage and couldn’t care less because “nothing happening on your shores makes much of a difference to our lives”.  

Given this background, the British attack on Nord Stream 2 may fall on deaf ears. 

28 Oct 2021 - The Guardian: Russia’s gas threats to European solidarity

As the clocks go back in Britain this weekend, signalling the change of seasons, Boris Johnson must move on from petty post-Brexit ideological vendettas with Brussels, and re-engage sensibly with the EU on matters of foreign and security policy. 

4 Nov 2021 - We must stand together for freedom and democracy:

                        article by Liz Truss

I want our friends across Europe to join us. That means standing together for example in opposing the construction of the Nord Stream 2 Pipeline. It risks undermining European security by allowing Russia to tighten its grip on those nations who rely on its gas, despite the pandemic reminding us about the importance of having diverse supply chains to avoid being strategically dependent on unreliable partners.   

16 Nov 2021 - Boris Johnson warns EU to choose between Ukraine and Nord Stream 2

Writing in The Sunday Telegraph, Truss urged “friends across Europe” to stand together in opposing the Nord Stream 2 pipeline. “It risks undermining European security by allowing Russia to tighten its grip on those nations who rely on its gas,” she wrote.

18 Nov 2021 - Nord Stream 2: Will you go to the Gazprom with me?

British Prime Minister Boris Johnson said on Monday that “a choice is shortly coming” for Europe, between consuming more Russian fossil fuels or sticking up for Ukraine and championing the cause of peace and stability.

30 Nov 2021 - Liz Truss urges Nato allies to block Russia’s Nord Stream 2 gas pipeline

It remains to be seen how far the UK can push its opposition to Nord Stream 2 but the prime minister, Boris Johnson, raised the issue’s profile in a foreign policy speech at the Guildhall this month, saying: “We hope that our friends may recognise that a choice is shortly coming between mainlining ever more Russian hydrocarbons in giant new pipelines, and sticking up for Ukraine and championing the cause of peace and stability.” 

19 Feb 2022 - PM speech at the Munich Security Conference

We must now wean ourselves off dependence on Putin’s oil and gas.

I understand the costs and complexities of this effort and the fact this is easier said than done, so I am grateful for Chancellor Scholz’s assurances about Nord Stream 2, but the lessons of the last few years, and of Gazprom’s obvious manipulation of European gas supply, cannot be ignored.

We must ensure that by making full use of alternative suppliers and technology, we make Russia’s threats redundant.

That will be the work of the months and years to come, as well as the necessary and overdue steps that we in the UK must take to protect

13th March 2022 - UK to host Joint Expeditionary Force leaders for talks on Ukraine crisis

Talks will cover "increasing defensive military support to Ukraine" and the issue of "long-term energy security", it said, while the Prime Minister will urge the coalition to work towards "greater resilience against hostile state threats".

The Prime Minister said resilience to Mr Putin's threats must "go beyond our military footing".

"Together… we must ensure we are insulated from Russia's interference and impact on our energy supplies, economy and values," he added. 

28 August 2022 - PM Boris Johnson: The next few months will be tough but I’m convinced Britain’s bounceback will be golden 

We are ending our dependency on Russian hydrocarbons. In June, for the first time in decades, we did not import any fuel from Russia. The UK has already stepped up production of domestic gas – 26 per cent more this year than last. We are going to build a new  reactor every year and will have a colossal 50 gigawatts of offshore wind by 2030 – almost half our total electricity consumption.

This British Energy Security Strategy is just a part of a vast  programme to make the economy more productive and competitive. 

We have laid the foundations for long-term gains in prosperity and productivity. We know we will bounce back from the crisis in the cost of energy as we rapidly build up our own UK supplies.

That is why we will succeed and why we cannot flinch now

We have more than enough resilience to get through tough months ahead. We have shown that before.

And we have made the long term decisions – including on domestic energy supply – to ensure that our bounceback can and should be remarkable and that our future will be golden. 

30 August 2022 - Jacob Rees-Mogg meets energy giants in bid to boost North Sea oil and gas supplies

City A.M. understands the Brexit Opportunities Minister and Liz Truss-backer held talks with energy giants including Shell over recent days, ahead of a desperate winter which will see energy bills spike to new records – driven by fears of supply shortages.

He is also looking to seal deals with companies operating in the waters of friendly allies such as Norway.

There is confusion over whether Rees-Mogg met oil and gas companies in his role as a Minister or as a supporter of Truss – with multiple Government departments refusing to comment. 

Truss’ senior team has claimed the meetings were set up by civil servants, and was not linked to her campaign.

 (Jacob Rees-Mogg - Secretary of State for Business, Energy and Industrial Strategy, in office 6 September 2022 – 25 October 2022). 

20 Sept 2022 -  UK PM Liz Truss defends power bills hike, cites 'security', Russia-Ukraine crisis.

20 Sep 2022 - Liz Truss lands in US to reset ‘special relationship’ on first foreign trip as PM

“My message to the people of Ukraine is this: the UK will continue to be right behind you every step of the way. Your security is our security.”

She will also tell fellow leaders that they must put an end to Putin’s economic blackmail by removing all energy dependence on Russia. 

“Too many lives – in Ukraine, in Europe and around the world – are being manipulated by a dependence on Russian energy. We need to work together to end this once and for all.” 

  

IV. From Brexit to Improving Energy insecurity beyond present needs, domestically and abroad for future needs


1 January 2021 -  the UK left the EU's internal energy market.

Energy trading through electricity interconnectors between the EU and Great Britain is no longer managed through existing single market tools, such as EU market coupling, as these are reserved for EU countries. Only Northern Ireland will maintain part of the single electricity market with Ireland, as provided by the Withdrawal Agreement.

Before Brexit, the UK participated in the EU's energy market coupling initiative, which facilitated the trading of electricity with other member states. However, after Brexit, the UK ceased to be a part of this initiative, and the energy market coupling with the EU was discontinued.

This has led to a number of consequences for the UK's energy market, including:

    • Increased energy prices: The end of energy market coupling has resulted in higher energy prices for consumers in the UK. This is because the UK is no longer able to benefit from the cheaper electricity prices available in other EU countries.
    • Reduced energy security: The end of energy market coupling has also reduced the UK's energy security, as the country is now more reliant on its own energy resources and less able to import electricity from other countries.
    • Increased regulatory costs: The UK has had to establish its own regulatory framework for the energy market, which has resulted in additional costs for energy companies.
    • Investment uncertainty: The end of energy market coupling has also created uncertainty for investors in the UK's energy sector, as they are no longer able to rely on the stable and integrated EU energy market.
Overall, the end of energy market coupling has had significant implications for the UK's energy market

21 March 2022 - Today the Prime Minister met nuclear industry leaders today to..

... discuss how to improve domestic energy security and accelerate nuclear projects in the UK. 

 16 March 2022 - Today Prime Minister @BorisJohnson met...

... the Crown Prince of the UAE @MohamedBinZayed. They welcomed the longstanding partnership between our two countries and discussed opportunities to increase collaboration on energy security, defence and trade.  

16 March 2022 - Prime Minister @BorisJohnson on why it’s vital that we invest in renewable energy and end the West’s reliance on Putin’s oil and gas.

see video news here

17 March 2022 - BoJo: We need to wean the West off Russian oil and gas 

...to punish Putin’s war machine. Prime Minister @BorisJohnson  has been working with partners in the UAE and Saudi Arabia on stabilising global energy markets and ramping up investments in renewable technologies.

1 April 2022 - We agreed that pressure on Russia must continue and we will work to eliminate dependency on Russian energy.


5 April 2022 - Spoke to Italian Foreign Minister @luigidimaio

...about tackling the income that is funding Putin’s regime. We need to step up our coordinated sanctions to end Russia’s war in Ukraine.

 7 April 2022 - UK updates its energy security strategy 

It is crucial we work with international partners to maintain stable energy markets and prices. This will help protect UK consumers and reduce the use of fossil fuels globally. Similar to our domestic strategy, we have a dual approach to reduce global reliance on Russian fossil fuels whilst pivoting towards clean, affordable energy. To reduce global reliance on Russian fossil fuels, the UK is:

committing to phase out the use of Russian oil and coal by the end of 2022, and end imports of Russian liquefied natural gas as soon as possible thereafter. The US has made similar commitments
building international support to reduce Russian energy revenues. Internationally coordinated action, for example, through the G7 and International Energy Agency is key to support stable markets and to help secure the critical minerals we all need to successfully move to clean energy
providing a key EU entry point for non-Russian supplies of gasWe are examining our infrastructure to ensure gas flows efficiently between the UK, Europe and the global market through our interconnectors and LNG terminals and promote gas infrastructure to be hydrogen-ready 
    Oil and gas
    Low carbon UK gas, and zero Russian imports.

     

     Phase out Russian oil and coal by end 2022
    and Russian LNG gas imports as soon as possible thereafter


    International delivery
    Reducing global reliance on Russian fossil fuels


    Supporting allies

    11 April 2022 - Alternatives to Russian oil: Saudi Arabia, the Gulf and Venezuela?

    How important is Russian supply, and which countries could replace it?

    Russia is the second largest producer of oil in the world, behind the US. Russian imports account for 8% of total UK oil demand. Two countries—the UAE and Saudi Arabia—are arguably best able to ramp up spare production capacity quickly. This is where recent UK diplomacy has focused.

    UK visits UAE and Saudi Arabia, March 2022

    On 16 March 2022, the Prime Minister, Boris Johnson, visited both Saudi Arabia and the UAE to discuss energy security, including potential measures to diversify the UK’s energy supply. He also raised human rights concerns with Saudi Arabia.

    The visit did not result in pledges from the two countries to increase their production. However, both the UAE and Saudi Arabia committed to improving stability in the global energy markets and to advance green technology and trade with the UK.

    12 May 2022 - Where will Britain’s future energy supply come from?


    Russian imports supplied only 2.2% of energy used in the UK in 2021..
    To account for future changes to gas and oil supply and secure more domestic resources, the Government plans to further utilise North Sea reserves alongside commissioning a scientific review of shale gas extraction.

    The Institute for Government (IfG) said the security of the UK’s physical supply will “likely hold up” following possible Russian gas export disruptions to the EU, even without measures from the strategy, due to diversity of supply

    17 May 2022 - EU energy security: Implications for the UK

    How EU dependency on Russian energy affects the UK

    The UK is far less reliant on Russian gas than the EU, but security of EU gas supply matters to the UK because:

      • it affects the prices of UK gas and electricity;
      • it could affect the UK’s own security of supply if gas imports into the UK were re-directed to the EU;
      • energy exports are economically important to Russia and changes may therefore affect geopolitical relations.

    UK-EU cooperation

    Russia’s invasion of Ukraine has stimulated UK and EU cooperation on the security of energy supply. 

    At the 30 March 2022 meeting of the UK-EU Specialised Committee on Energy, the UK and EU agreed to facilitate regular exchanges on the security of supply (PDF). They specifically discussed establishing a Working Group on Security of Supply as a matter of priority.

    This is because there is insufficient LNG import capacity within the EUbut spare capacity in the UK as well as capacity on the pipelines from the UK to mainland Europe. 

    24 April 2022 - Britain Must Help Remove 'Cancerous Growth' Russia From Ukraine, Says Ben Wallace

    30 May 2022 - Energy crisis: UK to become MAJOR exporter to EU with huge wind and solar boom

    BRITAIN could soon find a way out of the energy crisis, as a new report suggests that the UK could receive a massive supply of green electricity. 

    21 July 2022 - First UK-Germany power link gets financial green light

    A financial agreement was reached on Thursday to build the first power cable linking Britain and Germany, with construction set to begin later this year as the two countries work to reduce dependency on Russian gas and increase the use of green energy.

    9 Sept 2022 - Truss lifts ban on fracking, and will prop up fossil fuel companies in energy crisis

    Europe is particularly reliant on Russian gas, with the nation supplying some 45% of the EU’s total gas imports last year. While imports from Russia made up just 4% of the UK’s total gas supply in 2021,...b ...plans, announced earlier this year, to diminish reliance on Russian imports by building a robust network of fuel suppliers across the US, the Netherlands and the Gulf 

     

    V. Administrative and legal actions could no more stop Nordstream going online after the RussianUkrainian conflict ends

    13 July 2022 - EU court points to future resurrection of Russian gas pipe (NS2)

    8 Sept 2022 - Swiss court gives Nord Stream 2 more time to avoid insolvency. 

    In May, the court granted a provisional moratorium against bankruptcy proceedings for the first time, which was valid until September 10. This period has now been extended by another four months.

    The Swiss company behind the Russian gas pipeline Nord Stream 2 has received a four-month extension to try to repay its debts. 

     

    CONCLUSION/SUMMARY:

    • After Brexit the UK could no more legally and administratively stop or effect the Nordstream going online. Military action against (mainly) Russian pipeline and its cheap deliveries to its competitor (EU) was only left solution would the UK want to cancel the project.

    • It is known that sanctions would one day be rolled down.

    • During summer Swiss court made decision to extend the out-of-bankruptcy status of NS2 AG. Also it looks like the Gazprom won the highest European case about unbundling of pipeline operator and  

    SUM:

    Brexit has caused a lot of political, economical, security - internal & external issues for the UK. The country was side-lined in many areas. 

    Mission accomplished - UK - from Energy Importer to Energy Exporter

    The Act of Retorsion allows Gazprom legal suspension of deliveries to Europe 

    UK government does not like Nordstream

     

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