Finally got around to listening to this “Face Off” debate from @gmfus. First of all: a great format. Other think tanks with their 90-minute Zoom events (on this topic, usually featuring 3-4 people all repeating the same things) should take note! Ably moderated by @kristinberz 1/x https://twitter.com/gmfus/status/1369295764883705856
Prof. Pflueger emphasized a critical point, which is that the US using its control over US dollar clearing to impose a specific policy—in this case not even ex ante, but on a project 95% completed—is fundamentally unacceptable, for both Germany and the EU, as a policy matter. 2/x
Even US supporters of sanctions understand that acting in such a heavy-handed way brings a cost, particularly as the Biden administration tries to rebuild Transatlantic trust. This cost must be weighted against the supposed benefits of blocking Nord Stream 2. 3/x
In this context, @profalanriley1 made an important point. I have previously accused Alan of offering completely inaccurate analysis of the EU gas market, and he does so again here (“flooding the interconnectors” 😜) but I defer to his legal expertise on EU regulatory matters. 4/x
Professor Riley points out here that Nord Stream 2 “won’t be completed even if it’s [physically] completed” because it will not be certified as a Transmission System Operator (allowing it to operate) until it meets all the requirements of the EU Gas Directive. 5/x
Now then, I am well aware of the requirements for unbundling, third-party access etc. that were applied to the German offshore portion of Nord Stream 2 by the 2019 revision of the Gas Directive 2019. But Riley here also mentions Article 11 certification. 6/x
To quote: “crucially, it [NS2] will need an Article 11 certificate. Does it pose a supply security risk to [Germany] or to the Union as a whole? That’s Article 11 of the Gas Directive 2009. The point about this is that it will all be litigated in the courts . . .” 7/x
“. . . even if it’s physically completed, it will not . . . have a TSO certificate until the case has been disposed of in the Court of Justice of the European Union. So we are talking several years from now before that will happen.” 8/x
Now then, I am not sure about the timing, nor the certainty that this will end up in a multi-year CJEU proceeding. But what Prof. Riley makes clear is that Nord Stream 2 will not be allowed to operate unless/until it is judged *NOT* to put EU security of supply at risk 9/x
(It will *not* be judged to put EU security of gas supply at risk, by the way, because it doesn’t. That’s not my point here but I have elaborated this previously) 10/x https://twitter.com/LaurentRuseckas/status/1291744085364084736?s=20
So when US policymakers weigh the costs of unilaterally dictating policy to Europe vs. the benefits of sanctions for EU security of supply, there is literally no benefit: Not only on the basis of market analysis (as I argue), but, as Prof Riley asserts, as a matter of law. 11/x
In fact, what US policymakers must actually be weighing is the diplomatic cost of imposing unilateral sanctions vs. the benefit to the US national interest of supporting Ukraine in this matter. 12/x
That is a choice for the policymakers, but I think it is possible to support Ukraine while also avoiding heavy handed imposition of policy on Germany. I would argue the US priority should be an new framework on the NS2 sanctions that is acceptable to Germany . . . 13/14
. . . and which locks in US-German (& US-EU) joint measures to mitigate any negative effects of NS2 on Ukraine, should it begin operating; and critically to help Ukraine reboot and supercharge up its energy transition after recent problems in its renewables sector. 14/14 end
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