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Jerri-Lynn here. In the age of COVID-19, there are nonetheless perennial foreign policy issues that remain to preoccupy policymakers. And I for one need to be reminded of them, least I surrender completely to COVID craziness; I assume the same holds true for Naked Capitalism readers. I know from prior academic work I conducted decades ago on the Nixon administration’s trade policy, that Europe’s willingness – particularly what at that time was West Germany – to tie themselves to Russian oil supplies was a major U.S. concern.
So VP Mike Pompeo’s obsessions are by no means new or particularly contemporary, and are neither tied to the current New Cold War madness or Russiagate centred on Trump. I have yet to trace Pompeo’s fossil fuel connections, but the broader Trump administration has certainly served U.S. fossil fuel interests (as readers with memories recall was also the case with its predecessors. I think it’s almost a necessary condition to be a U.S. president.)
This time, what is now unified Germany will be the major receiver of Russian gas supplies that would flow through the new pipeline. The US is petrified that Germany may go rogue on this issue – as it has long been willing to use Russian energy supplies. You only need to troll through archives to see that – even during a period when many Germans had personal experience of Russian policies.
And this time, as the post explains, Germany has even offered to appease the US by offering to build two liquefied natural gas import terminals worth $1.2 billion if the U.S. ceases opposing the pipeline. So far Pompeo and the U.S. have yet to back down and the COVID-19 related cratering of oil demand and world energy prices means it unlikely that the current U.S. policy stance will change any time soon.
By Charles Kennedy, who writes for OilPrice and has covered this and many other issues. Originally published at OilPrice
The United States is building a coalition aimed at preventing the completion of the Nord Stream 2 pipeline that will substantially increase the flow of Russian gas into Europe, the U.S. Secretary of State told German daily Bild in an interview.
“From the US point of view, Nord Stream 2 endangers Europe because it makes it dependent on Russian gas and endangers Ukraine – which in my opinion worries many Germans,” Pompeo said. “We hope Nord Stream 2 will not be completed and we are working on a coalition to prevent this from happening. We hope that the German government will also come to this assessment, be it because of what happened to Mr. Navalny or because of the security implications that dependence on Russian gas brings.”
The interview comes days after another report in German media said the German government had tried to appease Washington about Nord Stream by offering to build two liquefied natural gas import terminals worth $1.2 billion if the U.S. stopped opposing the pipeline.
Germany will be the receiver of most of the gas that will flow through the expanded Nord Stream pipeline amid an expected surge in demand for natural gas as it closes coal and nuclear power plants. The U.S., however, is against it, claiming it will only increase Russia’s influence in the energy supply of the EU, which would be unwise. Of course, there are also the U.S. gas interests as a major LNG exporter.
The alleged poisoning of Putin critic Alexey Navalny recently raised the temperature of the issue, with critics of the Nord Stream project calling for the German government to punish Moscow by withdrawing its support for the infrastructure.
On the other hand, a group of local primer minister from eastern German regions declared their support for Nord Stream 2, saying in a joint document that it was important for the energy future of both Germany and Europe and its completion would be “right and justified”.
Building a coalition = pressing other countries as hard as we can
NS2 endangers Europe because it makes dependent on Russia and endangers Ukraine = isn’t it that the Ukraine pipeline brings gas… from Russia? Isn’t it that the conflict supported by the US makes supply through Ukraine less reliable? If EU was to diversify, wouldn’t it be worse to depend on still more contaminating and expensive shale oil supply?
Ah! because of Navalny! That explains all.
There can hardly be an argument that NS2 hurts Ukraine? The whole point of the nordstreams is to hurt Ukraine. Or at least, to take away Ukraine’s ability to levy tolls on the gas (both formally, and informally by taking a cut of the flow)
“The whole point of nordstreams is to hurt Ukraine”
Or worded in way that removes the “russia is bad” narrative…
The whole point is to have Ukraine and the US stop hurting Russia, Germany, and other nations, no?
I don’t think the US had much to do with it. The Nordstream projects predate the changes in Ukraine – they were aimed at a rather solitary Ukraine, that was seen as overplaying it’s hand when it came to the gas flow.
Sir/Madam, one thing about Natl gas supply is that it MUST be reliable. Ukraine’s pipeline isn’t. That is what hurts Ukraine, the absence of a stable geopolitical situation. Hence, NS2 is the consequence, not the cause.
Disagree, US has MUCH to do with the pipeline trouble. Also the point was your “Russia bad” narrative.
That is partly true. It is also the case that the pipelines through Ukraine are ageing and need plenty of repair/maintenance etc., work. Nordstream 2 eliminates that problem, especially as organising pipe repair work when Russia and Ukraine are not talking to each other would be a headache.
Repairs would be fun and games. The Ukrainians would want all the contracts to do all the work but would expect the Russians to pay for it all. But if anything went wrong with the repairs, guess who would get all the blame?
Besides, Ukraine wants to steal as much gas as possible. WInter’s coming! I’m hoping that Germany will tell the US to (family blog) off.
Hurt Ukraine? Why would one adopt MP’s terminology? It should be obvious that the secretary will not be upfront about what really bothers the US. Instead, feigning concern about Kiev comes in handy.
Plans for NSII started right after NSI was opened in 2011 – so long before the mess in Ukraine.
A direct, shortest pipeline makes a lot more sense than a long route overland. So there is that – efficiency.
Remember, even USSR exported energy resources to Europe, and quite reliably.
With NSII, Kiev will lose income, but it’s not like they’ve been buddy-buddy with Russia lately. Chalk it up to changing geopolitics – but it is a consequence, not the cause. Plus, a pipeline through Ukr. remains, so they will get nat-gas, provided Kiev pays for it. (In the past, a lot of gas was siphoned off, without compensation; with NSII, there’ll be less opportunity to do that.)
The author does not really say what US’ objections are. I recommend reading the Zbigniew. B’s Grand Chessboard. He’s pretty clear that if EurAsia combines and becomes economically interdependent, the far-away US could be easily cut out. It’d lose significance. The one indispensable nation that is not significant for anyone else – how could that be?
With the departure of the U.K. (not entirely sure we’ll be missed…) it is important to consider the implications especially where the U.K. previously influenced EU policy. Energy was one of the few areas where the U.K. and the Commission saw eye to eye (both being heavily influenced by neoliberal and even ordonomic thinking in this regard as to how an energy market should be constructed and managed).
This was a counterweight to some pretty blatant hegemonic power plays by Germany where defending and furthering the interests of the Mittelstand wasn’t even bothered to be disguised.
Nothing better illustrates this than Nordstream 2. In particular, Nordstream 2 for me, no Southstream for thee https://www.brookings.edu/wp-content/uploads/2016/08/fp_20160818_demaio_tale_of_two_countrie.pdf — it will be interesting to see just how far Germany is willing to push its domestic agenda through not-even-trying-to-hide-it strongarming of the Commission.
German clumsiness (aided and abetted, it has to be said, by the appalling Obama presidency and the warmongering of henchwoman Victoria Nuland) led to a near catastrophe in The Ukraine. Let’s hope for better outcomes this time.
“…German media said the German government had tried to appease Washington about Nord Stream by offering to build two liquefied natural gas import terminals worth $1.2 billion if the U.S. stopped opposing the pipeline.”
How about this instead, Mr Germany?
“The German government presented Washington will a bill due, demanding immediate payment of 50 billion Eur, for losses resulting from illegal American sanctions imposed on the building and completion of Nord Stream pipeline and requires the U.S. stop opposing the pipeline in any form effective immediately.”
“German officials said the bill due of 50 billion Euro would cover German expenses only, and they can not speak for losses the American apparently owe Russia, and suggested U.S. officials get in touch with Moscow on that matter and normalize state to state contacts and relations, which is in the best interests of not only Germany but the whole of Europe and the world.”
And then the US says no. What would be the point?
The answer to that is easy.
The point is to introduce reality into the situation and alter US expectations and actions towards Germany as she begins to act as the sovereign entity with dignity, that she it, and put US on notice to stop it’s illegal actions towards her and Russia and other nations.
But the reality is that the US is genuinely powerful, and can do a lot of unfair stuff.
Yeah, that’s not dignified if you are on the receiving end. You don’t get that dignity back by complaining about it.
Paying attention in the last few years may quite easily lead one to conclude that this ‘genuine’ power has been diminishing at a fairly steady clip. Notice the Iranian snap-back fiasco that has been recently playing out at the UN?
This ‘genuine’ power simply ain’t what it used to be (how does ‘power’ even get to be ‘genuine’?). But yes, this presents a test for Germans.
‘Genuine’ in the sense that it is not a bluff. The US can order European companies to stop work on European projects . Or to stop doing business with Iran, as the other example indeed. There is no easy, short term, reliable response to such threats on the European side.
The US is showing its power more openly. That might well be sign of weakness. They used to get their way by quiet diplomacy in the back, now they have to put their pieces on the board.
But the US pieces are still strong. Europe has been working on Instex for years now, but it’s still mostly a paper tiger. No matter what European governments say, European businesses are boycotting Iran anyway. Out of fear of US retaliation, and because they do not believe that their own governments can shield them from such retaliation
Germany has power, too. It could turn East and IMO it would actually be better for doing so. But generally US sanctions against Germany IMO would backfire horribly against the US. And, Germany has options to counter US sanctions on companies doing the Nordstream. She ought to make clear to US she knows that and may use them. The US does not hold all the cards and getting stretch thinner as time goes by.
Russian oligarchs buy less beamers and mercedes cars than american oligarchs.
That’s it in a nutshell. Not to mention all the other oligarchs in western nations where the US can exert pressure to buy Lexus instead.
Germany wants and needs to buy gas from Russia but needs to sell its products in western countries, not the least of them the US.
Remember the VW scandal? That’s kind of a warning.
My sense is that for something to be ‘genuine,’ the bar must be higher than just ‘it is not a bluff.’ There has to be something tangible behind it. In the past, there were weapons, overthrows, even an occasional assassination. The weapons are still there, I suppose, but how to use them represents a dilemma.
Maybe the US will win this one, though I doubt. But still… the road to EU’s eye-opening process seems inevitable, widening with successive US demands (as most result in sabotaging EU’s growth).
I said this before… as soon as the hegemon is forced to defend its power, openly or not, it has already lost. Even if it takes a while…
Yeah, I doubt that this is good for the position of the US in the long run. It’s using the kind of levers that you cannot use too often.
But that long run might still be very long. Europe has been on this eye-opening road since the days of Suez, or de Gaulle, the collapse of Bretton Woods, Brandt’s Ostpolitik, missile protests in the 80s, the demise of the USSR, Iraq, the financial crisis, the Iran nuclear deal fiasco, general Trumpiness.
And yet, the US is still everywhere, and the efforts to untangle are rare and lackluster. Another 4 years Trump might make a difference, but otherwise it will be like Obama, everyone relieved that the US is showing the nice face again, here’s a Nobel prize, and the untangle plans back in the fridge.
I’d only add the the following words about willingness to run a large trade deficit to the benefit Germany:
Who has the reserve currency?
And that has what to do with Germany acting as the sovereign nation that it is? Bowing to bullies isn’t a solution, it’s part of the problem.
Sovereignity is a very fluid concept, it’s a scale really.
Every small state has to bow to the bigger ones. That’s just a fact of this Earth. I hasn’t been different for our recorded history. Just back then it was the tribe or the village or the band of hominids.
Perhaps. But don’t agree Germany does not have to bow to the US on Nordstream. She has fluid or non fluid however you wish to call it sovereign ability to complete it regardless of US. But will she?
Germany does everything to build NS2 and get the gas flowing. It is necessary and there is really no alternative unless one wants to be dependant on Ukraines goodwill (where the other russian pipeline is).
The US is really a friend you don’t need enemies anymore, but Ukraine is quite a lot worse. So no one sane would ever want to depend on gas transiting through there. They have a very proven track record of stealing their gas from exactly this pipeline. So far, Russia made up the shortfall and dealt with the fallout. They will not do that ever again.
Dmitri Orlov provides a very funny, logical and compelling explanation of the entire Navalny ‘poisoning’
That is a good read. To my disappointment, reading further at his ‘blog, I came across a recent interview in which he dismisses CV as not that big a deal. So I appreciate the amusement value of the taxi-driver story, but am reluctant to rely on DO for reliable analysis.
While the analysis is mostly fine imho the conclusion is useless.
The SPD (our version of the democrats, complete with betrayal of their leftist base) will not benefit at all. Neither is Schröder anything in that party. He has about as much clout as Bush II in the current GOP or less. The party still keeps schröderian politics, austerity, neoliberalism etc. which is the main reason they lost every election since and went lower everytime each time there is a new one. Think a wannabe Blair without even a hint of any Corbyn politics anywhere after he was gone. There is another nice word for this: Nibelungentreue. You know it will take you down and destroy everything, you still do it to keep the faith in someone’s deeds.
So it didn’t help the SPD at all.
The only ones who would benefit doing this political kinda euro russiagate theater with sanctions, novichok, etc. would be, what we call “Atlantiker”, atlanticists, which have a very strong base all across the political spectrum in every party, even the former eastern german ex-communist die Linke now. Sort of a german AIPAC just with a different country but same role: kingmaker, indoctrination and if need, punisher of the naughty ones.
PS: wikipedia has a better explanation for Nibelungentreue than me obviously:
Nibelungentreue is a German compound noun, literally “Nibelung loyalty”, expressing the concept of absolute, unquestioning, excessive and potentially disastrous loyalty to a cause or person.
I have yet to trace Pompeo’s fossil fuel connections, ….
Pompeo is a politician elected from Kansas with ties to Koch Industries, a huge fossil fuels industry exporting LNG worldwide. He was sometimes known as “the congressman from Koch.”
From 2 years ago:
It used to be that Republican Presidents always has a Bechtel man on board, usually as Secretary of State. Then the Bushes move to Halliburton, Bechtels big competitor. I guess the Koch’s have topped them both. I do wonder what Bechtel are up to sometimes, they are a private company so much more secretive than most of the others.
Certainly explains Venezuela. Thank you.
Flora wrote: “Pompeo … was sometimes known as “the congressman from Koch.”
I’m going to undertake a Koch-related digression from the main thread here —
Indeed, Pompeo is a creature of Koch. It’s an insufficiently appreciated fact, however, that so is Mike Pence, Kellyanne Conway, and, at this point, about two-thirds of the Trump administration. Conceivably, Trump is too obtuse to have noticed it.
A little history of Conway and Pence, taken together, casts light on how the Koch machine works
Conway, before becoming Trump’s campaign manager in August 2016, was a consultant for the Koch-backed Americans for Prosperity’s national foundation, as well as for that group’s Ohio and Michigan chapters, and the Kochs’ Freedom Partners. She was, similarly, a board member of the Koch-funded Independent Women’s Forum, which promises to “reduce government red tape and return resources and control to people, so healthy communities and people can pursue their own visions of happiness.”
Mike Pence, now Vice President, was previously Governor of Indiana and employed Kellyanne Conway in his two gubernatorial campaigns there.
Here’s how that worked. By law, the Koch nonprofit, Americans for Prosperity, can’t support political candidates; its spinoff Americans for Prosperity Action, as a PAC, isn’t so restricted, but still can’t collaborate directly with candidates’ campaigns. However, an individual consultant like Conway, acting as a nominally independent coordinator between nominally separate organizations within the Koch network, enables Koch to sidestep all these legal restraints.
Besides such funds as Mike Pence got from the Koch network this way, the Republican Governors Association received $10.8 million from Koch and Koch Industries from 2003 onwards, and passed $4.2 million of that on to Pence in 2012 and 2016. Meanwhile, David Koch personally donated $300,000 to Pence and Mark Holden – Koch Industry’s senior vice president and general legal counsel, and a board member of the Koch network’s Freedom Partners Chamber of Commerce, and several other Koch political organizations – gave Pence $202,500. Pence has been a mainstay at Koch events, including their secretive donor conferences, and as Vice President has met privately with Charles Koch, Holden, and other senior Koch network figures.
Pence is now chairman of the White House Coronavirus Task Force.
My claim that about two-thirds of Trump’s administration are effectively people who’ve directly worked for Koch or taken money from one of Charles Koch’s front organizations would take too long to document here. Go look for yourselves, if you’re interested. If it initially seems unlikely, recall that Trump had no political machine at all when he started. Conversely, Charles Koch had spent decades building out his machine. Thus, when Trump needed competent operatives to run his campaign and then to fill his administration, it was unavoidable that many of the most competent potential hires out there were or had been Koch employees and affiliates.
Specifically, the rise of the Tea Party in 2010-12 as a response to the Obama administration’s criminal complicity with Wall Street meant that Koch had the opportunity to fund Tea Party candidates as insurgents in the Republican party and thereby largely take it over. Mark Meadows, the current White House chief of staff, is typical in that respect.
So, something else to thank Obama for: giving Charles Koch the major opportunity he mightn’t have had otherwise.
A couple of final points on how this has played out.
 Whenever working for Trump has become too much for an old-school establishment Republican to stomach, their replacement has usually been an individual affiliated with the Koch network. Thus, Pompeo for Tillerson, Meadows for John Kelly, and so on.
 The political resources that the Koch network brings to bear go beyond funding. Charles Koch is a highly intelligent individual with two Masters Degrees from MIT, in chemical engineering and nuclear engineering. He’s expanded the business he took over from his father by something like 100 orders of magnitude and one of the ways he did that was that Koch started using computers and data analysis far more extensively and long before most American businesses.
Same thing with politics. Basically, Koch set up a IT company for political campaigning, i360, which was doing everything for which Cambridge Analytica was attacked five years before Cambridge Analytica. Yes, factions exist in the Trump administration that aren’t Koch-affiliated, like the Mercer-Bannon faction — and Mercer was part of the money behind Cambridge Analytica. In a way, though, that can be construed as merely an attempt to catch up with what Koch already had in i360.
One of the things that Kellyanne Conway might have brought to the Trump campaign was access to i360’s resources. I’m not on the inside and don’t know about that.
Thanks very much for this detailed, behind-the-scenes look at how part of the K political machine works.
They’ve made a strong move into Iowa in the past few years which is one reason the ‘Constitutional Convention’ is a big political issue in Iowa now, imo. The K machine dreams of a Constitutional Convention and has ‘model bills’ already drafted and ready to present. Their arguments for a Constitutional Convention are snake oil, of course, but very plausible snake oil on the surface. And as they envision it, it’s a one-way door. (Don’t they call those ‘traps’? ;) )
This is why the DNC’s indifference to so many state elections in flyover and places like Fla is so short-sighted and dangerous in the long run. Their indifference to state losses is a win for the K machine.
I wouldn’t read too much into Germany’s proposals for LNG terminals – its been European policy for some time to build more terminals in order to provide more competition in the gas market (or just create more political leverage against suppliers). But nobody really wants to build them as its so expensive. It’s quite easy for them to promise money for some, and then find some sort of environmental obstacle later on if they decide its not worth it as the licensing system in most European countries will take years to overcome before you even start breaking ground. The reality is that LNG only makes financial sense when oil prices are high, and it doesn’t look likely that we’ll see that for a few years.
Mike pompeo isn’t vp, but secretary of state. if biden wins, he could well be a candidate for president in 2024, which would be a pretty apocalyptic scenario. if you think 2020 is bad…
This is great news, or at least it would be if cooking ourselves isn’t already baked in to our economies anyway.
The more the fossil fuelies fight over how to deliver their poison, the more it gets delayed, the more time people have to move on to something else.
Not that I don’t think all this ugly crap will still get built, but it will take 10 years longer to happen and will be abandoned 10 years earlier.
All the sanction talk means Russia is trying to get this pipeline built faster to create facts on the ground.
And especially natural gas is the fossil fuel that i needed the longest and most no matter how fast you transition to regenerative energy.
And delivery via pipeline from the nearest source is the best way by far ecologically.
Mr. Pompeo, Butt out, I want my relatively cheap Russian gas in Amsterdam ASAP! What a chutzpah!
I think this mad US overreach against Nordstream 2 (and Turkstream, too, it seems) is music to my ears. It is stuff like this that will finally force European satrapies to pry themselves loose from the US and Germany, of course, is the most important of those satrapies.
I have a nice chunk of change coming in this November for publication of my 1,312 page tome My Life As A Putin Stooge. I will be sharing this with Moe, Larry and Curly (the original Curly!) via personal check since I share Moe’s utter disdain for Pay Pal and its ilk. All I can say about NC is, wooo, wooo, wooo, wooo!
I live in south Germany. Sure, the media here has tried to make a story out of the alleged poisoning but most Germans I talk to have absolutely no issue with getting their gas from Russia. The idea they should be getting it from the USA is laughed at.
Said in previous comments how Europe getting its gas from the US is ridiculous. They would need to build a fleet of vessels to go back and forth across the Atlantic conveying it, it would be much more expensive that the Russian gas, the Germans would have to build massive infrastructure to receive all those ships – and pay for it out of their own pockets. And finally one good storm in the Gulf would knock the US facilities out of action for perhaps weeks so no gas for Germany in the meantime. And let us not forget the hazard of a Beirut-style explosion in a German port in case of an accident.
But there is something else. if Germany buckles, it would be paying Danegeld to Trump. And the one thing about Danegeld is that you have to pay it again and again. And there would be absolutely no gratitude by Trump or Pompeo to Germany at all. None. In fact, there would be a massive temptation in some circles to blackmail Germany over gas deliveries. And what is a promise from Washington worth these days anyway? If Germany’s economy was doing good, what better way to slow it down than to slow the supply of gas? If Merkel buckles, then Germany would be screwed.
“Germany screwed” – well, yes, that may very well be the cherry on the top – make those krautzes dependent on the unreliable US nat-gas (never mind that adequate supplies aren’t even there), with the goal of slowing down their economy. Another competitor removed (or at least, subdued, yet again). As Prez Xi says, “win-win.” Just not evenly distributed.
There’s plenty of supply. Just price the poors out of it. They won’t even miss it after they freeze.
Can anyone explain the deeper US leverage over Germany (and others in our “block”). In general terms I understand that the US “captured” G in WWII, has troops there that provide for G’s “defense”, etc. Is it dollar supremacy? Capital investment? Financial ownership? Energy dependence/Petro dollar (today’s read)? Mongo just pawn; need help!
For the Nordstream project in particular: the US has announced that certain companies working on the project will be ‘sanctioned’ if they keep working. That could mean barred from work in the US, and other places that would follow the US. This threat is already enough for most of them to stop work.
The sanction is (deliberately I presume) vague on the role of supporting firms. The implication is that, for example, a bank may be sanctioned for providing finances to a sanctioned company.
Since every bank needs access to US controlled payment channels, this is an extremely powerful threat. Even if a construction firm does no business in the US and might risk being barred from the US, their bank will not take such risk.
Basically, every company in Europe relies on banks that cannot risk US sanctions, so effectively the US can order every European company to follow US commands.
Apparently, US worries over German dependency on Russian gas is unfounded. After all, even the US imports Russian oil. This is to compensate for Venezuelan oil deliveries which are cut due to sanctions against that country
It appears, the whole issue is first and foremost about geopolitics. Completion and full operation of Nord Stream 2 would link Germany and other EU-members closer to Russia. This would reduce US influence on the EU. Certainly, the US is not prepared to give up its control over Germany, and its other European spoils for winning WWII and the Cold War, just to have them collaborate with its rivals Russia, and especially, China.
Because of their geographical proximity, it is in the best interest of both, Germany and Russia, to trade, exchange, collaborate, and cooperate wherever, and whenever useful. For Russia, there is nothing at all to win from tension and conflict with the EU and/or Germany. The same is true for the EU. In fact, both EU and Russia have to loose everything, literally everything, if drawn into a military conflict.
The geopolitical interest of the US is quite the opposite. It is to weaken Russia as much as possible. That requires to prevent closer relations between EU/Germany and Russia, and to reduce exchange, collaboration, and cooperation between the EU and Russia as much as possible. Germany is bombarded with anti-Russia, anti-Putin PR-campaigns in mainstream media. The Nawalny-incident served as a trigger for the current campaign. Quite handily, these campaigns serve to demonize any normalization or improvement of relations with Russia; they serve to increasing tension, and psychologically prepare for conflict. All this despite the serious negative, and even dangerous implications of this strategy. “Though this be madness, yet there is method in’t.”
There is no shame anymore. Members of the US senate and the administration don’t even bother to avoid the impression of bullying and blackmailing even a NATO member and partner sharing the same “western values”. Companies involved in the construction and operation of the pipeline, even the operator of Sassnitz harbor, where the pipeline goes onshore, are subjected to “serious sanctions”. This illustrates the level of contempt for its allies and partners. One can only hope, serious sanctions does not include being listed as terrorist organization.
US imports of Russian oil amount to about 1 days worth of US oil consumption every year?
Of course it is about geopolitics.
The German interest in Russia is not to become too dependent. After all, the Germans don’t want to pickup the Russia values of falling out windows or poisoning themselves willy nilly.